Decentralisation in procurement is a fast-growing trend helping reduce employee frustration, improving the speed and agility of dispersed teams, and still enabling employers to maintain strategic control of what people can buy and how much they spend (assuming they use a strategic procurement partner).
Employees respond very positively to having the day-to-day centralised procurement blockers removed whilst understanding there are rules to operate within, and accountability for the decisions they make. Even better, as you’ll see, is when you have an amazing online platform that enables you to control, monitor and manage what people buy remotely.
How refreshing! In fact, if your team need refreshments, wouldn’t it be great if they could order more tea bags at the click of a button, from a trusted source at a price you’ve already agreed?
What Is Decentralised Procurement?
Decentralised procurement is a strategic move away from a centralised purchasing decision model, where a single procurement team oversees all buying activities, to a model where individual departments or business units have the autonomy to manage their procurement needs.
This decentralised approach has been highlighted in a recent report from leading consultancy KPMG , suggesting that 35% of procurement leaders are actively considering or working towards decentralisation, as it offers a more responsive, agile framework for purchasing and supply chain management.
Strategic Decentralisation Partners
A long time ago, in an organisation near you, leaders focussed on ‘centralising’ procurement for reasons we’ll come onto in more detail later. With modern technology, like our amazing Online Platform with over 1million products, employers can have the benefits of centralised procurement (buying power, monitoring spend, streamlined suppliers), without the delays, mistakes and employee turnover associated with it.
That’s right, it is now possible to have your cake and eat it. By choosing a strategic procurement partner like Office Depot you can select what employees can buy according to their role. You can negotiate prices up front; you can monitor all spend as it is happening, you can have a single supplier providing you with pretty much anything you’ll ever need in the workspace. From workwear, stationary, coffee, to desks and tablets, you name it, with over 1 million products on our shelves, we’ll have what you need.
Decentralisation for Employee Satisfaction
Your teams are the lifeblood of your business. You trust them to deliver on your promises to the people and clients you serve. The days of employees tearing their hair out with red tape trying to get the job done are being consigned to the scrap heap.
Utilising your staff costs wisely involves enabling them to work swiftly and efficiently. Doesn’t this mean returning to the old days of costs being out of control? No, not if you choose a strategic partner like Office Depot to support you.
Improve Employee Satisfaction with our Online Platform
What Happened to Centralised Procurement?
Centralisation of procurement was a trend driven by the potential cost savings, buying power, supplier streamlining and employee restrictions that could be imposed compared to buying individually from a large range of suppliers doing much the same thing. This was particularly the case for ‘tail spend’ items, where 80% of your suppliers provided only 10-20% of your total spend.
Organisations believed it would be much easier if you had single or dual sourced suppliers instead of 100+ potential suppliers for low value items. The increased spend with these suppliers gave you leverage to drive down their prices, giving healthy savings which improved profitability and cashflow.
Whilst many of the advantages of centralisation in large organisations have been delivered, many issues have arisen as a side effect.
Disadvantages of Centralised Procurement
Disadvantages are wide ranging, from a lack of understanding towards employees, buying the wrong products, choosing suppliers on price rather than fit for purpose, causing extensive delays, to requiring 3 quotes for a bag of sugar, or whole planning committees telling you which staples you should be getting.
Centralisation and the feeling powerlessness that came with it for employees at all levels became a reason for people to leave rather than a strategy to improve profitability.
Worse, there have been implications to health and safety from employers being too slow or completely unable to provide adequate equipment and workwear in both offices and physical working environments. Large organisations simply ended up getting slower at buying everything, and without the materials and tools to do a job, productivity has fallen.
Imagine, teams of people costing tens of thousands per day waiting for staples, printers, paper, chairs, and so on, it simply doesn’t make sense, especially when your people are your largest cost!
Why Is Decentralisation Growing in Popularity?
Decentralisation is about allowing people to get the job done quicker, easier, and on time. Here are a few reasons decentralisation is becoming increasingly popular:
- Enhanced Responsiveness: Decentralisation allows departments to make swift, informed decisions, leveraging their close understanding of clients’ needs to act faster.
- Employee Engagement: Giving responsibility to individual units boosts ownership, accountability, and motivation among team members, contributing to a positive workplace culture.
- Staff Turnover: Frustrated and disengaged employees struggling to get their job done simply end up leaving in the end.
- Scalability and Flexibility: As organisations grow, decentralised procurement offers a scalable and flexible approach that can adapt to diverse needs and local market requirements.
- Improved Risk Management: Decentralisation places decision-making closer to the operational level, enhancing the ability to manage and mitigate risks effectively.
- Innovation and Continuous Improvement: Encouraging departments to explore alternative solutions, fostering a spirit of innovation and leading to competitive advantages.
In essence, the rising popularity of decentralised procurement lies in its potential to make organisations more agile, responsive, and innovative, aligning closely with the fast-paced, diverse needs of the modern marketplace.
Striking the Right Balance
Shifting to a decentralised procurement model involves aligning your procurement strategy with the specific needs of your business. Going back to the days of having too many suppliers providing low value items in large scale would merely bring back high costs and ‘maverick’ spending.
Today’s procurement challenges are about maintaining the advantages of centralisation with the agility of decentralisation. This is only possible due to the investment of strategic procurement partners like Office Depot in the volume of products available, the platforms through which to purchase, and the competitive pricing on offer that can’t be beaten.
Technology Enabling Procurement
Thanks to modern technology, employers can have a procurement strategy that allows teams and staff the autonomy required to get the job done.
The advantages of systems like Office Depots Online Platform are in enabling organisations to get the best price available for over 1 million products with a single source partner. Employees in dispersed and remote locations can order the items they’ve been given access to (by role) at the click of a button, receive it promptly thanks to an amazing logistics network, whilst you can monitor how much is being spent on what, and updating as necessary.
Online Procurement Platforms like Office Depot enables seamless communication, data sharing, and centralised control mechanisms.
The Benefits and Challenges of Decentralised Procurement
Advantages of Decentralisation
- Enhanced Flexibility and Efficiency: Decentralisation allows for quicker decision-making and responsiveness to market changes, potentially leading to cost savings and improved supplier relationships.
- Increased Empowerment and Accountability: Giving departments control over their procurement decisions boosts morale and improves overall performance.
Addressing the Challenges
Decentralisation brings benefits such as increased flexibility and responsiveness to local needs but also poses notable risks, such as maverick spending and inconsistent quality standards.
Maverick spending, where people make unauthorised purchases outside established contracts or policies can lead to higher costs and compromise negotiated supplier relationships and volume discounts.
To curb maverick spending, strategic planning needs to involve a procurement partner, who can work with your clear procurement guidelines, define roles, set precise spending limits and provide a framework for unit-level decision-making. All of this maximises your agility while minimising risks.
Advanced procurement technologies like Office Deport support this approach by offering automated approvals, real-time budget tracking and comprehensive reporting systems. These technologies ensure all purchasing activities are visible to central management, facilitating compliance with corporate policies and the early detection of policy deviations.
Additionally, our Online Platform helps standardise procurement processes across your organisation, maintaining quality and operational standards.
With an effective strategic partner, with the right technological tools, organisations can mitigate the risks associated with decentralisation.
A Partner in Your Procurement Strategy: Office Depot
As a trusted single-source supplier, Office Depot is well-positioned to support businesses navigating the shift to decentralised procurement.
We offer an extensive selection of over 1 million products and a sophisticated online ordering platform, enabling businesses to achieve efficiency and control regardless of their procurement model.
Your Journey Towards Decentralised Procurement
Decentralising procurement represents a strategic adaptation to a faster-paced, more segmented market environment.
With Office Depot’s support, businesses can confidently embrace this model, backed by tools and insights that safeguard against potential risks while maximising the inherent benefits.
We’re here to help you navigate this journey, offering not just products but partnership and advice to ensure your procurement strategy is robust, responsive, and aligned with your organisational objectives.
Contact Office Depot today to find out more and get instant help with your query.
Stay informed, stay agile, and let’s redefine procurement for a new era together.
