Sourcing & procurement process is a critical business function having a crucial & direct impact on bottom-line performance and supply chain management.
Hence, a perfect sourcing & procurement strategy is crucial and vital for any businesses to source and procure the best resources whilst also keeping the costs under check.
Monetary savings attained through an effective strategy of sourcing and procurement processes enable companies to, in turn, reinvest in growth, personnel, services, facilities, etc to drive improved performance.
SOURCING
Sourcing is a preliminary stage before any purchases are made and can be considered a subsection of the procurement department.
Hence, before you can procure materials from your suppliers, it is must to first find and vet those suppliers. When you have an effective strategic sourcing process in place, you’ll find reliable, affordable, and quality suppliers for your needs.
As a result, a good work here makes the procurement process more streamlined and efficient.
Sourcing is about finding the correct balance between the quality of raw materials and the affordability. The less you can spend on materials, the more profit your business can earn.
But, if you buy too cheap & shoddy materials, your resulting product is of lower quality. It is important to retain standards of quality because your customers want quality, too!
PROCUREMENTS
Procurement is the full process of sourcing and then using suppliers to gather all the materials you need for your products, services, and indirect costs. It involves placing orders with each supplier, receiving the goods, and paying for them.
Procurement is an end-to-end process that covers everything from planning purchases to negotiating pricing, making the purchases, to handling inventory control and storage.
As a result, companies are challenging their appointed procurement teams to play an increasingly important role in managing spend and optimizing end-to-end sourcing and procurement processes across the company.
Procurement starts overall supply chain because once the materials you need for manufacturing are in place, you can begin making the products you sell to others.
As a result this crucial process focuses on placing purchase orders with each of the suppliers, getting order confirmation, following up with suppliers until materials are delivered, and then ensuring the materials are paid for.
Without a solid procurement strategy in place, there’s always a chance that operations will have to halt. If you can’t get access to the materials you need to make a product, then you must stop production until a suitable alternative is developed
