A very informative piece, Jimmy! Your comments appropriately strike a good balance between the, sometimes conflicting, factors impacting the centralization vs. decentralization question.
I agree entirely that it is no longer a clear-cut choice, especially considering the myriad of pertinent issues and impacts, many of which you’ve touched on. And, indeed, there really is no single “best-fit structure”—it absolutely depends on the business and organizational context, as you infer.
I’d add that the consideration of companies’ objectives needs to extend beyond purely financial aspects.
The structure of any function in the enterprise is important. But perhaps more critical for most Procurement functions today is the organizational position the function occupies. Repositioning Procurement appropriately in the enterprise is as crucial for success as the functional structure.
But the concept of repositioning Procurement that I refer to goes beyond reporting lines in organizational structures. It extends to Procurement’s positioning in the perceptions of stakeholders and its embedment in enterprise-wide activities and relevant processes, such that effective purchasing becomes an integral aspect of the organizational DNA.
These two issues—Procurement’s position in the enterprise and its centralized or decentralized structure—are some of the key factors affecting the function’s success and profile in many organizations. I explore both issues in detail in my new book, Procurement Mojo®.
Both issues often elicit strong emotional views from us practitioners. Quite understandable, considering the challenges many Procurement folks face daily due the function’s less-than-ideal profile in many organizations.
But many of these challenges can be overcome when we can shift our mindsets; for example, to imbibe customer-centricity and focus more on building the “Procurement brand”, and becoming a valued business-partner function, as you mention.
This mindset shift is one of the critical requirements we need in the trade to expand the list of Procurement functions that achieve long-term sustainable success.
