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Understanding Purchasing Structures and How They Can Help You

Do you have a purchasing team? Do you just make purchases on an as needed basis? Do you feel you struggle with undermanaged spend due to lack of a purchasing strategy? YOU ARE NOT ALONE! Nonprofits, small businesses, and even large corporations struggle with purchasing and optimizing spend. 

Purchasing Structures

We know you want to put as much funds as possible towards your mission, that is why focusing on how you spend your money is so important. Even if you don’t have someone dedicated to purchasing, taking a look at how and why you purchase what you do is the first step to optimization and savings. 

Follow along as we discuss different types of purchasing structures and highlight how to optimize your spend so you can spend more time focusing on giving back. 

Purchasing Structures

Decentralized Purchasing

Decentralized purchasing allows multiple departments, branches, or employees to purchase the items they need. This can be beneficial to end users because the purchaser may understand their needs more closely than a dedicated purchasing team. Plus, since they are purchasing for their direct end users, there are fewer wasted resources. On the flip side, this structure lacks consistency and can cause severely undermanaged spend that can lead to greater risk management issues.  

Centralized Purchasing

Centralized purchasing means there is a dedicated purchasing department at your organization that handles all purchase orders. This option is standardized and regulated so that you are confident you are meeting any compliance standards. Since all purchasing decisions occur within one team, you are able to track and manage spend much easier as well. Conversely, a centralized purchasing structure can lead to a backup of purchase orders due to having a lean purchasing team and, at times, a surplus of goods that may go to waste. 

Coordinated Purchasing

Overall, the most effective structure tends to be a coordinated one that is neither centralized nor decentralized. A coordinated procurement structure is more effective at leveraging best practices and suppliers across your organization. It takes the pros of decentralized and centralized purchasing structures while avoiding the cons found in each model. By utilizing a hybrid of centralized and decentralized, your organization can craft a purchasing structure that helps you succeed.  

Cooperative Purchasing Strategy

As you evaluate what structure you utilize, or wish to utilize, we invite you to explore how a cooperative purchasing organization can be woven into any structure to bring extra value to your organization. Beyond time and cost savings, cooperatives can assist you in making strong, smart buying decisions that will centralize your overall spend patterns.  

As inflation continues to soar, organizations risk having a higher amount of undermanaged spend. Monitoring the market is a full-time job within itself—allowing a cooperative to take that piece away from you gives you more time to focus on other aspects of your organization. Your cooperative is constantly monitoring the market as well as the offered agreements to ensure you are getting the best price and service levels possible.  

Acting as an extension of your team, a cooperative is there to help you tackle the roadblocks that purchasing resources brings. Choose a cooperative that can help you futureproof your organization, mitigate your risks, and manage your spend. 

Want to learn more? Get in touch with our team, dedicated to nonprofits, today!!