Question

What is the difference between procurement and sourcing?

Procurement and sourcing are two terms often used interchangeably in business, but they do have distinct meanings.

Procurement refers to the process of obtaining goods and services to meet a company's internal needs. This process includes activities such as identifying requirements, supplier management, negotiation, order placement, inbound inspection, and final payment.

On the other hand, sourcing is a component of procurement that involves identifying potential suppliers, conducting market research, and negotiating contracts. It's the strategic approach to finding the most cost-effective suppliers for the goods or services a company needs.

In summary, sourcing is about finding the right suppliers, while procurement encompasses the entire process of acquiring goods and services.

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After these puzzles were solved, the IBM team came up with the following procurement solutions: master data management, analytics and insights, sourcing and contracting, content management, order management and helpdesk and payables. The new procurement process allowed IBM to deliver $67 million in savings in the first year, reduce procurement costs by 13% and achieve an immediate four-point improvement in Net Promoter Score (NPS).

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