What is Sourcing and Procurement?

Sourcing and procurement are two related processes that seem to be exactly the same but do have a few key differences. Ultimately, they go hand in hand to ensure smooth supply chains.


Let’s first look at procurement as an umbrella that has sourcing underneath it. From the start of the supply chain to the end, procurement is apparent and essential throughout. Before manufacturing begins, the proper materials must be purchased. Placing and paying for the orders from the suppliers up until the point of delivery is procurement in summation.

To begin this process, a company must recognize what materials they need. After you create an official purchase requisition, it needs to be reviewed. There is negotiations. Once the budget is agreed on and approved, then prepare to receive the materials. When you receive the materials, be sure to match the invoice to the purchase order and the receiving report. Make sure there are no mistakes and nothing is missing. After payment is complete, keep an organized record of the transaction for the future. Cloud based storage, pre-generated templates and risk mitigation tools can help ease this process.


Sourcing is what makes procurement possible. Before the materials are purchased, the suppliers and manufacturers need to be found and vetted. 

First identify needs and then assess the variety of offerings. Normally an RFI or RFQ is submitted to assess the market offerings. An RFI is a request for information and an RFQ is a request for a quote. The suppliers help to develop the material specification that are a perfect match. There are also negotiations with the suppliers to achieve the best terms and prices. The supplier chosen should meet all of the requirements for your project.

Both sourcing and procurement are essential to a healthy supply chain. However, a separate sourcing and procurement team is not necessary for every business. A lot of the time, either the sourcing or procurement team can handle the responsibilities of both. At Rad Sourcing, we help you with the entire sourcing and procurement process. 

Key Take Aways

  1. Sourcing always happens before procurement
  2. Sourcing is supplier relationships and mitigating risk
  3. Procurement is purchasing and receiving the materials needed for manufacturing

If you have any questions or concerns, feel free to contact us anytime.