Question

Compare the centralized and decentralized procurement functions. Discuss the factors that would influence which type an organization would select for its procurement functions. Include whether the size of the organization or the type of the business matters.

Answer 1

Centralized procurement functions are characterized by decision-making at a central authority, while decentralized procurement functions involve decision-making by various departments or individuals. Factors influencing the choice between the two include the size of the organization and the type of business.

Step-by-step explanation:

Centralized procurement functions refer to a structure where the procurement decisions are made by a central authority within an organization, while decentralized procurement functions refer to a structure where the procurement decisions are made by various departments or individuals within the organization.There are several factors that would influence an organization's choice between centralized and decentralized procurement. Firstly, the size of the organization plays a role. Larger organizations may prefer centralized procurement to ensure uniformity, consistency, and cost savings through economies of scale. Smaller organizations may opt for decentralized procurement to allow departments or individuals to make decisions based on their specific needs.The type of business also matters. Some industries, such as manufacturing, require centralized procurement to ensure efficient supply chain management. Other industries, such as retail, may benefit from decentralized procurement to respond quickly to changing customer demands.