The Benefits Of Merging Both Distributed And Centralized Procurement
Both large and small organizations will understand the benefit of having a centralized procurement model. Effectively a small bunch of managers are responsible for the purchases of a wider group. This allows both audit and control to be efficiently handled and allows compliance with issues like the Sarbanes-Oxley laws.
Unfortunately, there are drawbacks to this model as it can have the effect of funneling a large number of purchase transactions into a narrow pipe effectively throttling the efficiency bandwidth of the purchasing department.
How to solve problem ? One wants the efficiency of a large number of people doing a large volume of transactions but with the control of a smaller group of empowered managers monitoring them.
The resolution is to use a system of data control by way of a procurement software system. Recent exercises have shown large paybacks in rolling out Enterprise wide professional procurement solutions like SAP or Oracle or even Great Plains where such a solution allows users, mostly in place around the world, to be able to enter their requisitions but have them approved by a smaller group of approvers.
Conceptually this allows the best of everything where the users are responsible for their own orders and the management thereof but the approvers can have control of the available budgets and either approve the requests or reject them back to the originators for a redo.
Such a closed loop approach has been proven to be of benefit to the business’s P&L bottom line and allow for significant cost cuts in operational expenses.
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