The Pros and Cons of Centralized Procurement
By Anna Duin | August 6, 2019
Centralized procurement sounds ideal. One location managing most, if not all, of an organization’s purchasing decisions.
Anyone who has had to function within a decentralized procurement system knows the downsides of using such a strategy. There are more Requests for Proposals (RFPs) to issue, more suppliers to manage and more maverick spending to monitor. In other words, there is more chaos.
But, making the switch to centralized procurement isn’t always straightforward or easy. If you’re having trouble deciding if moving to centralized procurement is worth the potential hassle, check out the infographic below. The graphic explains the pros and cons of centralized procurement so you can determine if it’s right for your organization.
For a more in-depth guide to centralized procurement, read this article.
Infographic | Pros and Cons of Centralized Procurement
Which is better, centralized or decentralized procurement? Ultimately, it comes down to how much control and transparency you want. While every strategy has a downside, there are more benefits and fewer risks associated with centralized procurement.
You don’t have to choose, though. Consider leveraging a center-led structure which allows you to centralize the bulk of your purchasing process, while still maintaining autonomy around time-sensitive commodities.
The key is to know all of your options. Too many procurement professionals get stuck in a cycle of doing things the way they’ve always been done and taking the path of least resistance. It’s understandable, but it won’t help you deliver more value.