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What is Centralized Purchasing or Centralized Procurement?

Centralized purchasing or centralized procurement is a system where a single team or a department handles all the purchasing or procurement for the organization. In this purchasing model, decision-making is centralized and therefore most of the work is automated and integrated within a procurement platform , leading to end-to-end visibility and zero duplication of efforts.

Business priorities often define the choice to opt for a centralized procurement model, especially when it comes to maintaining optimum inventory levels as well as supplier visibility. Centralized procurement means increased purchasing volume, which can potentially drive down costs.

The centralized procurement model is, however, not without its pitfalls. For companies spread across geographies, this model might not deliver optimum results. In such scenarios, a hybrid approach works better. Incorporating both centralized and decentralized procurement  models enable companies to strike a balance and derive the benefits of both and retain authority and control at all levels of the procurement process. Read more to explore GEP’s procurement outsourcing services.

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