Strategic Sourcing vs Procurement: Understanding the Key Differences

In higher education, two terms are often used interchangeably: strategic sourcing and procurement. On the surface, they appear very similar. After all, both involve suppliers, contracts, and purchasing decisions. It’s no wonder many say that strategic sourcing is almost the same as procurement.

So, let’s define both and discuss when to use each approach.

Defining Procurement

Procurement is the process of acquiring goods and services from suppliers. It’s a broad function that spans identifying needs, negotiating terms, issuing purchase orders, receiving goods, and ensuring payment.

In higher education, procurement teams ensure that sourcing activities comply with institutional policies, government regulations, and compliance requirements. Procurement is largely about execution: making sure the right items are purchased at the right price, in the right quantity, and delivered on time.

Common procurement activities include:

• Issuing and managing purchase orders.
• Processing supplier invoices and payments.
• Monitoring compliance with institutional policies.
• Handling day-to-day supplier communication.

Defining Strategic Sourcing

Strategic sourcing is a more focused, long-term process. Rather than simply purchasing goods and services, strategic sourcing looks holistically at categories of spend, supplier markets, and institutional objectives.

This approach emphasizes:

• Total cost of ownership rather than just the lowest purchase price.
• Building long-term supplier relationships that support reliability and innovation.
• Aligning sourcing strategies with broader institutional goals such as sustainability, supplier diversity, and compliance.
• Using data analytics to forecast needs, evaluate suppliers, and manage risk.

In short, procurement executes transactions, while strategic sourcing sets the roadmap for where and how those transactions should occur.

Strategic Sourcing vs Procurement: Key Differences

Today’s academic budget realities mean colleges and universities can no longer rely on traditional purchasing pathways. These realities require a more strategic approach with a longer-term view to deal with budget constraints and funding uncertainty.

“30-40% of universities are now facing budget deficits, many in the hundreds of millions of dollars, requiring innovative procurement and cost management approaches.” – Eric Frank, CEO of E&I Cooperative Services, 2025 State of Higher Education Procurement Industry Report

The Benefits of Moving from Procurement to Strategic Sourcing

Colleges and universities that elevate their approach from transactional procurement to strategic sourcing can realize significant benefits, including:

• Cost savings beyond price: By considering the total cost of ownership, you can integrate the hidden costs related to maintenance, warranties, or quality issues.
• Supplier partnerships: Long-term relationships encourage innovation, better service, and more favorable terms.
• Risk management: Strategic sourcing helps mitigate supply chain disruptions, regulatory changes, or compliance failures.
• Institutional alignment: Sourcing can advance key priorities like sustainability goals, diverse supplier inclusion, or Title IX compliance.

Here’s how this might play out in the real world. Let’s say you’re trying to reduce your carbon footprint.

A traditional procurement approach might select the lowest-cost supplier for campus cleaning products. A strategic sourcing approach, however, would evaluate suppliers based on sustainability criteria. While the products may cost slightly more upfront, the long-term benefits include reduced environmental impact, improved student and staff health, and alignment with the university’s climate action plan.

Strategic Sourcing vs Procurement: Implementation

To maximize value, procurement leaders should clearly define and implement both tactical procurement vs strategic sourcing. Key steps include:

• Separating responsibilities: Assign transactional tasks (POs, payments) to procurement staff while strategic sourcing focuses on long-term category planning.
• Investing in analytics: Use spend analysis tools to identify opportunities for consolidation, cost savings, and supplier performance improvement.
• Engaging stakeholders: Involve academic departments, facilities, and finance in sourcing strategies to ensure alignment with institutional needs.
• Leveraging cooperative contracts: Cooperative agreements streamline tactical procurement while freeing resources to focus on strategic initiatives.

While it’s tempting to view strategic sourcing as almost the same as procurement, recognizing the distinctions and building both capabilities can move you beyond cost control and develop a procurement strategy that supports your mission for years to come.

A Strategic Spend Assessment (SSA) from E&I Cooperative Services can help you move towards a more strategic approach, uncovering hidden savings, finding areas for consolidation, and bringing more spend under contract.

To strengthen both procurement and strategic sourcing, explore the cooperative contracts available through E&I Cooperative Services or sign up for a no-cost Strategic Spend Assessment.