Direct comparison
Centralized vs Decentralized Purchasing Compared
Centralized vs decentralized purchasing: who decides what, how and when, the hybrid split, and how a university delegates buying authority to departments.
Written and maintained by CASRAI Editorial Board
Last updated
How do Centralized purchasing and Decentralized purchasing compare side by side?
The table below compares Centralized purchasing and Decentralized purchasing across 9 dimensions, from who holds decision-making power to when to pick each.
Side-by-side comparison
| Dimension | Centralized purchasing | Decentralized purchasing |
|---|---|---|
| Who holds decision-making power | A central purchasing body makes all the relevant decisions: what, how and when to buy. | Decision-making power is transferred to the relevant local administrations. |
| Advantages the review lists | Economies of scale and improved purchasing power, plus improved transparency and governance. | Procurement management placed closer to end-user needs. |
| Drawbacks the review lists | Transaction costs (information, negotiation, enforcement) could surpass the advantages of centralization; centralization may gradually exclude peripheral actors from participating in governance. | Collusion and corruption at local level can be a thorny issue, because decentralization can reduce public oversight and quality assurance of products in procurement and the supply chain. |
| Hybrid split: control, storage and logistics | Functions the hybrid model centralizes: control, storage and logistics (inventory control, warehousing, transportation, logistics information systems benefit from supervision and storage capacity). | Not centralized in this split: the review places these functions with the central side. |
| Hybrid split: financing and budgeting | Not centralized in this split: the review places these functions with the local side. | Functions the hybrid model decentralizes: financing and planning/budgeting, so local units keep flexibility to respond to local information. |
| Who may commit funds at one university (Indiana University) | Only authorized personnel with delegated authority may commit university funds for goods and services; faculty, staff and students do not have the authority to sign contracts. | Departments act only inside delegated authority, not on their own standing. |
| How a central office delegates (Indiana University) | The Associate Vice President of University Procurement Services has the authority to delegate procurement activity to departments for specific transactions and to review records for compliance. | The decentralized methods the policy lists include automatic purchase orders, procurement cards and pre-disbursement processing. |
| Scope of the evidence | The review covers public healthcare procurement in EU member states; it does not describe US health systems or laboratories. | The Indiana University policy (effective 03-12-2019) describes one university; it is not a general rule for other institutions. |
| When to pick each | Lean centralized where the aim is purchasing power, transparency and standardization, and accept the transaction-cost and exclusion risks the review names. | Lean decentralized where closeness to end-user needs matters most, and accept the oversight risk the review names. The review concludes a combination (hybrid) is promising for medical supplies in EU public healthcare. |
Sources
- Geropoulos N et al., "Hybrid model: a promising type of public procurement in the healthcare sector of the European Union," Frontiers in Public Health 2024
- 12:1359155 (https://pmc.ncbi.nlm.nih.gov/articles/PMC10902422/), read 2026-11-03
- Indiana University policy FIN-PURCH-01, Purchasing Authority, Office of Procurement Services (https://policies.iu.edu/policies/fin-purch-01-purchasing-authority/index.html), read 2026-11-03
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Common questions
Common questions about Centralized purchasing vs Decentralized purchasing
What is decentralized purchasing?
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A purchasing model in which decision-making power is transferred to the relevant local administrations rather than held by one central purchasing body (Geropoulos et al., Frontiers in Public Health, 2024). The review lists closeness to end-user needs as an advantage and local collusion and reduced oversight as risks.
What is hybrid purchasing?
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A model in which the central authority and the local administrations share decision-making power. The review describes decentralizing financing and planning/budgeting while centralizing functions such as control, storage and logistics, and calls the balance a highly intricate challenge. Its scope is EU public healthcare.
How do universities delegate purchasing authority?
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At Indiana University, only personnel with delegated authority may commit university funds, and the central procurement office can delegate specific transactions to departments through methods such as automatic purchase orders and procurement cards (policy FIN-PURCH-01, effective 03-12-2019). Other institutions set their own policies.
