Today’s post is the second on Center Led Procurement. In these next few paragraphs, I would like to examine the benefits of center led procurement.

Center Led Procurement: What does it mean and what does it look like?

A center-led model of procurement is where a procurement center of excellence (COE) focuses on corporate supply chain strategies and strategic commodities, best practices, and knowledge sharing while leaving individual buys and tactical execution to the individual business units provides the best of both worlds – all of the advantages of the centralized and decentralized models with minimal disadvantages.

The center led model, built on cross-functional teams that represent all of the key divisions and business units, allows for the creation of flexible supply chain processes and commodity strategies that can be tailored at the local level, when necessary, to adhere to local regulations, or take advantage of local markets or tax breaks.

Corporate spend can be fully leveraged on strategic commodity categories well suited for centralized sourcing and non-strategic categories not suited to centralized sourcing can be handled by the individual business units.

Operational efficiencies are increased and overall operational costs are decreased and the organization maintains the ability to react quickly to unexpected changes in supply or demand. Best practices can be shared easily throughout the enterprise, maverick buying significantly reduced, and performance maintained at a consistent level.

Which of the 3 procurement organization models does your organization use -or prefer?  For even more information, please visit the E-Sourcing Wiki on this topic.