Roles and functions of the PIM office

1. By G. Flanders-Hinds

2. Section 10
Objective 1(a)

3. 
Procurement involves the sourcing and obtaining
goods and services from external sources
(suppliers) to carry on the productive activities of
a business. Thus, during the procurement process
the purchaser seeks to acquire quality goods at a
reasonable price in the quantity and at the time it
is required.
What is procurement?

4. In a small organization the process of procurement is
centralized, that is, it is carried out by the proprietor or
he/she assigns a member of staff to do the purchasing.
However, in a medium-sized or large organization the
process of procurement may be both centralized or
decentralized. When procurement is decentralized in an
organization, it means that each department will handle its
own purchasing needs. If procurement is centralized, it
means that one department, the Procurement Office, will be
responsible for taking care of the purchasing needs of the
entire organization.
Centralization and decentralization of the
procurement process?

5. In a meduim-sized or large organization, the head of the
procurement office may be known as the Chief Buyer, the
Purchasing Director or the Chief Procurement Officer. This
individual is accountable to the upper-level managers and will
have a number of important purchasing decisions to make,
such as what to purchase; how much to purchase; when to
purchase; and who to purchase from. A Purchasing Clerk is
also employed to assist the head of the procurement office in
the procurement or purchasing process.
Key Persons responsible for carrying
out the procurement process

6. 
 Determining the items to purchase;
 Liaising with other departments; and
 Manage inventory.
i.
functions of the procurement and inventory
management office

7. One of the function of the purchasing office is to determine what items
to be purchased. These items will depend on the business activities the
business are engage in, for example, items are purchased by
organizations to carry on the day-to-day activities of the business, a
retail business buys stock for resale whilst a manufacturing
organization buys raw materials to make a product. Therefore, when
deciding on the goods and/or services to be purchased, the
procurement office must decide:
1. What to purchase?
2. How much to purchase?
3. When to purchase?
4. Who to purchase from?
determining items to purchased

8. Assets/Capital items – items of a permanent nature that a business
owns, e.g. motor vehicles, office furniture, office equipment and
buildings.
Consumable – expense items that are consumed or used in a
business, e.g. electricity for the factory, ink and paper for the
printer, stationery for the office, fuel, tyres and oil for the vehicles,
cleaning materials
Finished goods – goods resold to customer at a higher price in
order to make a profit, e.g. office equipment, books, furniture and
household items.
Types of items that are purchased by
business organizations

9. Raw materials – essential items are converted
into finished products for sale, e.g. cloth to make
clothing, leather to make shoes, lumber to make
furniture, or flour to bake bread and cakes
Components – parts of products for resale, e.g.
parts for motor vehicles or monitors,
motherboards, memory and keyboards for
computers.

10. All the departments of the organization depends on and must
liaise with the procurement office to purchase their supplies,
so each department keeps procurement office informed of its
requirements. Figure I depicts the relationship that exist
between the various departments.
 Operations or Factory Department – Procurement
department needs to liaise with this department to order the
necessary raw materials, supplies and equipment needed to
carry out the production process in an effective and efficient
manner.
Liaising with other departments

11.  Sales and Marketing Department – the procurement
department needs to liaise with this department in order to
provide all the supplies and equipment needed to carry on
the day to day operations of the department.
 Accounts Department – It is important for the procurement
department to establish a close relationship with the
accounts departments, as this department is responsible for
all the financial allocation in the business. It is ultimately
the accounts department that will be responsible for paying
the bills for all the purchase made by the procurement
department. They are also responsible for paying the wages
and salaries of the workers in the Procurement department.

12. 
 Despatch and Transport Department – there needs to be a close
relationship between the procurement department and the
Despatch and Transport department as it may be necessary for
the department to transport the goods purchased by the
procurement department to the business’s warehouse. The
Procurement Department will also be responsible for purchasing
equipment and supplies necessary for the operations of the
Despatch and Transport Department.
 Human Resource department – the procurement department
will need to liaise with this whenever there are vacancies within
the procurement department that need to be filled. The HR
department also deals with training and appraisal of the
Procurement Department staff as well as dealing with aspects of
general staff welfare.

13.  Despatch and
Transport
department or
office
Accounts
department or
office
Procurement
Department or
office
Operations
or Factory
department
or officeSales and
Marketing
department or
office
Human resource
department or
office
Relationships of the purchasing
office other departments
Figure I

14. Inventory is a list of goods and materials
held in stock by a business. Hence,
Inventory management is the process of
recording stocked gods and materials,
ensuring that the records are accurate,
ensuring that further stock is ordered when
necessary and supervising the cost of items
held in stock.
Managing inventory/stock

15. Setting up a good inventory management system (also referred
to stock control) gives a business an indication of market trends.
Thus, it is important that an effective stock-control system
should be set up and maintained as it helps to:
(i) ensure that stock does not run out
(ii) it indicates the reorder level
(iii) keeps production units supplied
(iv) reduce the likelihood of stock becoming obsolete
(v) identify when pilferage and spoilage occurs
(vi) maximize use of storage space
Advantages of inventory management

16. 
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Gartenstein, D. (2018). The Main Function of Inventory. Chron.com. Retrieved from
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Ramtahal, F. (2013). Office Administration, (2nd ed.) Caribbean Educational Publishers
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What Are the Functions of a Purchasing Department in an Organization? I
Chron.com. (2018). Retrieved from https://smallbusiness.chron.com/functions-
purchasing-department-organization-158.html.
References