Procurement's 'hybrid'

A few times we've reviewed whether an organization should have a decentralized or centralized purchasing structure. I immediately comment that it's not just a question between the two. Consider that the variations in between truly centralized and truly decentralized could be considered a hybrid.

To clarify - these are definitions of each as per a 2004 CAPS Research study by Fraser Johnson and Michiel Leenders:

Centralized Structure—All main purchasing is controlled at one central location for the entire firm.

Hybrid Structure—Purchasing is shared between the corporate office and the business units, operating plants, and/or divisions.

Decentralized Structure—All main purchasing is controlled at the business units, plants, and/or divisions.

That being said, research doesn't necessarily show whether people 'choose' a hybrid solution or if it is just a stage in a process of business transformation. A hybrid structure is less of a change than moving directly from centralized to decentralized and vice versa. According to Johnson/Leenders, the organizations in the hybrid structure in their 1995 study had since moved to either centralized or decentralized structures.

When considering a change, the study found that:

• Major changes in supply organization structure are driven by factors external to the supply organization itself, such as organizational structure as a whole changes; political pressures; competitive pressures; global issues; technology and continuous improvement which required adjustments on the supply chain structure to cope with the external pressures.
• Changes were not necessarily due to unsatisfactory performance of the function.
• Changes were due to attempts to improve cost structure “cost was cited as a universal driver for major corporate structural change.” (Leenders, pg 10)

There are obviously pros and cons to each variation, and THAT to me is the deciding factor as to what works for an individual organization. I don't see a one-size fits all solution.

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Johnson, P. Fraser and Leenders, Michiel R., Supply’s Organizational Roles and Responsibilities, The Centre for Advanced Purchasing Studies, 2004.
http://www.capsresearch.org/Publications/pdfs-protected/johnson2004.pdf