Purchasing vs. Sourcing

There are numerous functions in the procurement process. Some of those are purchasing and sourcing. These two activities are very essential to the procurement process and they make the procurement process more efficient.

Purchasing is a subset of procurement. Purchasing generally refers to buying goods, works and services. Purchasing often includes receiving goods and making payments. Sourcing is the process of identifying potential vendors, conducting negotiations with them and agreeing supply contracts with these vendors. It generally refers to allocating sources of goods, works and services that the organisation needs. It is a subsection of the procurement process.

Difference: while procurement is concerned with logistics and acquisition of goods, works and services, sourcing focuses on finding the best and least expensive supplier for those suppliers. Sourcing often includes identifying the suppliers, negotiating, testing for quality and market research. Sourcing is an essential step since the profits of the business can rely heavily in finding the best source of supply.

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