Procurement Organization - 5 Reasons to Not Have a Decentralised Organisation

 

There are many good reasons to have a decentralised procurement organization. They make it easier to respond to business needs and market changes faster, and they bring decision-making closer to the business. There are other reasons to not have a eprocurement system in malaysia. These are five reasons.

1. Inadequacy of business unit expertise. People who are not qualified to perform procurement tasks, especially when businesses have grown quickly from very small beginnings. They have many other things to do, so procurement can fall down on their priority list when they are busy.

2. Loss of visibility on spend. It is possible for two or more business units to purchase the same item, but the whole organisation would not be aware. This could lead to volume discounts being missed or prices being charged differently.


 

3. Multiple procedures and systems. It is possible for business units to have different procurement systems and methods of working if they are truly autonomous. Centralised procurement would be able invest in systems that individual units cannot afford and develop more efficient procedures.

4. There are not many career opportunities. e-procurement management system that oversees all business units' spend can provide more fulfilling roles than any individual units. This creates more career opportunities for existing employees and helps recruit better-qualified individuals.

5. Sub-optimal results. You can have business units decide their procurement futures and each get the best results. This could lead to a worse outcome than if they combine their requirements and go to market simultaneously.

This means that procurement is not managed by the entire organisation. This is a major reason to have a centralised purchasing organization, at least in the short-term. After these issues are resolved, you can return to a decentralised structure.

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