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The basic idea: Centralize the purchasing of individual materials and components to leverage buying power and scale, but do that for different components all around the globe, not just out of some central headquarters. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

Bo Andersson, the hard charging vice president of global procurement and supply chain operations at GM, says he has helped create a new hybrid type of procurement organization for the automotive giant.

“I call it “Centralized Decentralization,” he told attendees at the i2 user conference last week.

The basic idea: Centralize the purchasing of individual materials and components to leverage buying power and scale, but do that for different components all around the globe, not just out of some central headquarters.

“One day, I decided to just do it,” Andersson said. “We were buying seat belts in a number of locations around the world. We had some people in Mexico who were very good at buying seat belts, so one day I just decided I would have them buy seat belts for all of GM. That’s how I made it happen,” he added.

“I told all of our seat belt suppliers worldwide, ‘If you want to sell seat belts to GM, starting now you need to go to Mexico,’” Andersson said. 

“In the past, it always seemed to turn out that local buyers for some reason found it necessary to source from local suppliers,” Andersson said. Now, buyers and suppliers must take a global view.

The key is to locate the responsibility to where the optimal mix of internal skills and insight and supplier concentration is, Anderrson said. That ensures the right people are doing the job, and enables the company to gain the maximum clout with its massive purchasing power.

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Anderrson said, for example, that if he had a team of four people in Europe buying one component, if it made sense to move that team to Asia for supply chain reasons, he could have them over there and effective in 24 hours.

“We can leverage our global sourcing technology,” Andersson added. “They just need to be able to access a PC.  They can do the job from anywhere in the world.”

What’s your take on Anderrson’s “Centralized Decentralization” model? Can it work for many large global companies – or are regional buying centers better? What if any are the downsides? Let us know your thoughts at the Feedback button below.