What is a Procurement Center?

A procurement center refers to a department or institution that assists companies in obtaining and managing supplies and materials. A procurement center is generally part of the supply chain of larger companies that provides tangible materials as part of its business or that purchases materials in order to create products or run the company.

Procurement refers to the process of obtaining needed materials. In other words, it is simply a complex way of saying "buying" or "purchasing." Companies often need to buy or procure numerous items; in fact, almost all companies need to procure or buy certain items as part of doing business. Offices, for example, may need to buy computer equipment, photo copiers, pens and paper. A company that manufactures a given product will need to purchase all of the items and parts required for the manufacturing.

A procurement center streamlines the purchase of all goods and services for the company. This can be a different department or division within the company or a separate branch of the company. Smaller companies may not even have a procurement center but may have one or more individuals in charge of buying for the company; for example, a small office is unlikely to have a procurement center, but may have an office manager responsible for purchasing needed supplies and items.

Because of the cost and size of a separate and dedicated procurement center, normally only large companies that require many goods or parts have such a center. In these companies, the center is responsible for understanding all of the different goods that must be purchased to do business.

In addition to knowing what must be purchased, the center will often need to know when to place orders. This can involve conducting inventories or keeping a computer database of supplies used so when the amount available becomes too low, a new order can be placed. In some cases, companies will simply contact the center each time a given item or series of items needs to be bought.

Other duties of a procurement center include keeping costs down. For example, the center may be responsible for negotiating with suppliers of materials or soliciting bids to attempt to find the lowest cost provider of a given supply needed for the company's manufacturing process. These cost containment activities may be almost as important, if not more important, than the center's responsibility for ordering and directing goods to the appropriate places within the company at the right times.