SIG University Certified Sourcing Professional (CSP) program graduate Nancy Wieskus shares the "Better Method" for procurement teams to implement into their procurement system.
The hybrid procurement method combines a central procurement base with subject matter experts (SMEs) already in each department to balance stakeholders' functionalities and strategic sourcing, which gives the business the best of both worlds.
Centralized purchasing or Procurement is a system in which one department manages the purchasing of goods and services for the entire organization. The purchasing department is usually located in the organization's headquarters, where it operates the purchasing for all the branches in the firm. Advantages of central purchasing include reducing redundant work, lowering costs associated with training and supporting additional staff, and better controls. Disadvantages may be that the category manager may not be a subject matter expert in the particular category. It may take longer to complete a contract as Procurement takes a strategic approach. Also, stakeholders may be resentful in introducing other vendors into the mix.
Decentralized Procurement, on the other hand, allows individual stakeholders to make purchases for their departments. This, too, can have its advantages. Decentralization brings the decision-making process closer to the scene of action. This leads to quicker decision-making at the lower level since decisions do not have to be referred up through the hierarchy. Disadvantages are lower cost savings, competitive edge, reduced workload, and strategic advantage.
Nancy Wieskus, Lead Category Manager, Valley. Bank