Purchasing Department: Roles,

Duties, and Responsibilities

Purchasing Department: Roles, Duties,

and Responsibilities
Purchase departments help keep organizations financially healthy. They procure
goods and services designed to meet operational needs while providing the
highest possible value. They established procurement policies and procedures to
ensure their organization operates with integrity and the marketplace. Purchasing
departments keep operations moving smoothly because they monitor Supply
chains and take care of tedious tasks like negotiating contracts with vendors, so
the department has can focus on other things.

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The role of the purchasing department plays within a company depends on the
size of the organization. Outsourcing and technological advances have affected
the job outlook for the purchasing profession negatively, which is a trend we can
expect to continue.

The Role of the Purchasing Department

Also known as a procurement department or a purchase department, the
purchasing department support company operations as the primary buyer of
goods and services in private sector companies, government agencies,
educational institutions, or any other type of organization.

The procurement department serves its internal customers by procuring the

goods and services they need in a timely manner while also maintaining the
company’s financial health. They seek and purchase products and services at the
best possible price and value.

As such, the purchasing department must understand the complexities of the

operation it supports as well as the markets that provide the goods or services
required to meet its objectives. The duties and responsibilities of a purchasing
officer far extend beyond procuring office furniture and supplies. Today’s
procurement staff must also understand complex Network technology equipment,
international travel needs, acquisition of workspaces, and more.

Purchasing Department Staff

At the top of the purchasing department, there is a purchasing manager who
supervises the department staff and works closely with the organization executive
do plan and oversee the budget. The purchasing manager has to maintain close
communications with department heads to better understand their needs and the

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role their purchases play in the company. For instance, a purchasing manager for
an online retailer needs to have a working knowledge of the way network servers
play the company’s operational workflow.

Purchasing officers, purchasing agents, and buyers all work under the supervision
of the purchasing manager. Their duties and responsibilities may vary depending
on an organization’s size and priorities. A purchasing agent for a pharmaceutical
company may focus on purchasing the chemicals used in manufacturing specific
drugs. A purchasing agent for a mortgage broker may handle for curing goods
and services that range from necessary office supplies to vehicle rentals.

Procurement Policy and Procedure

Generally speaking, a procurement Department establishes the company’s
purchasing policies and procedures. The rules that they set in place define
spending limits and provide a list of authorized vendors from which the staff must
purchase items such as necessary office supplies or catering services.

For instance, the IT department may have the freedom to purchase external hard
drives that cost under $200 from any vendor. Still, if they need a high-capacity
hard drive that costs more than $200, they must submit a formal requisition, and
a purchase order number needs to be obtained from the purchasing department
before they can buy the goods. The purchase order process established between a
purchasing department and a vendor usually applies to specific products and
services sold at a previously negotiated price.

Purchasing agents are the people who work to negotiate contracts. For example,
if an organization requires employees who travel on business to work with certain
airlines, hotels, and car rental companies, that’s because a purchasing agent has
worked to establish a contract with those companies. Policies may also apply
when looking for services such as carpet cleaning, temporary staff through an

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employment agency, catering, and more.

Local or state purchase departments often established rules around purchases

from local and out-of-town vendors. For example, local governments may require
their departments to buy office supplies from a vendor that operates within the
city limits. Purchasing departments in private-sector organizations or government
made to find a preference for purchasing goods and services from minority-owned
and women-owned businesses.

Generally, local, state and federal purchasing departments work under strict
guidelines determined by law. When it comes to government agencies, individual
departments generally must purchase the majority of their goods and services
through a procurement department process to prevent conflicts of interest such
as buying from suppliers that are owned by elected officials or their family
members.

“Having a company purchasing department benefits the organization in

multiple ways. By monitoring internal and external Supply markets, purchasing
agents prevent a shortage in vital materials, over purchasing, and waste. They
also ensure quality goods and services at the best possible value to keep cash
flow and profit positive.”

Purchasing Department Duties

Competitive Duties
Many times, state, local, or federal laws require government agencies to make
certain purchases with a competitive bidding process. Some private companies
use the same practice and require their purchasing department to solicit and
evaluate bids before selecting the best business to supply whatever is needed.

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For example, a county government purchasing department may seek bids from
automobile dealers to replace their police cars. And growing tech company may
send a request for proposals (RFPs) to furniture companies to furnish a new
department, and a distribution company may ask for bids from local contractors
for the construction of a new warehouse complex.

In the competitive bidding process, the procurement department opens the

purchasing process to any eligible vendors and generally selects the bid based on
the lowest cost. However, at times, an organization will restrict the bidding pool
in a non-competitive bidding process. A television station may open and non-
competitive building process purchase new cameras and include only vendors
who sell only a particular brand of equipment.

Purchasing departments handle both competitive and non-competitive bidding

processes. They have to collect information from company stakeholders regarding
the types of goods and services required then contact vendors who could be
interested in bidding and purchase advertisements to announce the bidding
process. When it comes to a non-competitive bidding process, the procurement
department may also have the task of choosing the qualified vendors.

Non-competitive Duties
Purchasing departments often buy certain types of goods and services directly
from the vendor. This type of sole-source or non-competitive purchasing requires
purchasing agents to carefully research and evaluate vendors and products before
making their purchase. Buyers have to assess the quality of goods or services,
prices, and the vendor’s ability to deliver those goods or services on time.

In the case of large organizations, purchasing agents generally have to conduct

extensive research on a vendor by evaluating references or financial reports to
determine its ability to perform in a long-term contract. In these situations,

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finding the right supplier may involve visiting the vendors manufacturing plants
are distribution centers to understand their fulfillment capabilities and their
products. Purchasing staff may attend trade shows to stay current with the new
products and vendors or go to industry conferences to learn more about the goods
and services that are critical to supporting their operation.

Sometimes, the purchasing department has to negotiate a contract for service to

a single or multiple locations. For instance, the procurement department for a
nationwide bank may negotiate a deal with a national beverage vendor to deliver
soft drinks every week to all of its office locations across the country. These
contracts generally include location-specific quantities and delivery times.

The job’s not over after the contract is negotiated. After deals are in place, the
purchasing department monitors the vendor’s performance to ensure they are
complying with the established terms and conditions. It’s also possible that
purchasing agents will handle the return of any defective Goods in the processing
of refund or replacement request. In some organizations, purchasing staff may
manage critical operating inventories or year-end inventory reporting of property,
including office furniture, company vehicles, and computer hardware.

PurchaseControl helps to
streamline the procurement
process.

Find Out How

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