Devolved procurement refers to a model where purchasing authority and operations are decentralized within an organization.
In a devolved operating model, procurement decentralizes its operations and vests authority in other departments and stakeholders of the business. This means that different teams have the freedom to conduct purchasing independently of a central procurement team. Instead of a single, central department managing all buying activities, various units or departments are empowered to make their own procurement decisions and execute purchases directly.
This approach shifts the responsibility and decision-making power closer to the teams that understand their specific needs best.
Key Characteristics of Devolved Procurement
Based on the definition provided, the core characteristics of a devolved procurement model include:
- Decentralization: Procurement functions and responsibilities are spread across different parts of the business, rather than being concentrated in a single central department.
- Empowerment of Departments: Authority for procurement decisions and actions is given to various business units, teams, or stakeholders outside of the traditional procurement department.
- Independent Purchasing: Departments have the freedom to conduct purchasing independently without requiring approval or execution by a central procurement team for every transaction or category.
How it Works in Practice
Imagine a large company with various departments like Marketing, IT, and Operations. In a devolved procurement model:
- The Marketing team might have the authority to select and purchase advertising services or promotional materials directly from approved vendors.
- The IT department could procure specific software licenses or hardware independently based on their technical requirements.
- Operations teams might handle the procurement of specific raw materials or MRO (Maintenance, Repair, and Operations) supplies needed for their day-to-day tasks.
While a central procurement team might still exist in some form (perhaps for strategic sourcing, policy setting, or managing complex contracts), the day-to-day transactional procurement is handled by the departments themselves.
Why Organizations Adopt Devolved Procurement
Organizations might choose a devolved model for various reasons, often related to improving speed, responsiveness, and alignment with specific departmental needs. By giving teams the ability to buy what they need directly, the process can be faster and more tailored to unique requirements, fostering greater ownership and accountability within those departments.
