Many companies find it difficult to determine whether a centralised or decentralised purchasing system will suit their business best. Deciding on how your procurement system will run depends on the size of the company and how complex the purchases of the organisation are.
Centralised procurement is a system in which all departments of a company of a wide geographical distribution can make purchases through a common or ‘central’ purchasing team. This means that the purchase and provision of all goods and services within the company are managed by a single procurement department, typically run by a Procurement Manager.
What are the Key Benefits of Centralised Procurement?
Reduce overhead expenses
Reduce purchasing costs and save money
Build team cohesion and better intercompany relationships
Uniformity in purchasing policies and agreements
The most advantageous feature of the centralised procurement system is the ability to source the best deals on a national basis, resulting in high volume bulk discounts, and avoiding duplication of orders for multiple departments. This system also promotes lower inventory management costs and allows for an in-depth analysis on expenditure for each department, as all purchases are made through the one team.
Therefore, businesses looking for a long-term management solution to their purchasing woes should consider centralised procurement system.
If you are considering making this change, please contact Source Buy Sell to help make the transition from decentralised to a centralised procurement system. We are a procurement outsourcing company, who specialise in procurement management and would love to get to know your business’ unique requirements to help reduce your overhead expenses, build team cohesion, and make your company thrive.