Difference between Procurement, Purchasing and Sourcing


For any procurement professional, one of the most challenging task is to get the terminology based on procurement in a correct manner. The annoying part is that the all the terms are often exchanged even though it sounds the same. For instance; purchasing is a word which can be described with the word procurement. Although the words may sound the same, they don’t have the same meaning. This leads to confusion between businesses. These are the differences between procurement, purchasing and sourcing.

  1. Procurement – A business management function used for purchasing goods and services for the purpose of business is called as procurement. Procurement helps to identify different activities such as to identify the goods and services, allotting them etc. Different activities include Vendor selection, negotiate contracts, coming to consensus regarding payment, analyzing and sourcing. Therefore, procurement is an umbrella term while on the other hand purchase is a part of it.
  2. Purchase –A subset of procurement where both can be interchanged is what defines purchase. Although the words can be interchanged, but they do not mean the same thing. Purchasing is all about buying or selling of goods and services acting as transaction-oriented part of procurement. The restriction of purchase is that it is only about making and receiving payments.
  3. Sourcing – It is all about finding the best source for the goods and services that can be procured is called as sourcing. Sourcing is the subsection of procurement where the latter is about buying goods and services while the former is all about finding inexpensive supplier for the goods.

Take a procurement specialist course to learn more about the difference between the three.