Net Weight vs Gross Weight: Key Differences Explained

Published on June 18, 2025

• 8 min read

Net weight and gross weight sound similar and are often confusing. These two terms are used widely in weight measurement and significantly impact various processes such as shipping, logistics, and pricing. However, the meaning and application of these terms are very different. Understanding the difference is essential, especially when it comes to shipping. In this article, we will explore net weight vs gross weight and how they can be calculated.

Table Of Contents

What Is Net Weight and Gross Weight?
What Is the Difference Between Net and Gross Weight?
How Are Net Weight and Gross Weight Calculated?
The Importance of Net Weight and Gross Weight in Different Industries
Challenges in Weight Measurement
Get Hassle-free Shipping with WareIQs's Smart Shipping Solutions
Conclusion
FAQs about Net Weight vs Gross Weight

What Is Net Weight and Gross Weight?

What Is Net Weight?

Net weight refers to the weight of the product itself, excluding any packaging. The weight of containers or boxes that the product comes in is not considered while calculating net weight. It represents the quantity that a consumer can use.

Some examples to understand net weight are as follows:

A bag of potatoes weighing 4 kg net weight means that the potatoes weigh 5 kg. The weight of the bag is not counted.
A 1-litre bottle of milk represents that it contains 1 litre of milk. The bottle’s weight is not counted.

What Is Gross Weight?

Gross weight means the total weight, including the packaging or any other additional content with the packaging, like a straw or spoon. It is the combined weight that is shipped or sold. Some examples of gross weight are explained below:

A box of oranges weighing 5 kg gross weight represents the complete weight, including the weight of the box and other packing material.
A bottle of orange juice weighing 1-litre gross weight means the complete weight, including the bottle and the straw that comes with it.

What Is the Difference Between Net and Gross Weight?

The main difference between gross and net weight is that the calculation of net weight excludes packaging, while the calculation of gross weight includes packaging. Net weight is essential for consumer goods, while gross weight is essential in shipping and logistics.

Aspect	Net Weight	Gross Weight
Definition	Weight of the product alone, excluding packaging	Total weight including product and all packaging
Includes	Only the usable product	Product + packaging materials (box, bottle, straw, etc.)
Examples	1L milk means 1L of milk only, not the bottle	1L juice includes the juice, bottle, and straw
Used in	Food, manufacturing, retail	Shipping, logistics
Importance	For fair pricing and consumer transparency	For calculating shipping cost and logistics planning
Calculation Formula	Net Weight = Gross Weight – Tare Weight	Gross Weight = Net Weight + Tare Weight
Key Industry Relevance	Retail, food, and manufacturing where exact product quantity matters	Logistics and transport where total load weight is critical
Challenges	Distinguishing net from gross due to packaging variation	Affected by changes in temperature, pressure, and inaccurate tare weight calculation

How Are Net Weight and Gross Weight Calculated?

Before understanding the calculation of gross weight and net weight, it is important to understand another concept of measurement: the tare weight. So what is a tare weight? A tare weight is the weight of the packaging. Packaging can either include the main packaging or the packaging and additional containers that it comes in.

The calculation of net weight and gross weight is as below:

Net weight = Total Weight – Tare Weight / Gross Weight – Tare Weight

Gross Weight = Net Weight + Tare Weight

The Importance of Net Weight and Gross Weight in Different Industries

Gross weight and net weight are two terms that are most commonly used in day-to-day life. However, it has great significance in different industries as well. Below are some industries where the application of net weight and gross weight is used:

Shipping and Logistics

Understanding the concept of gross weight and net weight is crucial in the shipping and logistics industry. It helps determine shipping charges for different packages and ensures complete compliance with transport regulations. More importantly, as there are multiple packages, the transport vehicles are arranged based on the calculated weight.

If the calculation of the net weight and gross weight is an error, it can lead to additional charges. At times, the package might need to be redone to meet the regulations.

Manufacturing and Production

When manufacturing a product or producing an item, it is essential to know the net weight of the raw material to meet the standard requirements. Knowing the net weight helps maintain inventory control, maintain the uniformity of the produced goods, and accurately calculate material costs.

Net weight is a highly significant concept in this industry, as consumers must be provided with the mentioned quantity.

Food Industry

Knowing and understanding the concept of net weight is extremely important in the food industry. Since strict rules need to be followed to maintain food safety, the net weight of edible items is printed on the packaging to provide accurate details to the customer.

Furthermore, nutrition labelling is also a requisite in the food industry. It is essential to print everything according to the net weight so that customers can get the correct information if they are following a diet or want to avoid certain ingredients.

Consumer Goods and Retail

Knowing about net weight is essential to avoiding false advertising and following correct trade practices. All consumer goods are sold based on net weight, and it is required by law that a product’s packaging describe its net weight.

Printing the net weight is a standard rule because consumers compare products based on price and the quantity they are receiving. Hence, net weight is a significant concept in consumer goods and retail.

Challenges in Weight Measurement

The challenges that are faced by different industries in weight measurement are as follows:

Packaging variability: Packing materials have different weights, which can sometimes make it challenging to weigh. It can also become difficult to distinguish net weight from gross weight.
Faulty Equipment: Weighing equipment is necessary to determine the correct weight of an item. When the equipment is faulty, it will show the wrong weight, making it difficult to derive the exact weight.
Changing Conditions: When it comes to liquid or semi-liquid items, the temperature and pressure can impact the gross weight as well as the net weight.
Tare Weight Calculation: Since tare weight is essential to calculate gross weight or net weight, it can create errors if tare weight is challenging to weigh. This happens mostly when the shape of the container is unusual.

Also check – Dimensional Weight Calculation

Get Hassle-free Shipping with WareIQs’s Smart Shipping Solutions

WareIQ’s innovative shipping solution helps eCommerce brands minimise cost leakages caused by RTOs, fake delivery attempts in NDR, weight reconciliation issues, and more. Our solution also offers prompt support for handling urgent client escalations, ensuring smooth operations at all times.

Our solution offers the following capabilities:

Multi-carrier engine enabling fast deliveries across 24,000+ pin codes.

Control Tower & automated workflows to minimise NDRs & RTOs.

Same/Next-day delivery courier options.

Seamless integration with your WMS, ERPs, and shopfronts.

Shipping badges to display precise Estimated Delivery Dates (EDD).

Custom branded tracking pages and notifications to enhance the customer experience.

Conclusion

There is a slight difference between net weight and gross weight. In many industries, the calculation of net weight and gross weight is of great significance. Net weight is the actual weight of the product or goods; gross weight, on the other hand, is the combined weight of the product/item and the packaging/container. Whether it is the shipping industry or food and retail, gross weight and net weight are widely used to maintain fair practices and regulations. Various factors can pose a challenge in determining the net weight and gross weight, such as faulty equipment, failure to calculate the weight, and packaging variability.

FAQs about Net Weight vs Gross Weight

Does packaging affect gross weight?

Yes, packaging impacts gross weight for smaller products like cosmetics or snacks. However, when it comes to heavy-weight products, the packaging will make minimal difference.

Why does gross weight matter in the shipping industry?

The gross weight helps to determine proper transportation arrangements. An arrangement made based on net weight can lead to overloading and, hence, can be hazardous. It can damage the goods in transit.

What is tare weight?

Tare weight is the weight of the packaging. To know the tare weight, you can deduct net weight from gross weight.

Is it mandatory to list the net weight of the package?

Yes, most laws require manufacturers to list the net weight of the package so that consumers can make an informed decision.

Can gross weight and net weight be the same?

Yes, in cases of bulk machinery or goods sold without packaging, the net weight and the gross weight will be the same.

Supercharge your fulfilment with WareIQ now, contact our team.

Author

Mariyam Jameela

Mariyam Jameela works as a content writer at WareIQ. With a proven track record of working with renowned brands such as GO Digit, Urban Ladder, Juspay, Hong's Kitchen, and many more. She actively contributes to the creation of blog posts centered on eCommerce operations, fulfillment, and shipping, in addition to providing insights on various strategies and techniques tailored for eCommerce sellers

Read all of Mariyam Jameela's Posts

Bill of Entry Status: How to Check and What It Means in Customs?

Have you ever ordered something internationally and found yourself wondering what happens once it crosses the border? Customs procedures can feel like an endless maze, and one term that tends to pop up often in this context is "bill of entry status." But what exactly does it mean, and why is it such a big deal? Whether you're an importer, a business owner managing logistics, or just someone fascinated by the inner workings of customs, this guide is here to clear up the mystery for you. Think of the bill of entry as more than just a piece of paperwork; it’s the golden ticket that ensures goods can cross borders legally and without unnecessary delays. But what happens when the process stalls or you're not sure where things stand? That’s when knowing how to check the bill of entry status becomes a game-changer. In this blog, we’re going to break down everything you need to know about a bill of entry: what it is, why the status matters, and, most importantly, how to track it like a pro using tools like ICEGATE. Ready to get a clear understanding of customs clearance? Let’s jump in and figure it out together. What is a Bill of Entry? Simply put, a bill of entry (BOE) is a legal document submitted to Customs authorities when goods are imported into a country. It contains detailed information about the shipment, such as: The value of goods. The description of goods. The applicable customs duty. In the world of logistics, the BOE is essential for clearing goods through customs. Without it, your imported products might sit in a warehouse indefinitely or incur hefty fines. Did you know that filing a bill of entry allows importers to claim Input Tax Credit (ITC) under GST? That’s another reason why keeping an eye on the bill of entry status is crucial. Why is it Crucial to Monitor the Bill of Entry Status? International shipments can be tricky to manage, and even minor delays can lead to higher costs, dissatisfied customers, and logistical headaches. This makes keeping an eye on your bill of entry status a critical task for businesses involved in imports. It’s more than just tracking a document – it’s about ensuring the entire process runs smoothly and without unnecessary setbacks. Smooth Customs Clearance: Monitoring your bill of entry status helps ensure your goods pass through customs without issues caused by incomplete or incorrect paperwork. Avoiding delays here saves you from paying extra storage charges or facing penalties. Accurate Duty and Tax Calculations: The bill of entry is crucial for determining customs duties, Integrated GST (IGST), and any compensation cess. Staying updated ensures you avoid calculation errors and pay the correct taxes for your shipment. Compliance with Regulations: Monitoring your BOE status through platforms like ICEGATE helps you meet import regulations, avoid missed deadlines, and prevent penalties caused by incomplete filings or late submissions. Efficient Logistics Management: A clear and up-to-date BOE status allows you to coordinate better with logistics providers, accurately predict delivery schedules, and manage your inventory more effectively, ensuring your supply chain remains uninterrupted. By using tools like the ICEGATE bill of entry status tracker, you can stay informed at every step of the process, avoid unnecessary delays, and improve the efficiency of your import operations. Being proactive is not just a smart practice—it’s the key to running smooth and cost-effective international trade. How to Check Bill of Entry Status Online? Thanks to the ICEGATE portal (Indian Customs Electronic Gateway), tracking your bill of entry status is now a simple and straightforward process. ICEGATE is the official platform for customs and GST-related activities in India, providing importers with easy access to critical information about their shipments. Whether you’re new to this or just need clarity, here’s the exact process to follow. Step-by-Step Guide to Track Bill of Entry Status via ICEGATE Search for the ICEGATE Portal Open your browser and search for “ICEGATE Portal” on Google, or directly visit ICEGATE’s website. Access the ‘Bill of Entry’ Tracking Section Once on the homepage, navigate to the “BE Tracking” section. You may find it under “Enquiry” or “Tracking Tools.” Log In (If Required) Some users, such as importers or authorised agents, might need to log in with their credentials to access specific information. Enter the Required Details To fetch your BOE status, provide the following information: Bill of Entry Number: A unique 13-digit identifier for your shipment’s BOE. Port Code: Identifies the customs location where the BOE was processed. BOE Filing Date: The date the BOE was submitted. Submit and Check the Status Hit the "Search" button, and the portal will display your BOE status. The information includes: Payment confirmation and duty status. Customs clearance progress. Shipment value, importer details, and channel number. Government agency approvals and document validity. Resolve Issues or Get Real-Time Updates If the status seems outdated or unclear, use the “Query ICEGATE” feature to fetch real-time updates directly from the customs database. Key Components of a Bill of Entry Want to decode the information on a BOE? Here are the critical elements you’ll find: Importer’s Details: Name, address, and Import Export Code (IEC). Exporter’s Information: Name and origin of the shipment. Goods Description: Quantity, monetary value, and tariff classification. Port Code: Identifies the customs location. Duties and Taxes: Includes IGST, customs duty, and cess. Every detail on the BOE has a purpose, so ensure its accuracy during filing. Mistakes can lead to delays or penalties. Common Issues with Bill of Entry and How to Resolve Them IssueDescriptionResolutionBOE Status Not UpdatedThe status may not show the latest updates due to technical glitches.Use the “Query ICEGATE” feature to fetch real-time data from the ICEGATE portal.Mismatch in DetailsBOE details don’t align with your shipment or supporting documents.Contact your Clearing House Agent (CHA) or the customs department to rectify the discrepancies.Delayed ClearanceShipment clearance is delayed due to unpaid duties or missing documents.Ensure all duties and taxes are paid promptly and submit complete documentation for processing. This table highlights the most common BOE issues and provides actionable steps to resolve them efficiently, ensuring smoother customs clearance. Related article - Difference Between Excise Duty and Custom Duty How Can WareIQ Help Simplify Your Import and Fulfillment Process? When managing imports and navigating customs processes like tracking your bill of entry status, efficient logistics and inventory management are critical to avoiding delays and ensuring smooth operations. This is where WareIQ steps in as a reliable partner for eCommerce businesses. WareIQ is a Y-Combinator-backed, full-stack fulfilment and shipping platform designed to meet the needs of modern eCommerce operations. Here’s how WareIQ can optimise your supply chain: Nationwide Fulfillment Network: WareIQ operates fulfilment centres across 12+ cities, ensuring inventory is strategically positioned close to your customers for faster delivery. It supports multi-channel fulfilment across platforms like Amazon, Flipkart, Shopify, and others. Advanced Inventory Management: With AI-powered inventory planning, WareIQ helps prevent stockouts and automates replenishment to ensure uninterrupted supply chain operations. Smart Shipping Options: WareIQ offers delivery to 27,000+ pin codes through a multi-carrier engine, providing same-day or next-day delivery options. Features like branded tracking pages and accurate delivery timelines improve customer experience. Compliance Assistance: WareIQ simplifies GST registrations, APOB/PPOB setups, and ensures marketplace-compliant operations, easing the burden of customs and compliance management. Partnering with WareIQ means fewer delays, better efficiency, and more satisfied customers. Manage your import and fulfilment processes effortlessly with WareIQ Suggested read - Shipping Bill vs Bill of Lading: Key Differences Explained Wrapping Up Understanding and tracking the bill of entry status is a crucial part of ensuring seamless customs clearance and smooth logistics operations. From preventing delays to avoiding fines, staying updated on the BOE status can save businesses from unnecessary hassles. Platforms like ICEGATE make it easier to monitor shipments, while solutions like WareIQ further enhance logistics efficiency with advanced fulfilment and shipping support. By leveraging the tools and knowledge outlined in this blog, importers can navigate the complexities of customs with ease and focus on growing their business. Whether you’re an eCommerce seller or a business owner managing global trade, staying proactive with your logistics and customs processes will ensure success in the long run. You may also like to read - How to Check Your Shipping Bill Status Online in India? Frequently Asked Questions (FAQs) What is the SEZ bill of entry status?The SEZ bill of entry status refers to the tracking of customs clearance for goods being imported into or exported from Special Economic Zones (SEZs). It provides updates on document validation, customs duties, and clearance progress specific to SEZ regulations.What happens if my SEZ bill of entry status is not updated?If the SEZ bill of entry status is not updated, it could be due to system delays or incomplete filings. Use the "Query ICEGATE" feature for real-time updates or contact your CHA for assistance.What is the ICEGATE portal, and how does it help with tracking the bill of entry status?ICEGATE (Indian Customs Electronic Gateway) is the official platform for customs and GST-related activities in India. It allows importers to track their bill of entry status, view payment confirmations, check customs clearance updates, and access other shipment-related information.Can I check the status of the bill of entry without a clearing house agent (CHA)?Yes, you can track the status yourself through the ICEGATE portal if you have the required details like the Bill of Entry number, Port Code, and Date of Filing. However, a CHA can assist with resolving any issues or discrepancies in the process.

June 17, 2025

Shipping Bill vs Bill of Lading: Key Differences Explained

When it comes to international shipping, several documents must be considered. These documents are of great significance, as they contain information about shipments. Some of the documents that stand out for their importance include shipping bills and bills of lading. To a common man, both documents seem similar; however, they are quite distinct in terms of their importance in the logistics chain. Businesses involved in the shipping industry must understand the key differences between Shipping Bill vs Bill of Lading. Additionally, considering that in June 2022, approximately 2.1% of the 45 million bills were made digitally, it highlights how the shipping industry is transitioning to digital documents, replacing traditional paperwork such as the shipping bill and bills of lading; it thus becomes necessary to be aware of various documents and their usage. In this article, we will understand what is a shipping bill, what is a bill of lading and what are the differences between Shipping Bill and Bill of Lading. What is a Shipping Bill? One of the primary documents required by the customs authority during the clearance of goods is the shipping bill. The shipping bill contains detailed information about the goods that are being exported or imported. Details on a shipping bill include the following aspects: The complete description of the good, such as the type, value and the quantity. It also contains detailed information about the exporter and importer, including their names, numbers, and addresses. It also contains the HS code, which is the Harmonised System code for classifying the goods. The shipping bill also has details about the port for loading, as well as the destination. It specifies the exact location from which the goods are being shipped and to which location they are being shipped. Shipping bills also include export taxes, which apply to the goods. What is a Bill of Lading? The bill of lading is a document that is legalised, and it is a necessary requirement for every shipper. It is issued by the carrier to the shipper, thereby acknowledging the receipt of goods for shipment. A bill of lading serves several purposes. Purposes served by a bill of lading include: It confirms that the carrier had successfully received the shipment of goods. A bill of lading also outlines the terms and conditions in detail under which the goods are shipped. A bill of lading necessarily contains a document of title. It represents the ownership of the goods. The document title can be used to transfer ownership by endorsement. Shipping Bill Vs Bill of Lading: Key Differences When the international shipping industry is considered, the shipping bill is quite different from the bill of lading. The differences between a shipping bill and a bill of lading are explained below in detail: AspectShipping BillBill of LadingType of documentA shipping bill is a legal document that is required for customs clearance.On the contrary, a bill of lading is a legal document that is used by shippers or carriers.Main PurposeThe primary purpose of a shipping bill is to obtain customs clearance and permission for export.The primary reason why a bill of lading is issued is for the acknowledgement of goods and terms and conditions of a shipment.OwnershipA shipping bill does not represent ownership.A bill of lading does represent ownership and can also be transferred.Authorities involvedAuthorities involved in verification or issuance are customs authorities.The bill of lading is governed by maritime laws and does not involve customs authorities.Mode of generationA shipping bill is generated by authorities such as ICEGATE in India and is generated electronically.A bill of lading can be generated electronically or manually. It is usually generated by the shipping line.Requirement of signaturesA shipping bill may require signatures from customs, CHA, or even the exporter.A bill of lading mandatorily requires a signature from the carrier.Customs requirementA shipping bill is an essential document needed for customs clearance.A bill of lading is not needed for customs clearance; however, it is needed for cargo delivery.Retention periodThe retention period of a shipping bill as per legal or compliance norms is for 5 to 7 years.A bill of lading must be preserved for dispute handling and record keeping, as it is required for cargo release.AmendmentsAmendments to a shipping bill can be made before the departure of cargo or before customs clearance.Amendments to a bill of lading are difficult if the cargo is already shipped out.JurisdictionA shipping bill falls under export regulations or customs clearance in a country.A bill of lading falls under maritime or contractual laws.Related documentsDocuments which are related to a shipping bill include certificate of origin, LUT (for exports), packing list and invoice.Documents related to a bill of lading include a delivery order, letter of credit or freight invoice. Get Seamless Documentation With Shipping Solutions From WareIQ WareIQ’s smart shipping solution helps eCommerce brands minimise cost leakages caused by RTOs, fake delivery attempts in NDR, weight reconciliation issues, and more. Our solution also offers prompt support for handling urgent client escalations, ensuring smooth operations at all times. Our solution offers the following capabilities: Multi-carrier engine enabling fast deliveries across 24,000+ pin codes Control Tower & automated workflows to minimise NDR & RTOs Same/Next-day delivery courier options Seamless Integration with your WMS, ERPs and Storefronts Shipping Badges to display precise Estimated Delivery Dates (EDD) Custom branded tracking pages and notifications to enhance customer experience Suggested read- How to check Bill of Entry Status Conclusion A bill of lading and a shipping bill are two essential documents in international trade. Hence, it is necessary to understand both the documents and their differences as well. A shipping bill ensures smooth customs clearance, as it serves as a formal permission document, which is essential. On the other hand, a bill of lading is like a contractual pass that is issued by the carrier. Understanding the nuances of Shipping Bill vs Bill of Lading is necessary not only for compliance but also for seamless and efficient logistics management. It is also required to protect the cargo being shipped, maintain healthy cash flows, and obtain timely clearances. Being unaware of the significance and differences between these documents can lead to monetary penalties, delays, and even the seizure of shipments. Related read - How to Check Your Shipping Bill Status Online in India? FAQs About Shipping Bill vs Bill of Lading Who issues the shipping bill?A shipping bill is a document generated electronically by either the exporter or their authorised agent. It is usually generated through the ICEGATE portal in India.Is it necessary to have a shipping bill generated for every export?Yes, a shipping bill is a necessary document required for customs clearance on all shipments exported from India.Is a bill of lading similar to a sea waybill?No, a bill of lading is different from a sea waybill. A bill of lading is a document that essentially represents ownership of goods. On the other hand, a sea waybill is a non-negotiable document and does not serve as a document of title.Will there be any complications if there is a discrepancy found in a shipping bill?If there are discrepancies in a shipping bill, it can cause various problems, such as delayed customs clearance processes and potential penalties and fines.

June 16, 2025

Sourcing vs Procurement: Understanding Key Differences in the Supply Chain

Running a business in India, whether it is a small workshop in Coimbatore or a large factory in Gurgaon, often feels like juggling a dozen tasks at once. One moment, you are chasing customer orders, and the next, you are scrambling to secure raw materials. In the midst of this chaos, two terms frequently pop up: sourcing and procurement. They sound similar, but mixing them up is like confusing a recipe’s ingredients with the cooking process. Understanding the difference between Sourcing vs Procurement can transform how you manage your supply chain, saving you time, money, and plenty of stress. In this blog, I will break down what sourcing and procurement mean, highlight their roles in the supply chain, and share practical tips for Indian businesses. Whether you are sourcing cotton for a textile unit in Tiruppur or procuring electronics for a store in Delhi, this guide will help you navigate the process with confidence. Let us get started! What Is Sourcing in Procurement? Sourcing is the groundwork of your supply chain. It is about finding the right suppliers who can provide the goods or services your business needs at the right price and quality. Imagine you are a furniture maker in Jodhpur looking for high-quality teak. Sourcing involves researching suppliers, comparing their offerings, and building relationships to ensure a steady supply of wood that meets your standards. In procurement, sourcing is a strategic process. It focuses on identifying vendors, negotiating contracts, and setting up a reliable supply network. For example, a spice exporter in Kochi might source turmeric from farmers in Tamil Nadu, evaluating them based on quality, cost, and delivery reliability. The goal is to create a robust supplier base that supports your business in the long run. Key Aspects of Sourcing Supplier Research: Identifying potential vendors through market analysis and referrals. Vendor Evaluation: Assessing suppliers based on quality, pricing, and reliability. Contract Negotiation: Securing favourable terms, such as bulk discounts or flexible delivery schedules. Relationship Building: Establishing trust with suppliers for consistent collaboration. What Is Procurement in Supply Chain Management? Procurement is the bigger picture. It covers the entire process of acquiring goods or services, from spotting the need to paying the supplier. While sourcing is a part of procurement, the latter goes further, managing everything from purchase orders to delivery tracking. In India’s complex supply chain, where delays due to festivals or customs can throw a spanner in the works, procurement keeps things on track. For instance, picture a Mumbai-based retailer stocking up on festive decorations. Procurement involves not only sourcing reliable suppliers for lights and ornaments but also placing orders, ensuring timely delivery, checking quality, and settling invoices. It is about making sure your business has what it needs, when it needs it, without breaking the bank. Key Aspects of Procurement Need Assessment: Determining what goods or services are required to meet business goals. Order Placement: Issuing purchase orders and coordinating with suppliers. Delivery Management: Tracking shipments and verifying compliance with contract terms. Supplier Oversight: Monitoring vendor performance and maintaining relationships. Sourcing vs Procurement: Key Differences Sourcing and procurement work hand in hand, but they serve distinct purposes. Here is a clear comparison to help you see the difference: AspectSourcingProcurementDefinitionIdentifying and selecting suppliers for goods or services.The full process of acquiring goods or services, including sourcing.FocusFinding the right suppliers (the “who”).Managing the acquisition process (the “what” and “how”).ScopeA strategic subset of procurement, focused on supplier relationships.A broader process, covering sourcing, purchasing, and logistics.TimingOccurs before purchasing to establish supply channels.Spans activities before, during, and after purchasing.GoalsBuild cost-effective and resilient supply chains.Ensure timely delivery of quality goods at optimal costs.ActivitiesMarket research, supplier vetting, negotiation, contract signing.Sourcing, ordering, delivery tracking, payment, performance reviews. Procurement vs. Purchasing: Clearing the Confusion Another term that often confuses is purchasing. While it is part of procurement, purchasing is narrower, focusing solely on the transactional act of buying goods or services. It involves placing orders and making payments but lacks the strategic depth of procurement, such as supplier selection or long-term planning. For example, a Hyderabad startup buying office furniture from a local vendor is purchasing. However, if they are also researching suppliers, negotiating bulk deals, and ensuring timely delivery, that is procurement. Purchasing is about completing the transaction; procurement is about managing the entire process. Why These Differences Matter for Indian Businesses? In India, where supply chains can be as unpredictable as monsoon rains, understanding sourcing and procurement is crucial. Here is why: Cost Efficiency: Smart sourcing helps you find affordable suppliers, which is vital in a market where margins are tight. Procurement ensures you avoid costly mistakes like overordering or delayed deliveries. Supply Chain Stability: With challenges like infrastructure bottlenecks or regulatory complexities, sourcing builds a diverse supplier network while procurement keeps operations smooth. Local Advantage: Sourcing from nearby suppliers, such as leather vendors in Kanpur, cuts lead times and supports initiatives like “Make in India.” Procurement ensures compliance with GST and other regulations. Growth Potential: Clear sourcing and procurement processes allow businesses to scale, whether you are a small retailer in Kolkata or a growing exporter in Ahmedabad. An Example of Sourcing and Procurement Let us say you own a bakery chain in Bengaluru, and you need flour for your signature bread. Here is how sourcing and procurement come into play: Sourcing: You research wheat flour suppliers, shortlist a mill in Punjab for its quality and price, and negotiate a contract for monthly deliveries. You also check their sustainability practices to align with your brand. Procurement: You place an order for 1,000 kilograms of flour, track the shipment to your bakery, verify the flour’s quality, and process the payment. If the delivery is late, you coordinate with the supplier to resolve it. This example shows how sourcing secures the supplier, while procurement ensures the materials arrive and are used effectively. Which Comes First: Sourcing or Procurement? Sourcing usually happens first. You need to find and contract suppliers (sourcing) before you can order goods and manage deliveries (procurement). However, the two are interconnected. Procurement relies on sourcing to create a reliable supplier base, while sourcing uses procurement data, like supplier performance metrics, to refine vendor choices. Strategic Sourcing vs. Procurement Strategy A sourcing strategy is about building a strong supply chain. It involves long-term planning, such as diversifying suppliers to reduce risks or prioritising local vendors to save costs. For example, an Indian electronics manufacturer might source components from multiple vendors to avoid supply disruptions. A procurement strategy is broader, aiming to optimise the entire acquisition process. It includes sourcing but also focuses on streamlining orders, cutting lead times, and ensuring compliance. For instance, the same manufacturer might use a procurement strategy that automates purchase orders and integrates with GST portals for seamless tax filing. Practical Tips for Sourcing and Procurement in India To master sourcing and procurement, try these tips tailored for Indian businesses: Source Locally: Work with regional suppliers, such as textile mills in Surat, to reduce delivery times and support local economies. Embrace Technology: Use procurement software to automate orders, track shipments, and analyse supplier performance, saving time and reducing errors. Build Trust: Foster strong supplier relationships through clear communication and fair deals, a cornerstone of India’s business culture. Ensure Compliance: Align procurement with GST and import-export rules to avoid penalties, especially for cross-border sourcing. Review Suppliers: Regularly assess vendors based on quality, timeliness, and cost to keep your sourcing strategy sharp. Suggested - A Definitive Guide on How to Source Products for Your eCommerce Business in 2025 Facilitate Your Supply Chain with WareIQ’s Tech-Driven Solutions Navigating sourcing and procurement in India’s complex supply chain can feel like a full-time job. That is where WareIQ, a Y Combinator-backed e-commerce fulfilment platform, comes in, offering smart solutions to make your life easier. Whether you are sourcing raw materials or procuring goods for retail, WareIQ helps you manage inventory and deliveries with ease, letting you focus on growing your business. WareIQ provides: Nationwide Fulfilment Network: Store inventory in fulfilment centres across more than 12 cities, enabling fast deliveries to over 27,000 pin codes, compliant with Seller Flex and FAssured standards. AI-Driven Inventory Management: Use Inventory LogIQ to place stock strategically, avoid stockouts, and align with your procurement plans. Seamless Integration: Connect with D2C platforms (Shopify, WooCommerce) and marketplaces (Amazon, Flipkart) for centralised order and inventory management. Efficient Returns Handling: Manage returns with high-definition media evidence to minimise claim rejections, keeping procurement smooth. Regulatory Support: Get assistance with GST registration, catalogue listings, and compliance, simplifying your procurement process. By combining WareIQ’s solutions with effective sourcing and procurement, Indian businesses can optimise their supply chain, reduce costs, and deliver faster, whether in Pune, Chennai, or beyond. Summing Up Sourcing and procurement are like two sides of a coin, each essential to a thriving supply chain. Sourcing builds the foundation by finding reliable suppliers, while procurement ensures goods arrive on time and within budget. For Indian businesses, mastering these processes is key to staying competitive in a fast-moving market. By understanding the difference between sourcing and procurement, you can make informed decisions, cut costs, and build a supply chain that withstands India’s unique challenges. With partners like WareIQ, you can take efficiency to the next level, ensuring every order is fulfilled seamlessly and every customer leaves happy. So, go ahead—source smartly, procure wisely, and watch your business soar! Frequently Asked Questions on Sourcing vs Procurement What is the difference between procurement and sourcing?Sourcing involves finding and selecting suppliers, while procurement is the broader process of acquiring goods or services, including sourcing, purchasing, and delivery management.Which comes first: sourcing or procurement?Sourcing comes first, as it identifies and contracts suppliers before procurement handles ordering and delivery.What is the difference between sourcing and procurement strategy?A sourcing strategy focuses on creating a cost-effective supplier network, while a procurement strategy optimises the entire acquisition process, including purchasing and compliance.What is an example of sourcing and procurement?Sourcing is selecting a steel supplier for a construction firm in Mumbai, while procurement includes ordering the steel, tracking its delivery, and processing payment.

June 13, 2025