Purchasing organization refers to an organizational unit that is created to negotiate purchase conditions with sellers, procure materials and services and is liable for such transactions. The types of purchasing organizations include the following. First, the enterprise-wide purchasing organization involves one purchasing organization procuring materials and services for the whole organization and plants within the enterprise (Kurbel, 2012). It is the most centralized model. The centralized system allows all the purchasing team to report to the purchasing executive thus accommodating the purchasing requirements for the whole organization. Similarly, this type of purchasing organization is referred to as cross-company (CC) code model, and the purchasing entails all plants across all cross-company code.
Second, company-specific purchasing organization involves the use of one purchasing organization to procure materials and services for one company code in the organization (Kurbel, 2012). With this form of purchasing organization, only the plant that belongs to the company code can use its services. Lastly, with plant-specific, one purchasing organization is given the task to procure materials and services for one plant in the organization (Kurbel, 2012). This form of purchasing organization is the most decentralized and is appropriate under the condition that each plant in the enterprise is assigned to its own purchasing organization. Moreover, the purchasing organization cannot purchase for other plants.
Kurbel, K. (2012). Enterprise Resource Planning and Supply Chain Management: Functions, Business Processes and Software for Manufacturing Companies. Berlin: Springer Berlin.
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