If you’re in any type of business, you probably already understand the importance of the sourcing and procurement process. Purchasing the necessary goods and services is crucial to the operations of any business and, in most cases, is responsible for the majority of a business’s total costs. Although many people have heard of sourcing and procurement and use them as interchangeable synonyms, these terms represent two different concepts. Understanding these concepts is essential for the well-being of any company, so in this article we are going to talk about the differences between these two concepts and the importance of each of them.
On some level, sourcing and procurement have a similar meaning, as they are both synonymous with the word purchase. However, these two terms encompass more than a simple purchase process, since they refer to the process of obtaining high-quality goods and services that the customer needs, at the right time and at a good price.
Procurement is a broader term than sourcing, and sourcing is somehow included in the broader process of procurement. On the one hand, purchasing consists of the development of specifications, market research, price and payment date negotiations, marketing activities, purchasing activities, contract administration, inventory control, receiving and store control. On the other hand, sourcing is the act of identifying the needs of a company or organization and finding the ideal sources that can offer certain products and/or services.
Until now, purchasing and sourcing were seen as necessary processes, but rarely celebrated as crucial acts that can make or break the performance of any business. However, the situation has changed a lot in recent years. The purchasing and sourcing departments of the companies or external purchasing organizations that collaborate with these companies now play a crucial role in their success and many people think that they will not stop there. Recruitment now plays a strategic role in large companies and has become a more complex process, with many different facets, especially for multinational companies. Traditional purchasing managers never imagined such rapid growth in all the elements that make up the purchasing process and have begun to recognize the fact that they need help with the challenges they face every day.
As a company trying to succeed in an ever-changing business world, you have two options: You can invest in a larger purchasing department, or you can outsource it. Procurement outsourcing is a fairly new concept, as opposed to outsourcing departments like IT, Human Resources, or Legal.
If you have decided to look for a procurement and sourcing company to collaborate with, you can find one simply by doing a short internet search. It may be convenient to search sourcing and procurement and you will get all the information you need to hire such a company. By doing this, you can reduce expenses for an entire department, while working with people who have a lot of experience in this area, a network of companies they collaborate with, and a fresh perspective on how your company sources products. and services you need.