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
There are multiple advantages and disadvantages associated with centralized purchasing. First let’s talk about the advantages.
With centralized purchasing duplication of buying efforts in minimized. On time purchase decision is made not multiple decisions for multiple sites. People with specialized purchasing skills can make these decisions and hence there is no need to have specialized purchasers at each and every site.
The disadvantages of this approach are that different sites may require items with specific specifications which may not be met. The centralized purchasing may result in delays and timely delivery of purchases may not be possible as multiple sites may be located at distance from each other and the headquarter.