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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Procurement Department: 8 Crucial Roles in 2024

Key take-aways

  • The procurement is headed by the director of procurement and where the procurement process starts and finishes.

  • The three components of procurement are the people, process, and paperwork.

  • The procurement department’s important functions are sourcing, complying with policies, negotiation, contracting, and monitoring suppliers’ performance.

The procurement department is where it all happens. Every important procurement process starts in this very area where the procurement manager and his/her team discuss their strategies and options. As an upcoming or experienced procurement manager, your role is very important, that is why for today, we are going to discuss what the procurement department is all about.

We’ll cover the roles and the strategies that can be used. There are about 8 key roles that are very important in the procurement department, so we’ll cover those as well. After you are done reading this article, you should know those roles and possibly already have the right person in mind for these procurement roles.

    Definition of Procurement Department

    The procurement department of a company is responsible for buying and acquiring the goods the company sells. It interacts with suppliers and manufacturers to procure items and services that provide the best value for money.

    Also called the purchasing or sourcing department, the physical procurement department is where the procurement process starts and finishes.

    The procurement department is often headed by the director of procurement. They are the one who gathers the members of the procurement department.

    The procurement director is also the one who assigns the tasks needed during the procurement process, while checking to see if each process involved aligns with the strategies that the company wants for the procurement.

    Finally, it is also in the procurement department where the final stages of the process are done. When the supplies are received in good condition, the suppliers paid, and contracts are negotiated, the procurement department takes care of all the necessary work to finalize the procurement process.

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    The 8 Key ProcurementDepartment Roles

    Since we’ve nailed down what the procurement department does and what it is made of, it’s time to check what its 8 key roles are.

    Understand that each procurement role is dependent on one another. If the procurement department misses one, then it may present problems for the procurement process itself.

    So without further ado, here are the 8 key procurement department roles:

    1. Chief of Procurement

    • Leading a strong procurement team
    • Manage Annual Organizational Budgets
    • Manage Supplier Relationships
    • Develop an Organization’s purchasing policies
    • Source, Negotiate, and Review Supplier Contracts
    • Manage Supplier Relationships

    2. Director of Procurement

    • Maintaining Knowledge of the market, citing current prices and fair rates for supplies.
    • Monitoring, reviewing, and analyzing bids and quotes with potential suppliers.
    • Monitoring, reviewing, and analyzing service agreements and contracts
    • Overseeing sources for purchasing supplies
    • Maintaining company budget and streamlining costs

    3. Procurement manager

    • Identifying potential supplier sources
    • Conducting interviews with potential vendors
    • Negotiating good supplier agreements
    • Managing supplier and vendor contracts

    4. Procurement analyst

    • Meeting with vendors
    • Testing products
    • Negotiating supply contracts
    • Creating cost reports

    5. Procurement specialist

    • Supervise budget estimation and sourcing operations
    • Maintain excellent communication with all business stakeholders
    • Analyze offer and purchase bids and negotiate accordingly
    • Assist in asset management procedures when required

    6. Contract specialist

    • Manage contract development through all lifecycle stages
    • Provide ongoing assistance to staff on contract development and compliance issues.
    • Evaluate records for retention in compliance with Board-approved policies

    7. Legal counselor

    • Provide Legal Guidance
    • Conduct Legal Research
    • Draft Legal Correspondence
    • Ensure compliance with the law

    8. Business controller

    • Analyzing and controlling the development of purchase prices
    • Analyzing and controlling the impact from cost down projects and R&D projects
    • Monthly reports and KPIs regarding procurement
    • Forecasting the impact with procurement activities and development in purchase prices
    • Prepare presentations for meetings

    What is a Procurement Team?

    In project management, the term procurement refers to a group of professionals supervising the acquisition of needed goods and services as part of the project’s budget. 

    The procurement team is responsible for managing the procurement process and monitoring expenditures throughout the whole project lifecycle.

     Additionally, they are tasked to negotiate with private or government contractors regarding the price, quality, and delivery terms. They then communicate with the project management team the necessary items and requirements of the project.

    Important Functionsof the Procurement Department

    In the complex ecosystem of a modern organization, few departments hold as much influence over a company’s operational efficiency and financial health as the procurement department.

    A well-functioning procurement department is not just about purchasing but about optimizing costs, ensuring quality, and fostering strategic relationships with suppliers.

    1. Sourcing

    Sourcing is the number one most important function of a procurement department. Why? Because the procurement department is responsible for purchasing goods or services that the company needs to operate. 

    It requires the procurement department to create a strategic plan to acquire the goods or services at the best possible price. Thus, it plays a huge part in the growth of the organization. 

    Of course, this starts by looking for potential suppliers. Selecting the best and most reliable supplier can have a huge impact on controlling costs. 

    2. Compliance with business policies

    The procurement department must ensure that all its purchases are in compliance with the organization’s policies. Before purchasing, 

    It needs to look into the organization’s protocol to ensure that it complies with the budget approval. This will effectively help the organization to stay efficient with its costs. 

    3. Negotiation

    The procurement department must have great negotiation skills to acquire the best materials at the lowest price.

    This is vital to the profitability of the organization as high costs of materials can impact their revenue. If this happens, the growth of the organization will be slowed and will greatly affect its bottom line. 

    4. Contracting

    The procurement department offers the contract award to the best supplier. That is why the procurement department needs to scrutinize the supplier. 

    Furthermore, the procurement department must know and abide by all the agreements as it is vital to the success of the relationship between the organization and the supplier. 

    5. Monitors supplier’s performance

    The procurement department’s important functions are sourcing, complying with policies, negotiation, contracting, and monitoring suppliers’ performance.

    If it fails to monitor the supplier, it can be detrimental to the complete product and supply chain.

    Componentsof Procurement

    The following are the components of procurement:

    1. People

    This is the heart of procurement. They are the ones who are responsible for initiating and authorizing each step of the procurement process.  

    Without the people, nothing can be done in the procurement. There may be automation but there will be no one to maintain it without people in the procurement.

    2. Process

    The process is the key to keeping the costs down and ensuring that the supplies are available when needed. It helps improve and promote accuracy and timeliness in the procurement process. 

    3. Paperwork

    Keeping records is important to make sure that every document is accessible when needed. Records act as a database of knowledge concerning payment terms and the supplier’s performance.

    Procurement Expert’s Advice on Procurement Department

    For this article, we asked an experienced procurement expert to share his insights to help answer common questions about the procurement department.

    Elchin Musayev

    Deputy Procurement Director, State Oil Company of the Republic of Azerbaijan (SOCAR)
    LinkedIn Profile: linkedin.com/in/elchin-musayev

    1. What do most people get wrong about the procurement department?

    “One common misconception is that procurement is solely about cost reduction. In reality, it’s a strategic function that involves much more, including supplier relationships, sustainability, and aligning with the organization’s overall goals. It’s not a one-size-fits-all process and should be tailored to each organization’s unique needs.”

    2. What should people know about the procurement department if they are planning to start working on this?

    “People should know the following: Understand your organization’s goals and market trends. Be aware of procurement laws and regulations. Building good relationships with suppliers is key. Effective negotiation is crucial. Strong communication skills are vital. Be ready for changes in tech and regulations. Procurement is strategic, not just operational. Work closely with other departments. Be sensitive to global cultural differences. Consider ethical and sustainable practices.”

    3. From your experience, what is the most important thing you learned about the procurement department?

    “From my experience, I’ve learned that staying consistently updated with industry trends and regulations is paramount in procurement. Maintaining a systematic and organized approach helps navigate complex procurement processes effectively. Additionally, embracing challenges with readiness and an open mindset is crucial for growth in this field. Maintaining ethical and sincere conduct is not only a professional necessity but also a cornerstone of building trust in procurement relationships.”

    4. What tips can you give them to be effective in their procurement department?

    “1. Keep up with industry trends and regulations.
    2. Foster strong connections with suppliers.
    3. Develop effective negotiation techniques.
    4. Maintain open and clear communication.
    5. Be ready to adapt to changing tech and regulations.
    6. Approach procurement as a strategic function.
    7. Collaborate closely with other departments.
    8. Understand and respect cultural differences.
    9. Prioritize ethical and sustainable practices.”

    5. Can you give us an example of how you led your purchasing department effectively?

    “In my role as a procurement leader, I prioritize team dynamics and task delegation. We hold regular systematic team meetings and one-on-one catch-ups to ensure alignment and address individual needs. I’m focusing on the implementation of a robust follow-up and reporting system for accountability. Motivating my team to be proactive, open-minded, and share ideas is crucial. We’ve cultivated an open-door culture and a learning-by-example environment where I lead by setting an example.”

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    Here is Procurement Process Checklist to ensure that you won’t miss a thing.

    In Conclusion

    The procurement department plays a crucial role in the success of an organization. It is not just limited to purchasing; instead, it encompasses strategic planning, negotiation, compliance, and relationship management.

    The department requires a diverse skill set to perform its specified roles effectively. Monitoring supplier performance is also essential to maintain quality throughout the supply chain.

    Therefore, organizations must prioritize the development and maintenance of a well-functioning procurement department. By doing so, they can ensure that they have a robust supply chain that supports their business goals, enhances their reputation, and drives their overall success.

    Frequentlyasked questions

    What is a procurement department?

    A procurement department is a branch in any company that takes care of procurements.

    How to construct a procurement department?

    To construct a procurement department, you need a Director of Procurement, some procurement managers or directors, and procurement specialists.

    What are key roles in a procurement department?

    The key roles in a procurement department are sourcing, negotiations, competitor analysis, and supplier performance monitoring.

    Want to Grow in Your Company’s Procurement Department?

    Let’s face it; we all want to move up. Most especially if you’re working in your company’s procurement department.

    We’ll show you how! Enroll in our Negotiation Course For Procurement Professionals and we’ll give you everything that you’ll need to bring up your negotiation game!

    About the author

    My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

    Marijn Overvest Procurement Tactics