Decentralized purchasing entail division of purchasing function into sections whereby each section is mandated to control the functions within its scope. Here each department or branch is entirely responsible for its own buying.
Advantages of Decentralized purchasing
- The local buyer will have better knowledge of the needs of his/her factory and local suppliers for improved service. It is more responsive to clients i.e. the user departments.
- The buyer will be able to respond more quickly to emergency requirements.
- Local purchase will be emphasized and this attribute will save on transport costs.
- Local purchase will contribute to local prosperity of the local community etc.
- Small and easy to manage.
- Easy to instil team spirit.
- Fast in decision making
Disadvantages of Decentralized purchasing
- May lead to buying expensively for lack of economies of scale.
- Duplication of purchases may result.
- Standardization of materials and procedures may be difficult to implement.
- Specialized staff training may not be possible
- Rivals can emerge