Sourcing and procurement are two related, but different business terms that are often used interchangeably. Both are approaches for purchasing raw materials, services, components, and the supplies needed by a company to run its operations. Axia Sourcing gives an insight into these two terms to help you understand the approach that you are taking for your manufacturing management.
Simply put, procurement is the overarching system involving vendor selection, strategic vetting, contract pricing and terms negotiation, and purchasing of services and products for business purposes.
Lack of a proper procurement strategy can negatively affect a company’s ability to stay competitive in their market due to increased costs and limited quality control.
Sourcing is a stage that comes before purchasing; it is a subsection of the procurement process. As the name states, it is the process of identifying the source from where the goods and services will be procured. Parts sourcing services, such as those provided by Axia, involve selecting the right factory to match the manufacturing process, while upholding all product specifications and quality requirements. It also provides cost savings through expert negotiations and leveraging Axia’s buying power.
Basic Differences between Procurement and Sourcing
- While both involve materials needed in the operation of the business, sourcing is more focused on identifying and locating the sources for the parts your company needs. It is a subsection of the procurement process.
- Sourcing comes before procurement, although smaller enterprises may combine the two.
- Procurement is the overarching strategic process of obtaining the goods and services your company needs to achieve its goals.
- Procurement managers set and uphold quality standards, negotiate price & terms, select vendors, negotiate service levels and contracts, and coordinate with their inventory control team.
Even though procurement and sourcing are closely related, they have certain distinctions that make each one unique. Manufacturers looking for global parts sourcing greatly rely on both sourcing and procurement to acquire the parts needed for their final products. Axia Sourcing is a leading manufacturing and procurement company that deals with global parts sourcing. If you are needing China parts sourcing or India product sourcing, get in touch with us today for your large scale global parts sourcing needs.