Name: Saga khaled Mohamed Ibrahim

Dr: Engy yehia

Section one

Centralization purchasing
Introduction
Central purchasing is a department within a business or organization that
is responsible for making all necessary procurement. Central purchasing works
with other departments and agencies to consolidate orders for products to make use
of economies of scale for receiving cheaper prices.

Centralization refers to the process in which activities involving planning and

decision-making within an organization. In a centralized organization, the
decision-making powers are retained in the head office, and all other offices
receive commands from the main office.

Using a central purchasing department is part of an organizational strategy aimed

at efficiency. While consolidating may allow the organization to order goods in
larger quantities and reduce costs, it may also slow down the procurement process
and prevent employees from getting the materials they need on time. Centralized
planning may result in more bureaucratic red tape that can stymie innovation by
preventing emerging departments from obtaining the materials that they need.

Central purchasing may work better for larger organizations that are less spread out
geographically. It may not make sense for smaller companies to engage in a central
purchasing strategy given the costs associated with enhanced technology and
additional staff.
Definition
Business Dictionary defines centralized procurement as a purchasing system in
which all the departments of a company with a wide geographical distribution can
make purchases through a common purchasing organization.

In simple words, centralized procurement is a purchase of all required goods and

services by a single department for all the branches of the entire company.
Generally, a purchasing manager heads the department.

Centralized procurement is beneficial in finding the best deals with local vendors
for the corresponding location of the company department. It not only aids in
avoiding duplicity of orders, but also promotes advantages arising from the high
volume bulk discounts, lower transportation and inventory management costs.
Centralized purchasing is an indispensable solution for those who feel difficulties
in managing long-running transitions and mending fences.

Literature review
Centralization and decentralization are techniques that deeply have an effect on
the political, social and monetary issue of a country. In a centralized nation, the
electricity is inside the fingers of the imperative authorities, however this does not
always translate in an authoritarian or despotic regime. Many western democracies
use a centralized machine with the intention to restrict duplications and avoid
losing cash in vain bureaucratic tactics. A centralized nation has many advantages
(i.E. Performance, rapidity, and many others.) but, at the identical time, has
numerous hazards. The centralization of electricity is frequently visible as a
discount of public participation, and the centralized government is regularly
blamed for political and economic screw ups. But pupils and practitioners have not
been capable of decide whether or not one is higher than the other. The method of
centralization can be initiated for diverse reasons: a few governments trust that a
higher diploma of control over the country’s political and financial system can
bring about monetary boom, order and prosperity. Not all centralized international
locations are the equal, and now not all decentralized nations are alike. The
centralized device is better healthy for small international locations, whereas the
decentralized model is ideal within the case of large and really numerous
international locations like China or America.
Pros and Cons
Pros

1. It employs standardization of work.

Implementing this process has often resulted in equality of a person’s behavior,
guaranteeing standardized progression and solid judgment.

2. It ensures unbiased work allocation.

Centralization ensures assigning a particular amount of work will be fair and just
between different units and responsible individual employees, which will help
increase progress within the company.

3. It promotes flexibility.
During emergencies or crises, standardization of tasks will make it easier to revise
activities altogether. This means that there will be a greater degree of flexibility in
the organization, unlike one without centralized training.

4. It does not allow replication of work.

A centralized organization will leave no scope for replication of actions or tasks,
which eliminates additional costs on excessive labor from redundant work.

5. It offers an area of specialization.

Having a leader who handles a particular area expertly will have an immediate
advantage. For example, it will make the work distribution process much easier
within other levels of a group.
Cons

1. It encourages dictatorship.
With centralization, employees will often be expected to work based on what has
been dictated to him, and none of them are given the authority to make decisions
on a particular issue, even if their leaders are not around.

2. It brings out the negatives in an administrative system.

This organizational structure would give way to inequity, as strict conformity to
official norms or excessive regulations will be instigated, hindering decisions and
delaying work.

3. It is seen as inflexible.
While proponents say that centralization is flexible, opponents think otherwise.
They say that requiring staff members to seek approval from their leaders before
making a decision would foster rigidity. This is especially true in small
establishments, such as restaurant chains.

4. It limits communication.
Small businesses implementing centralization has limited quality of
communication through their organization. With tight control, employees would
not be inclined to use emails to communicate with their leaders, as they would not
be comfortable with the chain of command, where ideas are shared only with the
managers.

5. It limits creativity.
Centralization would not work for organizations that require a high degree of
creativity from their people. As you can see, this structure does not allow
employees to work within a more democratic structure, which means that they
cannot share ideas to improve processes.

Benefits
• A clear chain of command
An incorporated association profits by an unmistakable hierarchy of
leadership in light of the fact that each individual inside the association
realizes who to answer to. Junior workers likewise realize who to approach
at whatever point they have worries about the association. Then again, senior
 officials pursue a reasonable arrangement of appointing expert to
representatives who exceed expectations in explicit capacities. The officials
likewise gain the certainty that when they delegate obligations to mid-level
supervisors and different workers, there will be no cover. A reasonable level
of leadership is useful when the association needs to execute choices rapidly
and in a brought together way.

• Centered vision
At the point when an association pursues a brought together administration
structure, it can concentrate on the satisfaction of its vision easily. There are
clear lines of correspondence and the senior official can convey the
association’s vision to workers and guide them towards the accomplishment
of the vision. Without an incorporated administration, there will be
irregularities in transferring the message to workers in light of the fact that
there are no reasonable lines of power. Coordinating the association’s vision
from the best takes into consideration a smooth execution of its dreams and
procedures. The association’s partners, for example, clients, providers, and
networks likewise get a uniform message.

• Decreased expenses
A brought together association holds fast to standard strategies and
techniques that control the association, which help decrease office and
authoritative expenses. The fundamental chiefs are housed at the
organization’s head office or home office, and accordingly, there is no
requirement for conveying more offices and gear to different branches.
Likewise, the association does not have to cause additional expenses to
enlist experts for its branches since basic choices are made at the head office
and after that imparted to the branches. The reasonable levels of leadership
lessen duplication of obligations that may result in extra expenses to the
association.

• Fast execution of choices

In a brought together association, choices are made by a little gathering of
individuals and afterward conveyed to the lower-level chiefs. The
association of just a couple of individuals settles on the basic leadership
process increasingly effective since they can talk about the subtleties of
every choice in one gathering. The choices are then conveyed to the lower
dimensions of the association for execution. Be that as it may, if bring down
 dimension supervisors are engaged with the basic leadership process, the
procedure will take longer and clashes will emerge. It will make the usage
procedure protracted and confounded in light of the fact that a few chiefs
may item to the choices if their info is overlooked.

Implementation
1. Determine business needs.
2. Assess market conditions.
3. Set clear objectives.
4. Define Policies.
5. Implement software.
6. Outline a strategy.
7. Develop a digital strategy.

References

1. https://precoro.com/blog/what-is-centralized-purchasing/
2. https://planergy.com/blog/centralized-vs-decentralized-purchasing/
3. https://una.com/resources/article/is-centralized-procurement-right-for-you/
4. https://smallbusiness.chron.com/importance-centralized-purchasing-80496.html
5. Report on Centralized Purchasing, Board of Education, 1916 (Classic
Reprint) Paperback – February 24, 2018 by Citizens Research Council of
Michigan (Author)
6. Co-operative Centralized Purchasing In The City Of New York: Results Of A
Year's Practical Test Of Central Purchasing In The Mayor's
Departments Paperback – September 23, 2011 by Henry Bruère (Author)