Centralised strategy finds favour with procurement

7 April 2009

08 April 2009 | Jake Kanter

More than half of purchasers are championing centralised buying as the most effective procurement strategy, citing better spending and lower costs among the benefits, according to the latest SM100 poll.

Of buyers surveyed, 63 per cent said they favoured centralisation. The remainder argued that other purchasing strategies, including decentralisation, could be equally effective.

The poll follows the move by Homeserve, overall winner of the 2008 CIPS Supply Management Awards, to decentralise its purchasing operations. Three senior buyers are leaving the company as a result of the overhaul.

The majority of respondents said centralised purchasing was beneficial because procurement teams can reduce overhead costs, share knowledge and data, and leverage spend.

"For most organisations, centralised procurement will be the most effective way to manage strategic purchasing, ensuring it is done by adequately trained and experienced professionals, who can also apply an enterprise-wide perspective," said Nick Harries, director of sourcing and procurement at marketing and communications company Interpublic.

Nikki Hunter, a strategic relationship manager, said centralisation could help improve supplier relations and enable buyers to track market trends.

Garry Moore, procurement performance manager at BAE Systems, said failing to apply consistent and effective purchasing practices and allowing spend to become fractured could result in procurement not delivering enough value.

Centralised purchasing is becoming increasingly important in the public sector, according to Martin Blake, head of corporate procurement at London Probation.

"If we consider the need for effective budgetary control, savings and efficiencies, enhanced contract performance, the current economic climate and the growing role of procurement in addressing wider government issues, then the need for centralisation is growing," he said. Some of those less in favour of centralised buying proposed "hybrid" strategies, combining the advantages of both.

Graham Ockendon, principle consultant at Atos, explained: "The advantages of a decentralised approach - product focus, supply focus, customer relationships and being aligned to the delivery team - should not be ignored."

SMapr2009

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