Purchasing Centrally But Approving Using A Distributed Model
Both large and small businesss will recognize the beauty of having a centralized procurement model Effectively a small group of people are responsible for the purchases of a larger group. This allows controls and audit 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.
So how to get around that issue ? We want the efficiencies of a large group of people performing a large number of transactions but with the oversight of a smaller group monitoring them.
The solution is to devise a system of controls by way of a procurement software system. Recent public exercises have shown big paybacks in rolling out Enterprise wide procurement solutions like SAP or Oracle or even Great Plains where such a system allows users, perhaps dotted globally around the globe, to enter their purchase orders but have them approved by a smaller group of line management.
This allows the best of both worlds where the users are responsible for their own orders and the expediting thereof but the line managers can have oversight of the available budgets and either approve the requests or deny them back to the requestors for correction.
This closed loop approach has proven to be beneficial to the bottom line and allow for serious cost reductions in operational expenses.
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