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What is a Procurement Department?

By Carol Francois
Updated May 16, 2024
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A procurement department is responsible for managing the purchasing activity for the organization. There are two types of purchasing or procurement departments: centralized and decentralized. In a centralized model, all requests for materials or goods are center to this department. In a decentralized model, individual departments can process their own purchases.

Regardless of the organizational model used, procurement activity is subject to more scrutiny and review than any other process. The use of company resources to purchase goods and services must be based on adherence to specific policies and procedures to reduce the chance of fraud or theft. Typically, the type of activity is monitored by the accounting department and internal audit.

In a procurement department, the director is responsible for strategic planning, policy development, and providing procurement advice to senior management. Most organizations have procurement officers responsible for managing the request for proposal process, bid tendering, and other related processes. The most junior position in a procurement department is buyer. A buyer is typically responsible for a specific commodity or product type. He or she issues purchase requisitions and orders to approved suppliers, based on internal needs.

The main purpose of a procurement department is to manage the process used for the purchase of goods and services by the organization. Advanced planning, group buying, and negotiated pricing are all strategies used to reduce costs and increase profitability. In most organizations, the implementation of procurement strategies is used to reduce overhead and operational costs without compromising on service to customers.

In order to qualify for a position in a procurement department, most organizations require a minimum college diploma in business, procurement, business administration, or a related field. In order to become a purchasing officer, manager, or director, a university degree or professional certification is often necessary. These positions have a greater degree of responsibility, and so many firms require more education.

The increased used of technology in business has resulted in the development and adoption of electronic procurement, or eprocurement. Using the Internet, companies can purchase products from suppliers' websites, submit the order electronically, and receive the invoices electronically. This process reduces inefficiencies, decreases costs for both the supplier and the customer, and is becoming increasingly popular. In many firms, the transition to electronic procurement is slow, due to the complexity of the technology and the complete change in business process required. However, this area of procurement is expected to grow, due to the potential cost savings and increased efficiency.

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Discussion Comments
By anon256476 — On Mar 22, 2012

I am a new entrant and I have graduated with a degree in business administration. I don't have a diploma in procurement, but I want to know if it's important to have a specialization or masters.

For a good job it seems a bachelors would be fine to climb the ladder in any company lately. I have intentions of doing an MBA from the London school of business and finance. Will it add on to the responsibility and requirement of the better jobs in a good company or career advancement?

By Bertie68 — On Jun 21, 2011

I imagine that in any company, it's really important to have very definite policies and procedures to avoid fraud and waste when purchasing. This is probably especially important when each department in the company buys their own materials and service.

I think the most interesting job to me in this area would be "buyer." I would like to be the one to find the best choice in a certain category and take care of the actual purchasing.

The trend for companies to buy online seems to be the less costly and more efficient way of procuring what is needed.

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