table of contents
About the Author: Emmanuel Tankpinou
Key Takeaways
- Sourcing and procurement activities are different but interlinked functions.
- Sourcing comes first, working supplier identification, evaluation, and negotiation.
- Procurement starts working after it, focusing on ordering, receiving, invoicing, and payment.
- Professional sourcing activity improves cost efficiency and procurement accuracy.
- Together, they boost supply chain performance and reduce risks.
In the work of supply chain and purchasing activities, sourcing and procurement are often used interchangeably. However, they are two different processes; each helps the companies in the crucial role of ensuring organizations acquire quality products and services at the best value. One of the most common questions in the industry is:
“Which comes first, sourcing or procurement?”
The answer is sourcing comes first—but understanding why requires exploring how both processes work and how they complement each other.
What Is Sourcing?
Sourcing works for a company to identify, evaluate, and select suppliers who can deliver the goods or services your business needs. It focuses heavily on:
- Supplier research and comparison
- Negotiating price and terms
- Assessing supplier reliability
- Supplier audits and quality verification
- Risk assessment
- Contract creation
In a nutshell, sourcing is about finding the right supplier at the right price before any purchasing takes place.
What Is Procurement?
Procurement helps a company in the transactional and operational process of purchasing goods and services from the suppliers selected during sourcing. This includes:
- Creating purchase orders (POs)
- Approvals and budgeting
- Receiving goods or services
- Invoice processing
- Payment management
- Supplier performance management
Procurement works for acquiring the right products at the right time from the suppliers chosen during sourcing.
Why Sourcing Comes Before Procurement
Here’s the sequence in a typical business:
- You identify a need (raw materials, finished products, services).
- Here is where sourcing begins – Search for the best suppliers, negotiate pricing, and finalize contracts.
- Whereas procurement follows – You purchase from the suppliers selected during sourcing.
If sourcing is skipped or doesn’t work properly, procurement suffers through:
- Higher costs
- Lower quality
- Supply risks
- Poor delivery timelines
- Unreliable suppliers
When sourcing is completed and it’s working correctly, procurement becomes efficient, cost-effective, and predictable.
How Sourcing and Procurement Work Together
Although the work of sourcing starts first, procurement and sourcing are not separated. A cycle is formed in this regard, where procurement continuously provides feedback on supplier performance, helping sourcing teams make better decisions.
Together, they bring:
- Reduced costs
- Better supplier relationships
- Higher quality products
- Lower supply risks
- Operational efficiency
FAQ Section
- Which comes first, sourcing or procurement?
Sourcing starts the work first in the process because suppliers must be identified and approved before procurement can purchase from them.
- Are sourcing and procurement the same?
Not actually. It works in a combined process; sourcing is about finding suppliers, and procurement is about purchasing from those suppliers.
- Can procurement happen without sourcing?
Yes, but the whole process doesn’t work properly. Without sourcing, companies may face higher costs, unreliable suppliers, delayed deliveries, or compliance issues.
- What is strategic sourcing?
Strategic sourcing is a long-term, data-driven activity that focuses on optimizing supplier shortlisting and selection, cost savings, and supply chain performance.
- Why is supplier evaluation important in sourcing?
It lowers risks, ensures consistent quality, stabilizes supply, and helps negotiate better pricing and terms.
Resources
You may explore the following resources to deepen your understanding:
-
CIPS (Chartered Institute of Procurement & Supply) — guidance on sourcing vs. procurement
-
ISM (Institute for Supply Management) Procurement Training
-
Harvard Business Review — Articles on supply chain strategy
-
APICS Supply Chain Council — Supply chain operational frameworks
-
Dragon Sourcing — Supplier sourcing, procurement support, and global market intelligence services
Image: pixabay.com
