What Is The Difference Between Procurement, Purchasing, Sourcing, Purchase Orders, and Requisitions?

  • What Is The Difference Between Procurement, Purchasing, Sourcing, Purchase Orders, and Requisitions?

    What Is The Difference Between Procurement, Purchasing, Sourcing, Purchase Orders, and Requisitions?

    Terms like procurement, purchasing, and sourcing are often used interchangeably. The same goes for paperwork such as purchase orders and requisitions. While all these things are connected, they’re not exactly the same. As such, understanding the differences and connections between all these terms can give us a better understanding of what’s going on in procurement.

    What is Procurement Purchasing


    Procurement is a business management function that includes the acquisition of products and services. The procurement department is responsible for tasks that include locating suppliers, handling purchasing paperwork, and placing orders. As an over-arching concept, procurement includes purchasing and sourcing as well as purchase orders and requisitions.


    Sourcing is the aspect of the procurement process which happens before you purchase products. This process is all about finding the best source for the products your company needs. Sourcing involves comparing prices and negotiating discounts. One of the key goals for this step is to find a high-quality products at an affordable price.


    Purchasing is the aspect of procurement that’s responsible for actually purchasing items from approved suppliers. This process involves placing orders, communicating with suppliers, receiving goods and services, and verifying invoices before sending them on to accounts payable.


    When someone in the company wants to place an order for goods or services, they can submit a requisition to the procurement department. Depending on your company policy, not all purchases require a requisition. You might let employees order a couple boxes of paper clips, or example, without requiring a requisition. But for larger purchases like 10 cases of paper clips, they’ll need to go through procurement.

    Purchase Orders

    When your company places an order with a seller, you’ll typically submit a purchase order (or PO) to your supplier. The PO serves as a legal document laying out what you’re purchasing, how much of that item or service you want, and the price you expect to pay. POs provide important records you can use to track approved requisitions, company spend, and expected shipments.

    Tying It All Together

    Every aspect of the procurement process has to work together for a company’s procurement department to function. One of the biggest challenges in creating a procurement system that works smoothly is that many companies are still relying on manual, paper-based processes.

    When you implement procurement automation in your company, it’s going to improve every aspect of the process. The easy-to-use software will make comparing different suppliers easy and help simplify sourcing. It automatically tracks every aspect of purchasing and streamlines the entire process. Employees can enter requisitions directly into the system, which makes it easy to generate purchase orders and to make sure all purchases comply with your company’s custom policies.

    If you’re interested in seeing how procurement software can work for your company, contact us today. We’ll set up a free demo and answer any questions you have.

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