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Duties of a Procurement Manager

Updated on June 5, 2012
Financials
Financials | Source
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Driving Sales.. | Source
Human Capital
Human Capital | Source

A Business & Its Divisions

Any organization that works with the motive of producing and selling goods for a profit is said to be in a business.

For any business to run successfully it requires the support of various functions or divisions.

Some of these divisions may be-

Finance & Accounting: they manage all the book keeping, keep tabs on costs and manage the Profit & Loss Account as well as carry out forecasting and budgeting for the future of the business.

Sales & Marketing: they take care of marketing the product or service the business provides to the customers. Effective marketing and reaching the right target audience for the business leads to closure on sales deals.

Human Resources: these folks manage the hiring, recruiting, compensation & benefits and career development opportunities of people working for the business.

Procurement: this team is responsible for procuring or purchasing the material and services the business requires to function smoothly.

Goods & Their Types

Goods that need to be procured can be of two types- Direct or Indirect

Direct Goods are those that are used as inputs (or ingredients) for the production or manufacturing of the main product that is being produced for sale in the market. Example: Wood used for making furniture.

Indirect Goods are those that are required to support the main production process. Example: Office Supplies or IT infrastructure (desktops, printer)

Thus, depending on the type of product being procured, the process is termed as Direct or Indirect Procurement.


The Sourcing Cycle
The Sourcing Cycle | Source

The Sourcing Cycle

Let us see what role does the Procurement Manager play in the case of Indirect Goods?

In order to procure any good, it needs to go through the rhythm of a few steps as depicted below. This is the ideal step by step process that a procurement of any good should go through. (Why it is important is a whole new article in itself!)

Step 1 - Purchase Requisition (a document or request raised by a division for a good or service to be obtained from suppliers)

Step 2 – Selecting a Supplier (A supplier is a company or business which sells or supplies goods or services)

Step 3 – Creation of a Request for Quote (RFQ) (a document prepared by the supplier stating the description of the good or services they are providing and the price for the same, as well as terms & conditions)

Step 4- Price determination (comparing quotes received from various Suppliers and choosing one supplier based on varying factors as quality of good or service, price, negotiations etc)

Step 5 – Purchase Order creation (a document that is a contract between the Supplier and the Buyer stating the terms & conditions, price, quantity of the good they are providing)

Step 6- Expediting (the steps involved in ensuring the goods are received as per the requested delivery date from the Supplier)

Step 7- Receiving of the good (the documentation entered once the good is received at the receiving dock or warehouse by the Buyer and copy provided to the Supplier as well- for proof of supplying the good)

Step 8- Invoice (a bill sent by the Supplier requesting approval and payment for the good provided to the Buyer)

Step 9- Supplier Performance Tracking and Evaluation (the process of assessing the Suppliers’ services based on various factors such as quality of goods provided, timeliness of supply and adherence to terms and conditions)


Evaluating Supplier Performance
Evaluating Supplier Performance | Source
Building & Maintaining Supplier Relations
Building & Maintaining Supplier Relations | Source

A Purchasing Manager is responsible for ensuring that the above cycle functions smoothly and in the best possible interest of the business.

This involves multiple things such as –

Firstly, forecasting the needs of the business. He is responsible for gathering necessary inputs from various departments and gauging the future requirements for the company. This is an important aspect to ensure that material and services are available in sufficient quantities in a reasonable period of time.

There will be certain good and services that are continually in demand, hence an efficient Procurement Manager will work with his Suppliers and enter into contracts that will provide the company an assured flow of these items and also at a good price. By negotiation and signing a contract with the most promising supplier, one creates a win-win situation of receiving good quality material at a great price and for the Supplier a fixed Customer for the period of the contract. In this manner the successful procurement manager is able to build and maintain relationships with his supplier base.



Managing the various procurement flows and measuring their effectiveness
Managing the various procurement flows and measuring their effectiveness | Source

He is also responsible for facilitating the overall ‘procurement process flow’. How do various divisions raise a purchase requisition? What approvals do they need? How will these approvals be obtained and documented? What thresholds, if any, in terms of quantity need to be set in place? Are requisitions raised in a manual – email or paper format or does the size and demand of the company warrant investment in a comprehensive procurement platform? These are some of the key questions that a Procurement Manager will be responsible to solve for.

Once the Procurement Process Flow is established, he needs to measure the effectiveness of this flow and set Key Performance Indicators in place for the same. He needs to monitor and track the performance of his team that are either working on the Purchase Requisitions or Purchase Orders, or expediting with the Suppliers or document/ entering the ‘good receipt’ into the system etc. An efficient system will have defined Turn Around Times between requisition to receipt of good. If too many wrong items are being received then there might be a need to validate the Purchase Orders for accuracy before they are sent to the Suppliers. There also needs to be audits and checks to see if procurement is happening as per the organizations Compliance and Purchasing policies.


Communications & Training - For the various cycles that work within the different divisions of the company, the Procurement Manager has to also ensure that everybody who is involved in these cycles or flows are adequately trained. Folks need to know how to raise a requisition, they need to be given access and training on how to fill the forms, obtain approvals etc. If there are any changes in these processes, the Procurement Manager has to ensure communication and training is provided well in advance to make sure no operations are hampered or slowed down.

The Purchasing division interacts a lot with the Accounts Payables division and helps in the smooth flow of the invoicing and payments process. One of the efficient invoice matching processes is the three way match between the invoice, purchase order and good receipt. Whenever there is a match exception in such a case, it is resolved together between Purchasing, Accounts Payable and Good Receiving. To support this process, the Procurement Manager has to ensure every buying or purchase is transacted via a set process or through the purchasing system. Accurate and complete documentation and closing of purchase transactions will help in solving any disputes that might arise in the clearing of invoices.


Working with other departments
Working with other departments | Source

Just like in an everyday buy and sell scenario, there will often times goods received that are not of good quality or to the satisfaction of the buyer. The Procurement Manager is also responsible to gather all such feedback regarding various good or services and follows through with the Suppliers on the same. He needs to discuss and formulate a strategy for handling such cases.

With all the above responsibilities, a Procurement Managers overall aim is to provide his company, the best possible goods and services, in a timely fashion and at a great price! He needs to keep a sharp eye on the various options in terms of substitute goods, the many suppliers and constantly negotiate for competitive prices for his goods. It is a very challenging and exhausting role and one that always has scope for raising the bar.

The Procurement Department has a huge impact on the overall costs of the business and has the potential to make or break their entire financials.


The many responsibilities of a Procurement Manager
The many responsibilities of a Procurement Manager | Source

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    • spartucusjones profile image

      CJ Baker 4 years ago from Parts Unknown

      Very informative hub & well researched. I didn't know a whole lot about the duties of a procurement manager until I read your hub.

    • Riverfish24 profile image
      Author

      Riverfish24 4 years ago from United States

      Thanks spartucusjones,glad you learnt something new

    • Angela Brummer profile image

      Angela Brummer 4 years ago from Lincoln, Nebraska

      This is very well written!

    • Riverfish24 profile image
      Author

      Riverfish24 4 years ago from United States

      Thank You Angela for the vote of confidence!

    • Simone Smith profile image

      Simone Haruko Smith 4 years ago from San Francisco

      I really knew nothing about the job of a procurement manager- or the processes one might go through- before reading this Hub. It's such a good introduction! Your graphics and explanations are fantastic. This is such a splendid resource!!

    • Riverfish24 profile image
      Author

      Riverfish24 4 years ago from United States

      Thanks Simone.

    • Made profile image

      Madeleine Salin 4 years ago from Finland

      Congrats on the hub of the day! This is a very well written hub and there were several things I didn't know. Voted up and useful!

    • KenWu profile image

      KenWu 4 years ago from Malaysia

      A very well written article on this subject. I once had a friend that worked in the procurement department and what he told me was very similar to what you have penned out there.

    • profile image

      ssiddhanta 4 years ago

      Well written hub. Thanks a lot!

    • techhound profile image

      techhound 4 years ago

      We need more hubs like this. Thanks for the information.

    • CloudExplorer profile image

      Mike Pugh 4 years ago from New York City

      Great hub here on being a procurement manager. I learned much of this stuff in my 10 year Naval career, from working with the supply department there as a supervisor of Calibrations & working with Aviation electronics maintenance departments facilities programs.

      I believe your information to be very accurate in every way, and this hub definitely deserved to be hub of the day. Awesome job! voted up and out.

    • foysal8990 profile image

      foysal8990 4 years ago

      nice article..........

    • meenakshibhati profile image

      meenakshibhati 4 years ago

      Well researched. I liked your knowledge level.

      Congrats for the hub of the day.

    • spartucusjones profile image

      CJ Baker 4 years ago from Parts Unknown

      Congrats on the hub of the day!

    • anusujith profile image

      Anoop Aravind A 4 years ago from Nilambur, Kerala, India

      Well done, You know I had worked as a project Coordinator... I have many friends as procurement manager... Hopefully it's a new idea for non engineers. well written hub... You made a new trend in hub writing... Congratulations...

    • ComfortB profile image

      Comfort Babatola 4 years ago from Bonaire, GA, USA

      Great information on this job regarding the SKA required to do it. Well written. Voted Up and Useful.

    • Hui (蕙) profile image

      Hui (蕙) 4 years ago

      Great hub with those detailed information and helpful illustrations. You must work or have worked in this department! Congratulations on your hub and your work!

    • Justin Muir profile image

      Justin Muir 4 years ago from New York

      Wow...excellent hub and very applicable to my profession (purchasing manager). I will definitely be following you in the future.

    • brsmom68 profile image

      Diane Ziomek 4 years ago from Alberta, Canada

      First of all, congratulations on Hub of the Day! Your Hub is well researched, and the duties of various personnel is well laid out. I hadn't heard the term "procurement manager" before I read this, and I have been on both sides of the fence in business for years. Well done! Voted up and useful, as well as pinned.

    • Rusticliving profile image

      Elizabeth Rayen 4 years ago from California

      Congratulations on "Hub of the Day." I can certainly understand why it was chosen. You have done an excellent job writing, illustrating and explaining the fundementals of a procurement manager. Anyone who is in that position or close to it should take the time to read it. Well done! Thunks up! Lisa

    • RTalloni profile image

      RTalloni 4 years ago from the short journey

      Thanks for this look at the duties of a Procurement Manager. It is interesting with helpful information. Congrats on the Hub of the Day award--well-done!

    • randomcreative profile image

      Rose Clearfield 4 years ago from Milwaukee, Wisconsin

      Congrats on getting HOTD! Interesting read and a useful resource.

    • Riverfish24 profile image
      Author

      Riverfish24 4 years ago from United States

      Thanks everyone! Appreciate the wishes and encouragement! Big surprise for me here... seriously.

    • jpcmc profile image

      JP Carlos 4 years ago from Quezon CIty, Phlippines

      Great job description. Many companies fail to clearly state what their employees are expected to do. Because of this, many fail at their jobs.

    • dreamer18 profile image

      dreamer18 4 years ago from San Diego, CA

      Something new to learn about duties of a procurement manager. Well researched and presented. Voted up.

      Also, Congratulations on Hub of the Day!

    • uzma shaheen profile image

      Uzma Shaheen Bhatti 4 years ago from Lahore,Pakistan

      very interesting and well written hub. pics atr adding value to it and making it easier to understand.thanks for sharing such valuable information.

    • Riverfish24 profile image
      Author

      Riverfish24 4 years ago from United States

      Thank you folks! Glad to know you found it an interesting read.

    • profile image

      llil reason 4 years ago

      This is a typical governmental organizational procurement management department role and duties.

    • profile image

      raj888 3 years ago

      nice and good experience by reading

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