A procurement policy is a formal document that covers the legal requirements and organizational rules, principles, and guidelines that an organization will follow across all its purchasing and sourcing activities. It is a well-documented framework that establishes ethical standards, ensures compliance, and instills consistency and transparency across the end-to-end procurement process.

The main objectives of a procurement policy are to drive process efficiency and streamline processes and workflows. It also helps control unauthorized spend and manage/mitigate a wide range of procurement risks. Best of all, it helps align procurement activities within the broader umbrella of overall business goals and procurement strategy.
An ideal procurement policy includes the scope of purchases (thresholds, type of procurement), roles and responsibilities of the team, purchasing methods, supplier management policies, contract management guidelines, and ethics and conduct.