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The difference between centralized and decentralized is that in a centralized structure, decision making
is done by the top authority. Decentralized systems, unlike the centralized ones, often delegate
authority throughout the organization. The system used usually depends on the size of the company.
Centralization is said to be a process where the concentration of decision making is in a few hands. All
the important decision and actions at the lower level, all subjects and actions at the lower level are
subject to the approval of top management. According to Allen, Centralization is the systematic and
consistent reservation of authority at central points in the organization.
Decentralization is a systematic delegation of authority at all levels of management and in all of the
organization. In a decentralization concern, authority in retained by the top management for taking
major decisions and framing policies concerning the whole concern. Rest of the authority may be
delegated to the middle level and lower level of management.


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1. Purchase request - The specifications and number quantity and delivery of equipment, devices and
materials are determined by the department that will be using the product or materials.
2. Selection of companies for estimate submission - The Purchasing Department, at its sole discretion,
selects companies from which estimates will be sought. Suppliers are selected from the files of
Companies with Previously Established Business Relationships, Companies from Which Estimates Can Be
Requested and Products and Suppliers.
3 estimate request - As a rule, when requesting an estimate from a company that it has selected
4 submission requests - Specification sheets submitted by potential suppliers at their own expense are
checked by the Purchasing Department and the department that will be using the product, in order to
determine whether the required standards are met by the product
5 negotiation- valid cost estimates and specifications have been comprehensively evaluated in respect
of price, technical requirements
6 contract conclusion - The business will be established upon conclusion of a contract, in the form of a
written document if necessary.
7 delivery and inspection - Delivery dates specified in the contract must be strictly observed. Precise
details of the delivery schedule will be agreed between the supplier and the relevant department
8 payment- Payment will be made according to the payment terms specified in the contract.

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A purchasing system manages the entire acquisition process, from requisition, to purchase order, to
product receipt, to payment. Purchasing systems are a key component of effective inventory
management in that they monitor existing stock and help companies determine what to buy, how much
to buy and when to buy it
Recognition and description of need
Procurement activities in an organisation start right since the stage a need is felt for any material or
service.
An organisation categorises it's material requirements into two broad ways , viz. Inventory Control item
or Non inventory item.
Transmission of need
A Purchase requisition is a document that is used to list down the requirement and is sent to Purchase
department for further processing. Since material requirement is a regular phenomenon for an
organization, every organization develops a formalised paper or electronic requisition which is filled up
by the user department who has assessed the need for the item.
Selection of Source to satisfy the need
Sourcing' or 'Selection of source/s' is a major challenge for any Purchasing manager. Source of supply of
required materials is basically selection of a suitable supplier. The Purchasing manager has to ensure ,
getting the material / service from the right source

Contracting with the accepted source

Following up with the source

Receiving and inspecting material


Payment and closure of the case

http://www.materialsmanagement.info/purchase/procedure/