Decentralized Procurement Structure Examples

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Decentralized Procurement Structure Examples

We were not able to find comprehensive data on large companies that have decentralized purchasing models given the internal nature of this information. Based on the limited data found, the Royal Caribbean Cruises and the University of Virginia firms appear to have decentralized procurement models.

FINDINGS

No solid data wsa found that fully describe the decentralized purchasing models and the organization reporting lines of large companies with more than $5 billion in revenue. The following section indicates the two large companies found that provide some partial glimpse on what the decentralized purchasing model looks like.

The Royal Caribbean Cruises Ltd.

  • The Royal Caribbean Cruises Ltd. aims to meet the company's needs by buying from vendors that reflect the same dedication to quality, safety, innovation, sustainability, and customer satisfaction.
  • The cruise line firm's "Supply Chain Management division" is focused on ensuring a steady flow of needed goods and services for the shops and onshore sites.
  • Organization-wise, the company's core purchasing groups include the following: "environmental services, facilities, food and beverage, hotel, logistics and warehousing, maritime new building, technical and projects, print, technology and marketing, and travel services."
  • Since the model above indicates that purchasing is part of the Supply Chain division, we have inferred that Mr. Paul B.L. is leading the purchasing teams in the organization as the Supply Chain Vice President.
  • Meanwhile, other business divisions of the company also communicate with professional service vendors to supply their service requirements. These divisions' engagement with these service suppliers is independent of the Supply Chain organization's purchasing process.
  • The company has a revenue of $9.4 billion.

The University of Virginia

  • The University of Virginia has released a "goods and services procurement guide."
  • The guide shows that purchasing can be done by individual departments as long as there is no supplier-originated contracts to be signed.
  • The various departments are generally allowed to buy goods and services if the transaction amount is less than $10,000. Payments to the suppliers can then be done through the travel and expense card, a department-authorized purchase order, or a payment voucher.
  • However, if there is a need to formally sign supplier contracts, the "Procurement and Supplier Diversity Services" group will be the one to handle the purchase.
  • Some purchase transactions that typically require contracts include academic testing services, advertisements agreement, air charter services, and others.
  • John Gerding is the Assistant Director for Procurement at the University who is leading the procurement team.
  • The University of Virginia has a revenue of $4.01 billion.

RESEARCH STRATEGY

We started our research by looking for directly available reports on large companies with over $5 billion in revenue that have a decentralized procurement model. We looked for this information in procurement-related sites such as the Institute for Supply Management, Acta Logistica, Fast Retailing, IQPC, SCM Doho, Next Level Purchasing, and other similar sites; business-oriented sites such as Forbes, Bloomberg, FT, Financial Brand, and other relevant sources. Based on this search approach, we were not able to find comprehensive reports that list large companies with decentralized procurement models. What we found were two companies that provided only a limited glimpse of the type of decentralized purchasing model that they have. One company that we found has a revenue that is slightly short of the required $5 billion in revenue. Furthermore, we did not find solid data on the organizational reporting structure for these large companies' procurement systems. We also found outdated information on conglomerates that have employed the model before and general articles about the decentralized procurement structure.

We then searched through consulting sites such as EY, Deloitte, PWC, and others to determine whether these firms released case studies about suppliers who are selling to large companies. We hoped to find the type of arrangements that these suppliers have in order to derive relevant insights that we can draw some conclusions on. However, our search for case studies from consulting firms did not yield related insights that might be helpful for our research.

We also looked if there are statements from the executives of some of the Fortune 1000 companies. We hoped to find relevant insights that reflect their strategies for their organizations. However, the statements that we found were more general ones. We were not able to find any helpful information from the executive interviews that we found that will help in triangulating the answer.
We then inferred that the reason why this information on companies with decentralized purchasing models and their organizational reporting structures was not available could be due to the private and internal nature of this information.

Given the limited amount of information that we got from our research, we then presented the two companies that provide some partial glimpse on what look like to be decentralized purchasing models, even if one company's revenue is slightly less than $5 billion. We also inferred the high-level reporting structure based on the available data.

Sources
Sources