In a recent piece on the dangers of centralization in a de-centralized world we noted that not only was it time to bury anything that remained of centralized Procurement, but also classical centre-led Procurement. While centre-led Procurement worked great for about two decades, we saw it crash and burn during the COVID pandemic and any signs of recovery cease once global trade was again interrupted on a regular basis thanks to geopolitical conflicts, sanctions, seaway closings, tariffs, natural disasters, and economic instability, among other things.

As a result, the model needs to evolve for global multi-nationals looking for a way to standardize their Procurement without creating as many problems or costs as they solve or remove. The answer is centralized orchestration through a centre of excellence designed to support, but not lead, since, with the exception of any materials, components, parts, or products that can only come from a handful of suppliers in a few locations and, thus, truly need to be sourced globally, Procurement should be a mix of regional and local activities.

The need for friend-shoring, near-shoring, and home-shoring has hit an all time high, which means that Procurement has to be a lot more localized than it has been in leading multi-nationals for the past two decades. That means it needs to be done locally, with local expertise, to ensure the right suppliers and right products are selected for the local (market) needs.

But you can’t revert to decentralized Procurement because that will essentially bring back all of the original problems it came with. Some may present different, but you will have a lack of standardization where it is needed, a loss of economies of scale, duplicate effort in Procurement process and best-practice creation, multiple platforms where you should have a single platform, and so on.

Even though Procurement needs to be more localized than it has been in decades, it still needs some standardization, economies of scale, single platforms, and efforts that generate value versus duplicate, wasted, efforts. So a Center of Excellence is needed now more than ever, but we’ve repeatedly seen that a pull-based center of excellence never gets used. Procurement pros are so overworked and constantly bombarded that they don’t have time to even think about consulting a center of excellence, especially one in a totally different time zone.

That means, for it to work, there has to be a push element as well … but no one likes processes, platforms, prognostications, or prescriptions being forced upon them.

That’s why we need to step up from center-led procurement to centralized orchestration, not led, orchestration — because good orchestration understands the process, defines the workflows, and, most importantly, knows where the source and lead systems, processes, and people are. It knows when a sourcing event should be fully centralized, fully decentralized, and, more importantly, split … broken into a number of regional buys with appropriate splits, selections that could serve other regions in a pinch, and standardized processes. It knows how to coordinate, when it needs to push events, and when it needs to pull information and awards to better coordinate globally. It doesn’t lead, it orchestrates. It’s a subtle difference, but an important one.