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What is the difference between centralized purchasing and decentralized purchasing?

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posted Jun 13 by Deepak Jangid

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Centralization
If top manager make the organization’s decisions with little or no input from subordinates, then the organization is Centralized
The degree to which decision making is concentrated at a single point in the organization.

Decentralization
When the managers and supervisors at the middle and lower levels are given considerable autonomy in decision-making, the organization is considered to be decentralized”
“It assumes that those most involved with the particular product, service, or consumers know what to do and can do it more quickly if given the authority to commit resources.”

Buying Decision
“Purchasing is a window to the outside world.”
In any industry purchase means buying of equipment, materials, tools, parts etc. required for industry.

The major task of the purchasing decision related with:
---Getting the right quantity of material,
---At the required or right quality,
---At the right time,
---At the right place,
---From the right source, and
---At the right cost.

Centralization Vs. Decentralization on Buying Decision

The issue of centralization versus decentralization of purchase function is basically concerned with decision about the purchasing policies defining the purchasing authorities and the resultant responsibilities.
When an organization has several facilities, management must decide whether to buy locally or centrally.

Centralized Buying

Centralized purchasing is a method of procurement of all types of materials, supplies, equipment etc. through a single department (not necessarily centrally located) under the direct control and superintendence of one responsible person.
He is directly accountable to the top management for all duties falling within the broad area of purchase function.

Decentralized Buying

Localized /Decentralized Purchasing means that divisions or smaller areas of an organization have their own purchasing dept

answer Jun 13 by Ati Kumar
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