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How to implement centralized purchasing?

Purchasing processes are said to be centralized when all purchasing-related decisions and their execution falls under one central team’s – the procurement team’s – responsibility. So, the first step of centralizing purchasing and procurement is to build a procurement team or department if you do not have one already.

Your central procurement team will assess suppliers and consolidate a list of preferred ones. As the procurement personnel receives a Purchase Requisition, they will raise RFQs and RFPs, negotiate with the vendors, raise Purchase Orders, and manage the resulting contracts. They will also be responsible for spend analysis and recording procurement-related KPIs. Do note that such a process may not be feasible for all businesses. However, it eliminates maverick spending and facilitates compliance checking.

Centralizing can be facilitated immensely if the organization digitalizes its procurement process through procurement automation software. It also brings AP on board as well, so three-way matching and invoicing are also performed on the central procurement platform. This results in a streamlined P2P cycle with accurate records and clear visibility.