Here at Fairmarkit, we’re always talking about procurement – but what do procurement teams do? Strictly speaking, it is the sourcing of products and related services, the negotiation and strategic selection of those products, and delivering those goods and services to the internal department within the company that plans to implement and distribute what has been purchased. Pretty wordy, huh?
Given the complexity of the department, people often confuse it with purchasing, though they are separate teams with different sets of responsibilities. To put it simply, procurement is often the big umbrella that purchasing lives under, when a company needs a new product it will be procured and then purchased. Purchasing deals with the process in which goods and services are ordered and then paid for, which is more of a financial function.
In world class companies, procurement is viewed as a strategic function working to improve the organization’s profitability and productivity. The best leaders and managers not only ensure their organizations are getting the best deals and prices for their purchased products and services. They also guarantee they are using the best-in-breed tools, to enable their entire company to perform better.
The function can vary greatly across industries, often in government or other public sector organizations, procurement is incredibly mindful of its fiscal responsibility and accountability to taxpayers and the use of their funds. These departments in public sector organizations are under intense scrutiny, and must follow very rigid rules and processes. To get a better idea of this, check out Alaska’s procurement department’s responsibilities.
So bottom line, regardless of industry, what do procurement teams really do?! They are a strategic function. They source, negotiate and delivers goods. They empower their company to function more efficiently and effectively.