Decentralized Procurement

Decentralized procurement is a type of procurement in which decentralized decision-making authority is granted to individual business units within an organization. This allows business units to contracts with suppliers directly, without going through a central procurement department.

There are several advantages to decentralizing procurement. First, it can help reduce the overall cost of procurement by allowing business units to choose the supplier that offers the best value, rather than the lowest price. Second, decentralization can lead to faster decision-making and greater agility in the face of changing market conditions. Finally, decentralized procurement can help build better relationships with suppliers, as each business unit is able to develop its own specific partnerships.

There are also some disadvantages to decentralizing procurement. One is that it can lead to duplication of effort and waste if different business units purchase the same goods or services from different suppliers. Another downside is that it can be difficult to maintain quality control when there is no centralized oversight. Finally, decentralized procurement can make it more difficult to take advantage of economies of scale.