Differences between Sourcing and Procurement

Gaurav Baheti
Jan 11, 2022·4 min


If you judge the surface meaning of sourcing and procurement while purchasing goods and services for an organization, you may often use them interchangeably. But both sourcing and procurement have significant differences between them. Both relate at some point & play a crucial role in the organization’s supply chain. In this article, we will understand what procurement and sourcing management are. Also, we will focus on how they are different from one another.

What is procurement?

Procurement is the process of placing orders with suppliers, confirming them, and making the payment. It comprises a range of actions related to obtaining goods or services within an organization. Not every enterprise defines procurement in the same manner. In some of them, the procurement process has multiple phases. Some companies will gather business necessities and then supply the goods plus, updating the payment terms. Such a process of procuring goods and services for the organization is also known as the Procure-to-Pay cycle.

What is sourcing?

Sourcing is a process that involves finding the best supplier for goods & services, vetting them, selecting them as per business requirements, and managing them as whosoever can provide the inputs aligning the business needs for day-to-day running. The sourcing management also comprises evaluating the supply market, developing the procurement method, and bargaining the t&c of the purchase.

What is sourcing-procurement software?

The win of a procurement organization relies on how efficiently the procurement and sourcing process can manage its sourcing strategies. That’s where the team requires sourcing-procurement software that can help an organization with functions and tools to acquire goods and services during the procurement process. Such apps can automate various purchasing processes, evaluate the market demand, and maintain a checklist of goods.

Benefits of sourcing-procurement software

Here is a list of some benefits of sourcing-procurement software.

  • All the purchase data remains available in one centralized location.
  • Such software helps increase the accuracy and speed of the sourcing and procurement process.
  • Organizations can leverage such tools to gain instant access to any purchase-related documentation.
  • Such sourcing-procurement software also renders better visibility and control over acquiring goods and services data across the business.
  • It also provides precise inventory management that helps in eliminating shortages and over-stocking.
  • Enterprises can cater to organized supply management.
  • Its automation system and built-in analytics solutions help in efficient report generation.

Features of sourcing-procurement software

A complete sourcing-procurement software consists of the following features:

  • Such software can hold and maintain a database of vendors and suppliers, along with their rankings and ratings.
  • It can generate auto requests for quotes.
  • An automated budgeting capability is also present within such software.
  • Such software provides collaborative access to multiple data
  • Such software can generate and manage the purchase of requisition, billing, purchase orders, and contracts.
  • We can either have the procurement records on the cloud or local server based on the company’s directives.

Difference between Sourcing and Procurement

Sourcing and procurement hold a lot of similarities. It is because sourcing acts as an enabler for procurement. For small enterprises, sourcing and procurement departments get tied as one - purchase department. That department does all the research on sellers, services, suppliers, cost, etc. However, as the business grows or for large enterprises, both sourcing management and procurement operations get divided for reducing errors, improving efficiency, saving time, benefitting from all angles.

Sourcing deals with managing information related to goods and service supply. Here are some of the tasks that the sourcing process comprises:

  • Analyze all the products and services required for the enterprise.
  • Identify the vendors from whom they can buy the product or service for their company.
  • Negotiate with the vendors in terms of suitability and pricing
  • Preserving a database of matching and alternate suppliers and their price details.
  • Request for effective quotes
  • Conduct a pricing agreement
  • Conduct a risk analysis for the supplier

Procurement primarily deals with acquiring various supplies used for the day-to-day running of the enterprise. This process involves the actual buying of products or services from suppliers or vendors. Here are some of the tasks that the procurement process comprises:

  • Assembling all the products or services orders for purchases
  • Buying the product or service
  • Tracking the delivery and keeping updates of its arrival
  • Ensuring the delivery as per purchase specifications
  • Paying for the products and services

Tabular Differentiation between Sourcing and Procurement

Differentiation between Sourcing and Procurement


Due to the sourcing-procurement software, companies can easily automate their critical sourcing and procurement operations. Procol is a next-generation procurement software that can save time by eliminating manual effort, cutting costs, improving record-keeping techniques, streamlining vendor details, and procuring records. You can deploy it in under seven days to optimize your procurement management.

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