Multi-facility companies must decide whether to purchase goods centrally or let each site purchase on its own. Discuss advantages and disadvantages of centralized purchasing.
Advantages and disadvantages of centralized purchasing
When companies go big and have multiple facilities, they have to make decision related to their purchase of goods. Either they have to make a purchase through centralized processes or each site makes their own purchase. Both processes have their pros and cons. If the purchase is done centralized, there would be an opportunity to make a single department or team sitting under one roof and make purchase decisions. This would make the decision making process simple and quick. But what if different sites have different needs and requirements? Would the centralized setup be still efficient? I don’t think so. In my opinion, decentralized, site based purchase decisions would be efficient in such a scenario.