Compare and
contrast centralized and decentralized approaches to purchasing in
terms of the advantages and disadvantage of
each.
- Centralized Purchase has better control on whole purchase
process, whereas Decentralized Purchase lacks an effective
control
- Centralized Purchase has high intial setup cost, whereas in
Decentralized Purchase Initial cost is relatively low.
- In Centralized Purchase advantage of local market cannot be
obtained, whereas in Decentralized Purchase advantages of local
market can be enjoyed
- In Centralized Purchase efficiency is obtained due to
specialization, whereas in Decentralized Purchase efficiency cannot
be obtained
- In Centralized Purchase due to large scale order, better terms
of purchase may be available., whereas in Decentralized Purchase
less favourable terms may be available
Which approach
is used where you work? Do you think it is the most appropriate
approach?
In my organisation, Centralized Purchase approach is followed,
because-
- Most of the customers are international, so quality of raw
materials is of high importance
- Supply chain has to be efficient, so Centralized Purchase
reduces delivery time, thus reducing cycle time