The importance of meaning what you are saying

Purchasing, procurement, tendering & sourcing

Four very relevant words for us working in the transport / logistics industry, with different meanings and purposes that happened to be misused on a daily basis. Do you know what purchasing, procurement, tendering and sourcing actually stand for? Below we aim to make it clearer:

  • Sourcing
Is where one starts, the strategic work of identifying sources that could provide needed products or services so that you can continue with the other activities. Once you have decided on your strategy, you can move on to;
  • Procurement

Is the tactical process where you do the work to secure the strategic objective. From collecting data and requirements internally, preparing the RFQ/tender through the steps of negotiation to contracting and implementing of the commercial result.

  • Tendering

Is the external activity within the procurement process, where you put your request to the market to collect bids and negotiate with your suppliers.

  • Purchasing

Is the transactional buying of goods and services defined in the contract/agreement where no negotiation is required (or possible).

Many LinkedIn Groups have ongoing discussions regarding this topic, and this is indeed great to read to get a better image and explanation of the terminology discussed.

Additionally, one should not forget that the meanings may also vary depending on your geographical position – This can make things everything but easy!

Fredrik Nergell
Fredrik is head of freight management at TenderEasy, with strong negotiation skills and experience from both seller and buyer side of transport procurement. Connect with Fredrik on Linkedin or twitter.

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