Centralized purchasing
Centralized purchasing is the control by one headquarters department of all purchasing that is undertaken by a business. This allows for central management and volume purchases that lead to better prices and terms as well as the ability to work with larger suppliers.
This central control enables more efficient inventory control, lower staffing costs and a decrease in overheads. Staff also benefit with better training and support and the ability to build better relationships with suppliers.
While this may seem obvious, many large companies either have grown quickly and organically or have grown via mergers and acquisitions. This means that they often have several separate purchasing departments that are each responsible for purchasing a group of products.
Advantages of centralized purchasing:
- Allows for fewer overheads.
- Duplication of staff efforts
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