If you are part of 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 most of the total costs of a business. Although many people have heard of sourcing and purchasing and use them interchangeably synonymously, 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.
At one level, sourcing and purchasing have a similar meaning, both of which are synonymous with the word purchase. However, these two terms cover more than a simple purchasing process, because 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 procurement process. On the one hand, acquisitions consist of the development of specifications, market studies, price negotiations and payment dates, marketing activities, purchasing activities, contract administration, inventory control, reception and control of stores. 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, procurement and sourcing were considered necessary processes, but rarely celebrated as a crucial act that can make or break the performance of any company. However, the situation has changed a lot in recent years. The procurement and sourcing departments of companies or third-party procurement organizations that collaborate with these companies now play a crucial role in their success, and many people think they won’t stop there. Procurement now plays a strategic role in large companies and has become a more complex process, with many different facets, especially for multinational companies. Old-fashioned procurement managers have never imagined such rapid growth of all the elements that make up the procurement 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 either invest in a larger procurement department, or you can outsource it. Procurement outsourcing is a fairly new concept, unlike outsourcing departments like IT, Human Resources, or Legal.
If you’ve decided to find a procurement and sourcing company to collaborate with, you can find one simply by doing a short search on the Internet. It may be wise to search sourcing and procurement and you will obtain all the necessary information to hire said company. By doing this, you can reduce the expenses of 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 new perspective on how your company sources products. and services you need.