What is the difference between sourcing and procurement?

Procurement management is the management of the procurement process and related to an organization. Since production companies currently purchase approximately 70% of their total sales and because service companies purchase approximately 40% of their total sales, procurement management is one of the most important departments in the organization and needs tight management.

Sourcing as the name suggests, it is a finding a source from where the goods and services can be procured. It is a subset of procurement.

Procurement is a formal process to obtain goods and services. It includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team.

 

 

Procurement is a complete systematic process that involves skillset, intelligence, decisions, agreements, contracts and standards that need to be implement in the process.  Sourcing is a part of procurement. 

Sourcing is basically the one component of procurement; wherein procurement is the entire process that involves different activities from sourcing to delivery. Sourcing can be described as generation of a contract and procurement as the execution of contract.

Procurement deals with the sourcing activities, negotiation and strategic selection of goods and services that are usually of importance to an organization.

 

 

Procurement is the entire range and process of activities from sourcing, purchasing, negotiating and acquisition and also includes risk management, sustainability etc. Sourcing is the component of the Procurement process that deals with supplier selection and management.