Sourcing and procurement are critical processes in supply chain management that ensure a company acquires the necessary goods and services efficiently and cost-effectively.
- Sourcing: This is the strategic process of identifying, evaluating, and selecting suppliers to provide the goods and services needed by an organization. Key activities include:
- Market Research: Analyzing market conditions and potential suppliers.
- Supplier Evaluation: Assessing suppliers based on quality, reliability, and cost.
- Negotiation: Securing favorable terms and conditions.
- Contract Management: Establishing and maintaining supplier agreements.
- Procurement: This is the operational process of acquiring goods and services. It involves:
- Purchase Ordering: Issuing orders to suppliers.
- Receiving: Ensuring the delivery of goods and services.
- Payment Processing: Managing invoices and payments.
- Supplier Relationship Management: Maintaining ongoing relationships with suppliers to ensure continuous supply and performance.
Together, sourcing and procurement help build a robust supply chain, minimize costs, and ensure that the project has the materials and services it needs to run effectively and efficiently.