Disadvantages of Centralized Purchasing There are several arguments against centralization. Most of the resistance is from companies where there are decentralized profit centers. The three main arguments are given below:
1. engineering involvement in procurement decision making. At the early stages of product development, engineering needs to be deeply involved design, which can be different with remotely located centralized purchasing
2. To coordinate purchased parts with production schedules. This is especially applicable when small amounts are ordered frequently. The supplying firm must be within close geographical proximity or guarantee deliveries. It may not be cost-effective to have centralized purchasing operations
3. Some JIT situations political High need to buy from local community. Sometimes it makes good sense for firms to make put in the community where the plant is located Because of the profit-leveraging effect, profit center manager feel the need to control purchasing if they are to be held accountable Advantages of Decentralized Purchasing Decentralized purchasing provides for a more streamlined procedure since the department manager's purchasing needs and thus decisions can be made immediately.