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Purchasing and Supply Functions

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Why is centralizing the purchasing and supply function important? Discuss fully.

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The key advantage of a centralized purchasing/supply office is that this allows a firm to combine all volumes from across the enterprise into a single quantity. This makes the firm to be much more important to the supplier, which will gain for the firm many advantages. It is usually difficult to know who owns whom in the corporate world. So, if a single firm owns 5 companies A, B, C, D, and E and all 5 purchase from the same supplier and each represents 10% of the supplier's total production capacity none of them would be very important to the supplier. But of the firm combines all 5 into one centralized purchasing effort, suddenly the firm represents 50% of the ...

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The key advantage of a centralized purchasing/supply office is that this allows a firm to .......

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