Saturday, September 26, 2009

Purchasing groups in large companies are becoming more centralized than de-centralized? Why?

Having centralized purchasing can cut down on the labor force needed to perform the tasks of purchasing. It provides economies of scale since all requirements for many locations can be combined for negotiations. Policies and procedures can be unified and help reduce costs. It provides a high level of visibility into the products being delivered to each of the manufacturing facilities. It helps in making components common within the Engineering Development Design process. Why reinvent the wheel again?

Though, local buyers can also be of benefit. They realize the and appreciate the local needs and preferences for certain items. They can also help out with supply base contingency plans and provide insight into the items that uniquely effect that facility from a purchasing standpoint.

I believe that a mixture of having centralized and decentralized purchasing groups can help a company realize the benefits of both. Especially since we have become so advanced with the different means of communication available to us over large distances in little time.

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