If you are a part of any type of business, you probably already understand the significance of the procurement and sourcing procedure. Purchasing the needed goods and services is vital for the operations of any organization and is, typically, accountable for the largest aspect of an organization’s total costs. Although many people know of sourcing and procurement and use them as interchangeable synonyms, these terms stand for two distinct concepts. Understanding these concepts is vital for the well-being of any provider so, in this report, we are going to discuss the differences between these two theories and the value of every one of them.
At a certain level, sourcing And procurement are similar in meaning, both being synonyms of the term purchasing. However, both of these terms encompass something more than a simple buying process, since they refer to the procedure for getting the high quality products and services the customer needs, at the perfect time and at a fantastic price. Procurement is a broader term than sourcing and, in some ways, sourcing is included in the larger process of mediation. On one hand, procurement contains specification development, market research, and cost and payment date discussions, marketing activities, buying activities, contract management, inventory management, receiving and store commanding. On the other hand, sourcing is the act of identifying the requirements of a business or organization and locating the perfect sources that can provide certain products and/or solutions.
Until today, procurement and Sourcing were about as necessary procedures, but they were seldom celebrated as critical act that could make or break the performance of any provider. However, the situation has greatly changes in the past decades. Procurement and sourcing departments in businesses or external procurement organizations that collaborate with these businesses are currently playing crucial roles due to their achievement and several individuals think that they would not stop there. Procurement now has a strategic role in large companies and has become a more complex procedure, with many diverse facets, particularly for multinational companies. Old fashioned procurement managers have never imagined such a fast development of all of the elements that compose the procurement process and have started to acknowledge that they need help with the challenges they are facing daily. As a company attempting to succeed in and ever changing business world, you have got two options: you can either invest in a bigger procurement section or you can outsource it. Procurement outsourcing is a somewhat new idea, instead of outsourcing departments such as IT, Human Resources or Legal.