Centralized procurement separates the purchasing power from the lower level with demand in order to strengthen the supervision and control of the higher level over the lower level, which actually reflects a certain degree of patriarchal characteristics. The core of centralized procurement is centralized procurement, and the direct benefit is to reduce risks and time costs.
For some large-scale e-commerce companies, in addition to general goods purchased by themselves, other large or large quantities of goods are purchased by the headquarters. This is also centralized procurement in the general sense, that is, the e-commerce company reports the required goods to the headquarters, and then the headquarters is responsible for unified procurement, which can save decision-making time and communication costs.
The operating mechanism of a certain e-commerce company is centralized headquarters direct management, that is, the headquarters manages all major suppliers in a unified manner. In addition, the price of the product, promotional activities, etc. are also controlled by the headquarters. In the actual operation process, the headquarters brings together procurement personnel to make centralized procurement decisions. This model reduces the number of suppliers of the e-commerce company, which is conducive to reducing procurement costs.
There are four main models of centralized procurement: first, centralized pricing and separate procurement; second, centralized ordering and separate receipt and payment; third, centralized ordering, separate receipt and centralized payment; fourth, centralized procurement and then allocation. Taking the model of centralized ordering, separate receipt and centralized payment as an example, its operation process is as follows.
First, the e-commerce company submits a procurement application and submits a bill of lading, which is summarized and adjusted by the headquarters. Then, the procurement department of the headquarters is responsible for negotiating with suppliers, formulating procurement matters such as goods and prices, and is responsible for centralized ordering; finally, the headquarters distributes the goods, and the e-commerce company receives and stores the goods according to the receipt notice or purchase order.
A Beijing e-commerce company is a large group with dozens of online stores under it. In terms of procurement, although the online stores have common procurement needs, due to the existence of time differences, the procurement staff of the headquarters must count the procurement needs of each online store to calculate the total amount in the first half of each centralized procurement, and then propose procurement needs to the supplier based on the total amount.
In January 2020, the headquarters proposed a purchase demand of 8 million yuan to major suppliers, and obtained certain preferential conditions from the suppliers with this volume.
In fact, although the e-commerce company adopts centralized procurement, the online stores often fail to report the required goods in time due to various reasons.
For example, an online store should submit a purchase application list to the procurement department of the headquarters on March 15, 2020, but it was not until the 18th that it found that it needed another item of goods, but it was too late. At this time, the online store has the right to find suppliers independently, especially when the procurement demand is not large. Such an approach can easily lead to an internal price war, because the supplier also gives the bottom price based on the quotation of the headquarters and the online store. In addition, such an approach also directly led to the investment of the e-commerce company at least 1 times more than before, and the procurement cost also increased by nearly one million yuan.
In order to solve this problem, the e-commerce company will take back the procurement authority to the headquarters, and the procurement department of the headquarters will be responsible for it. Each online store only has the authority to purchase and follow up. After half a year of adjustment and operation, the e-commerce company’s procurement costs have been reduced by about 2 million yuan.
From the above case, it can be seen that centralized procurement is indeed conducive to reducing procurement costs and avoiding price wars within e-commerce companies. Moreover, the advantages of centralized procurement are also very obvious: First, the cost of individual procurement is reduced through centralized procurement; second, when centralized procurement of large quantities of goods, the most favorable prices can be obtained from suppliers, thereby reducing procurement costs; third, indirect costs are reduced, and risks and time costs are reduced.
Of course, this does not mean that centralized procurement is perfect, it also has its own limitations. Improper handling of centralized procurement will cause conflicts of interest among relevant departments. For example, some departments believe that decentralized procurement can expand their authority and is more flexible, while centralized procurement often has time differences, and it is necessary to report statistics, collate and review, and it is easy to conflict with suppliers, especially small and medium-sized suppliers cannot adapt to large orders.
Tips
Should centralized procurement be adopted? Only centralized procurement as a model, or combined with other models? These issues need to be determined by e-commerce companies based on the specific circumstances of procurement. In short, no matter what model is adopted, the core is to reduce procurement costs from the inside.