What Are the Functions of a Purchasing Department in

an Organization?
by Alexis Writing, Demand Media
Most maor companies and e!en some go!ernment organizations ha!e a purchasing or procurement
department as part of e!eryday operations" #hese departments pro!ide a ser!ice that is the
bac$bone of many manufacturing, retail, military and other industrial organizations" Many
indi!iduals, e!en some %ho %or$ for these companies, are una%are of %hat the purchasing
department does, %hy it exists or %hat purposes it ser!es" #o understand better %hat the role of the
purchasing department is, consider some functions it performs"
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Procuring Materials
One role of the purchasing department is to procure all necessary materials needed for production or
daily operation of the company or go!ernment organization" For a manufacturing company, this
might include ra% materials such as iron, steel, aluminum or plastics, but it also might include tools,
machinery, deli!ery truc$s or e!en the o,ce supplies needed for the secretaries and sales team" -n a
retail en!ironment, the purchasing department ma$es sure there is al%ays su,cient product on the
shel!es or in the %arehouses to $eep the customers happy and $eep the store %ell+stoc$ed" With a
small business, it is especially important to $eep in!entory ordering at a reasonable le!el. in!esting
large amounts of capital in excess stoc$ could result in storage problems and in a shortage of capital
for other expenditures such as ad!ertising or research and de!elopment" Purchasing also o!ersees all
of the !endors that supply a company %ith the items it needs to operate properly"
/!aluating Price
A purchasing department also is charged %ith continuously e!aluating %hether it is recei!ing these
materials at the best possible price in order to maximize pro0tability" #his can be challenging for a
small business that may purchase in lesser 1uantities than a larger !endor and %hich thus may not
recei!e the same type of bul$ discounts" A purchasing department in a small business needs to shop
around to 0nd the best !endors at the most reasonable prices for the company2s particular size
orders" Purchasing department sta3 may communicate %ith alternate !endors, negotiate better
pricing for bul$ orders or in!estigate the possibility of procuring cheaper materials from alternati!e
sources as part of their daily acti!ities"
Related Reading: 4o% to 5et Obecti!es for an -# Department in a 6usiness Organization
Paper%or$ and Accounting
Purchasing departments handle all of the paper%or$ in!ol!ed %ith purchasing and deli!ery of
supplies and materials" Purchasing ensures timely deli!ery of materials from !endors, generates and
trac$s purchase orders and %or$s alongside the recei!ing department and the accounts payable
department to ensure that promised deli!eries %ere recei!ed in full and are being paid for on time" -n
a small business, this means %or$ing closely %ith the accounting department to ensure that there is
su,cient capital to buy the items purchased and that cash is 7o%ing smoothly and all payments are
made on time"
Policy 'ompliance
#he purchasing department also must ensure that it is complying %ith all company policies" For
example, in a small business, indi!idual sta3 members may communicate %ith the purchasing
department about purchasing needs for things such as o,ce supplies or computers" 6efore ma$ing a
purchase, the purchasing department must ensure that it heeds the proper protocols for purchase
and budget appro!al and must ensure that any items are purchased in accordance %ith the o!erall
purchasing policy of the organization"
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?eferences B*C
About the Author
Alexis Writing has many years of freelance %riting experience" 5he has %ritten for a !ariety of online
destinations, including Peternity"com" 5he holds a 6achelor of Arts in communication from the
Dni!ersity of ?ochester"