Have you ever wondered when to use the words procurement, sourcing and purchasing? They are all used in similar situations to mean acquiring things and are sometimes interchangeable. Strictly speaking though, each word has a different nuance. We can break down their usage by process.

Procurement covers the whole process

Procurement describes the entire process of obtaining goods or services from an external resource from start to finish. This includes all activities associated with acquisition, such as defining needs; identifying, evaluating and selecting suppliers; negotiating; placing orders; receiving and inspecting items as well as  managing invoices, payments and suppliers.

Sourcing is the act of selecting a supplier

Among the procurement activities, sourcing refers to the process of identifying, evaluating and selecting suppliers in order to obtain goods, services or raw materials. In other words, sourcing is determining where to procure from.

Purchasing is the actual process of buying

Purchasing is the process that comes after selecting a supplier (sourcing). It involves ordering and receiving products as well as processing invoices and payments.

In both the GRI 204: Procurement Practices and the ISO 20400 Sustainable procurement – Guidance, procurement refers to the entire process.

At the same time, the terms sustainable procurement, sustainable sourcing and sustainable purchasing are used synonymously in a variety of situations. Since sustainable sourcing leads to sustainable purchasing, it seems as though any of the terms would be acceptable to use in many cases. However, if you keep the figure above in mind, you will be able to choose the appropriate word without hesitation.

Yasuko Sato (author), translation by Melody Poland

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