Both large and small businesss will recognize the beauty of having a centralized procurement model Effectively a small group of people are responsible for the purchases of a larger group. This allows controls and audit to be efficiently handled and allows compliance with issues like the Sarbanes-Oxley laws.

Unfortunately, there are drawbacks to this model as it can have the effect of funneling a large number of purchase transactions into a narrow pipe effectively throttling the efficiency bandwidth of the purchasing department.

How to solve problem ? One wants the efficiency of a large number of people doing a large volume of transactions but with the control of a smaller group of empowered managers monitoring them.

The solution is to devise a system of controls by way of a procurement software system. Recent public exercises have shown big paybacks in rolling out Enterprise wide procurement solutions like SAP or Oracle or even Great Plains where such a system allows users, perhaps dotted globally around the globe, to enter their purchase orders but have them approved by a smaller group of line management.

Conceptually this allows the best of everything where the users are responsible for their own orders and the management thereof but the approvers can have control of the available budgets and either approve the requests or reject them back to the originators for a redo.

This closed loop approach has proven to be beneficial to the bottom line and allow for serious cost reductions in operational expenses.