My organization has a centralized supply chain organization with some hybrid functionality in it.
The supply chain organization is primarily centralized when it comes to purchasing supplies.
This would include general office supplies to specialized tools, materials, and vendors. The
supply chain organization will work with vendors and write contracts with them that will be used
by the entire organization allowing for more buying power and the ability to normalize pricing no
matter the market fluctuations. The centralized structure allows for advantages such as buying
specialization, purchasing standard supplies for the company, and controlling the cost of supply.
The disadvantage the centralized structure has it that it does not allow for specific business unit
focus of the tools or material needed and does not recognize the unique needs of those
business units. Therefore, we also use the hybrid model. In this scenario, the centralized supply
chain organization will work with individual business units to establish policies, procedures,
controls, and systems for purchasing supplies. The hybrid model has several advantages, one of
which is the speed of response for individual business units. It also gives the business units the
autonomy to purchase the supplies they need for their organization. The disadvantage is that the
purchasing power diminishes, and our company loses buying power with the vendor suppliers.
This intern limits the functional advancement of opportunities with the suppliers.
For my organization, I would stay in the current hybrid structure with an emphasis on centralized
purchasing. This model allows for the autonomy of the individual business units to order the
required supplies. However, we continue to follow the standard purchasing policy set by the
centralized supply chain management team and use standard control systems that track the
finances for the company.
Frank Mestas
