Procurement Vs. Freight Forwarding

Procurement Vs. Freight Forwarding

Does the shipping of goods adhere to the quality standards that I want? Will it suffice my taste? Is it up to a grading standard? Will the freight company check upon that? How do I make sure of it?

In this blog, we will help you understand the difference between Procurement and Freight forwarding, and state the reason why they are interchangeable on the surface. As a person in the industry, it is very important to distinguish the two to make trading goods crystal clear and comprehensible.

Freight sourcing and procurement are key components of the whole supply chain and are critical to the success of the organization.



Procurement logistics are important in the e-commerce supply chain, but the emphasis is frequently on what happens following procurement, beginning with receiving inventory and improving the supply chain from there. It also refers to the process of obtaining the inventory required to meet demand.

This could contain raw materials required to make custom products or to sell to another business, as well as finished goods ready to sell directly to the end consumer. Once goods have been sourced and received, they are deemed inventory, which entails the process of keeping, monitoring SKUs, preparing them for retail fulfillment, and buying more to refill inventory. 

Procurement processes vary greatly depending on each company’s structure and needs, but generally include the following six core steps:

  1. Identify which goods and services the company needs –  First, a company must determine its needs for a given commodity or service. This might be a new item that the firm hasn’t acquired before, a replenishment of current items, or a subscription renewal. This stage often entails looking into the finer points of what the company requires, such as detailed technical standards, materials, component numbers, or service qualities.
  2. Submit purchase request – A purchase requisition is created when a firm needs to acquire a large number of new items or services. A purchase request alerts the firm to the existence of a requirement, generally through department managers, purchasing employees, or the finance team, as well as criteria such as price, the time required, quantity, and other relevant factors for the purchasing team to consider.
  3. Assess and select vendors – With a clear list of needs and an approved buy request, it’s time to select the best vendor and submit a request for a quote (RFQ) – this is what the purchasing team sends to potential suppliers to acquire a quote – be as precise as possible so you can compare apples to apples. Vendor evaluation should consider not only cost but also reputation, speed, quality, and dependability. Because procurement is frequently connected with corporate identity, many businesses consider ethical and social responsibility as well.
  4. Negotiate price and terms – Before making a decision, it is customary practice to obtain at least three quotes from providers. Examine each quote carefully and, if possible, bargain. If you need to back out of a contract, make sure you have real alternatives. Once you’ve reached an agreement on final terms, make sure to put everything in writing. After, fill out a purchase order (PO) and send it to the supplier. The PO should be sufficiently detailed to identify the exact services or goods needed and to enable the supplier to fill the order.
  5. Receive and inspect the delivered goods – Carefully examine deliveries for any errors or damage. Make sure everything is delivered as specified in the PO and that the quality meets or exceeds expectations. After receiving, conduct three-way matching. Accounts payable should conduct three-way matching by comparing the purchase order, order receipt or packing list, and invoice. The purpose is to ensure that the products or services obtained correspond to the purchase order and to prevent payment for unapproved or incorrect invoicing. Highlight any differences between the three documents and work out any difficulties before making payment.
  6. Approve the invoice and arrange payment and Recordkeeping – Approve and pay the invoice if the three-way match is correct. Businesses should strive for a consistent invoice payment process that confirms that payments match the invoice amount and due date. A systematic approach can assist ensure that invoices are always paid on time, avoiding late fees, and fostering excellent relationships with suppliers. Maintaining records for the whole procurement process, from purchase requests to price negotiations, invoices, receipts, and everything in between is critical.

The process presented may enlighten how procurement companies work. To understand procurement from the perspective of business briefly, procurement companies work to obtain competitively priced supplies that deliver the most value. However, not all companies define procurement in the same way. Many companies consider that procurement encompasses all the stages, from gathering business requirements and sourcing suppliers to tracking the receipt of goods and updating payment terms, while others define procurement as a narrower range of activities, such as issuing purchase orders and making payments.


Freight Forwarding

Freight forwarding is one of the most widely used methods of international transport for both business and personal use. A freight forwarder is responsible for the transportation of goods between one destination and another.

Freight forwarding companies specialize in arranging the whole process for their shippers, from the storage to the shipping of their merchandise. They act as an intermediary between the shipper and transportation services, liaising with various carriers to negotiate prices and decide on the most economical, reliable, and fastest route.

There are six key stages of freight forwarding. The freight forwarding process can be broken up into six key stages, including:

Export haulage – the transfer of goods from their source to the freight forwarders’ warehouse.
Export customs clearance – the goods receive clearance to leave their country of origin.
Origin handling – the unloading, inspection, and validation of the cargo against its booking documents.
Import customs clearance – the customs paperwork for your cargo will be checked by the authorities.
Destination handling – the handling of cargo once it reaches the destination office, including transfer to the import warehouse.
Import haulage – the transfer of cargo from the import warehouse to its final destination.
In the perspective of the business sector, a freight forwarder, or forwarding agent, is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer, or final point distribution. Forwarders contract with a carrier or often multiple carriers to move the goods from one country to another.



Optimizing for speedy fulfillment and shipment is a primary concern in e-commerce. After all, the capacity of a brand to remain competitive and achieve customer expectations is directly impacted by this stage of the supply chain. The terms procurement and freight forwarding may often be interchangeable. However, there are important distinctions between them. Procurement is defined as all activities related to carefully sourcing and obtaining goods and services needed to support business operations where including sourcing, negotiation, purchasing, receiving, and recordkeeping. On the contrary, Freight forwarding usually focuses on the delivery of the products.



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