The difference between Strategic Sourcing and Purchasing

A lot of confusion exists as to what the difference is between Strategic Sourcing and Purchasing. Many people ‘bundle both disciplines into the same generic basket’. In this basic introductory article to a series on Strategic Sourcing, I will explain the difference.

What is Strategic Sourcing (aka Strategic Procurement)?

Strategic Sourcing is the continuous development, leveraging and improvement of strategic responsibilities within Procurement. As a result it is a very analytical, collaborative, organised and methodological process. It is typified by management categorisations such as risk analysis, compliance, vendor onboarding amongst many others.

The two most overlooked responsibilities is properly managing internal stakeholder relations and Corporate Social Responsibility stemming from Procurement.

Contributing to the greater organisational objectives from a Procurement perspective is of prime importance. Used properly in this context, Strategic Sourcing becomes a valuable information feed into the development and refinement of corporate strategy.

Strategic Sourcing often involves different cross functional teams (within customer and suppler), in different locations, and in some instances, different subsidiary organisations. It develops and manages business relations across all aspects of the Customer-Supplier-Internal Stakeholder-General Public Interface.

What is Purchasing?

 Purchasing is the ‘shop floor” that concentrates on tactical based transactional activities like product/services sourcing, pricing, supplier representative relations, order placement and expediting.

Purchasing is a vital information feed into the planning and decision-making process of Strategic Sourcing executives.

For many organisations and interlocking recruitment specialists, misunderstanding the fundamental differences between Strategic Sourcing and Purchasing responsibility is often the root of more complex Supply Chain related and recruitment based issues.

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