EDITOR’S NOTE: The following is my response to Laura Barrett’s very good post about SRM and centralization versus decentralization.
To start, here is an excerpt of a post I wrote in Sept. 2007 – https://bit.ly/3SUWxml
“Process understanding starts and ends with the premise of centralized visibility and departmental empowerment.
“It is my position that a true centralization of procurement objectives requires a decentralized architecture that is based on the real-world operating attributes of all transactional stakeholders starting at the local or regional level. In other words, your organization gains control of it’s spend environment by relinquishing centralized functional control in favor of operational efficiencies on the front lines. This is the cornerstone of agent-based modeling.” (Acres of Diamonds: The Value of Effectively Managing Low-Dollar, High Transactional Volume Spend – fall 2004.)”
Here is a link to my comment on a Kate Vitasek post yesterday – https://bit.ly/3AtkADZ
The critical takeaway – stop using equation-based models and start using an agent-based model.
Excellent post, Laura Barrett!
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Procurement Insights 
rccram
August 16, 2024
All too often the centralisation vs decentralisation debate descends into navel gazing. Procurement needs to be organised in order to deliver the objectives and meet the needs of the organisation or business. So its objectives must be clearly aligned with those of the business. The most reliable procurement performance measure for many businesses may be how well the business is doing compared to its competitors.
Delivering such objectives may include market management – which can be very challenging when operating in global markets. This will require market expertise as well as procurement expertise – plus a suitably resourced and structured organisation with the authority to deliver the required results. Also, there must be clear accountability for delivering the required outcomes, i.e. there must be someone to ‘finger’ if the results are not up to scratch.
piblogger
August 16, 2024
A case of omphaloskepsis if ever there was one 😉