Purchasing departments manage the procurement of goods and services, with two models: centralized and decentralized. Procurement activity is subject to scrutiny, with the director responsible for strategic planning and policy development. Advanced planning, group purchasing, and negotiated pricing reduce costs. E-procurement is becoming popular, but the transition is slow due to the complexity of technology. Education and professional certification are often required for management positions.
A purchasing department is responsible for managing the purchasing activity for the organization. There are two types of procurement or purchasing departments: centralized and decentralized. In a centralized model, all requests for materials or goods are the focus of this department. In a decentralized model, individual departments can process their own purchases.
Regardless of the organizational model used, the 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 risk of fraud or theft. Typically, the type of business is monitored by the internal accounting and audit department.
In a procurement department, the director is responsible for strategic planning, policy development, and providing procurement advice to senior management. Most organizations have procurement managers responsible for managing the request for proposal process, tendering, and other related processes. The most junior position in a purchasing department is the buyer. A buyer is typically responsible for a specific product or type of product. He issues purchase requisitions and orders to approved suppliers, based on internal needs.
The main purpose of a purchasing department is to manage the process used for purchasing goods and services by the organization. Advanced planning, group purchasing, and negotiated pricing are all strategies used to reduce costs and increase profitability. In most organizations, implementing procurement strategies is used to reduce overhead and operational costs without compromising customer service.
To qualify for a position in a procurement department, most organizations require a minimum college degree in business, procurement, business administration, or a related field. To become a purchasing manager, manager, or director, a college degree or professional certification is often required. These positions have a greater degree of responsibility and many companies require more education.
The increased use of technology in business has led to the development and adoption of electronic procurement or eprocurement. Using the Internet, businesses can purchase products from supplier websites, place the order electronically, and receive invoices electronically. This process reduces inefficiencies, reduces costs for both the supplier and the customer and is becoming increasingly popular. In many companies, the transition to electronic purchasing is slow, due to the complexity of the technology and the complete change in business processes required. However, this area of supply is expected to grow, due to potential cost savings and increased efficiency.
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