STRUCTURES

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Definitions of SCAN and CLAN

 Strategically Controlled Action Network (SCAN)

 A procurement model where local procurement teams report primarily to a
central procurement function. This centralised approach allows for greater
strategic control and consistency in procurement decisions across the
organisation
 Centre-Led Action Network (CLAN)
 A hybrid procurement model that combines the advantages of centralised and
decentralised procurement structures. CLAN empowers local procurement
teams to make decisions and execute activities within their specific business
units, while a central procurement function provides strategic guidance, sets
standards, and coordinates activities across the organisation.
SCAN Features

Feature Description

Central procurement function has

Centralized Control significant authority over strategic decisions,
policy-making, and supplier relationships.

Local procurement teams implement

Local Execution strategies and execute tactical
procurement activities.
Centralized control ensures consistent
Standardized Processes procurement processes and procedures
across the organization.

Effective communication between the

Strong Communication central and local teams is crucial to ensure
alignment and coordination.
CLAN Features

Feature Description
Local procurement teams operate within
Decentralized Execution business units and report primarily to local
management.
A central procurement team provides
Centralized Leadership strategic direction, sets standards, and
coordinates activities.
Both central and local teams share
Shared Responsibility responsibility for procurement decisions
and outcomes.
CLAN encourages collaboration and
Collaboration and Knowledge Sharing knowledge sharing between central and
local teams.
 Comparison

Feature SCAN CLAN

Decision-making Centralized Decentralized with centralized guidance
Local teams report primarily to
Reporting Structure Local teams report primarily to local management
central function
Process Standardization High level of standardization Moderate level of standardization
Strategic, long-term planning and
Focus Tactical, operational execution and local responsiveness
control
Strong communication between
Communication Encourages collaboration and knowledge sharing
central and local teams
Less flexible due to centralized
Flexibility More flexible due to decentralized decision-making
control

Risk Management Centralized risk management Shared risk management between central and local teams

Potential for significant cost savings

Cost Savings through economies of scale and Potential for cost savings through local expertise and responsiveness
standardized processes
Hybrid Structures

 Hybrid procurement structures combine the best aspects of centralized

and decentralized procurement models to achieve a balance between
strategic control and operational flexibility. They aim to optimize
procurement processes, reduce costs, and improve supplier relationships
 Features of Hybrid

Characteristic Description

A central procurement function oversees strategic sourcing, supplier

Centralized Strategic Control
relationship management, and category management.

Local procurement teams handle day-to-day purchasing activities,

Decentralized Operational Execution such as raising purchase orders and managing supplier relationships for
specific business units or locations.

Both central and local teams share responsibility for procurement

Shared Responsibility
decisions and outcomes.

Hybrid structures often leverage technology to streamline processes,

Technology-Enabled Processes improve data visibility, and facilitate collaboration between central
and local teams.
Benefits of Hybrid

Benefit Description

Centralized control for strategic decisions and decentralized

Optimized Efficiency
execution for tactical activities lead to improved efficiency.

Centralized negotiation and standardization can reduce

Reduced Costs costs, while decentralized purchasing can leverage local
supplier relationships and market knowledge.

Centralized policies and guidelines ensure compliance with

Enhanced Compliance
regulations and corporate standards.

Decentralized decision-making empowers local teams to

Increased Innovation
identify and implement innovative solutions.

Strong relationships with suppliers can be fostered through a

Improved Supplier Relationships combination of centralized strategic partnerships and local
supplier management.
 Typical Roles in Hybrid

Role Centralized Team Decentralized Team

May participate in sourcing activities for high-
Develops sourcing strategies, conducts RFPs,
Strategic Sourcing value categories but primarily focuses on
negotiates contracts with key suppliers
tactical purchasing
Manages supplier relationships, identifies cost-
May collaborate with central category
Category Management saving opportunities, and monitors
managers on specific categories
performance
May participate in contract negotiations and
Contract Management Develops, negotiates, and manages contracts
manage smaller contracts
Builds and maintains relationships with
Supplier Relationship Management Manages relationships with local suppliers
strategic suppliers
Handles day-to-day purchasing activities, such
Primarily responsible for tactical purchasing
Tactical Purchasing as raising purchase orders and processing
activities
invoices
Ensures compliance with procurement policies Ensures compliance with procurement policies
Compliance
and procedures and procedures
Collects and analyzes procurement data to May provide data to the central team for
Reporting and Analytics
identify trends and opportunities analysis
Centralised / Devolved Definitions

 Centralised Procurement Structure

 In a centralised procurement structure, a central procurement function
has significant authority over procurement decisions, policy-making, and
supplier relationships. This centralised approach ensures consistency,
reduces duplication of effort, and leverages economies of scale.
 Devolved Procurement Structure
 In a devolved procurement structure, procurement decisions and activities
are delegated to local business units or departments. This decentralised
approach allows for greater flexibility and responsiveness to local needs.
 Characteristics

Characteristic Centralised Procurement Devolved Procurement

Decision-making Centralized procurement team Local business units or departments

Process Standardisation High level of standardisation Lower level of standardisation

High level of control from the central Lower level of control, more autonomy
Control
team for local teams
More flexible due to decentralised
Flexibility Less flexible due to centralised control
decision-making
Potential for increased efficiency through Potential for increased efficiency through
Efficiency economies of scale and standardised faster decision-making and local
processes expertise
Decentralised risk management may
Centralised risk management can lead
Risk Management lead to inconsistent risk management
to better control and mitigation of risks
practices
Potential to build strong, strategic Potential for stronger relationships with
Supplier Relationships
relationships with key suppliers local suppliers
Advantages & Disadvantages

Feature Centralized Procurement Devolved Procurement

Faster decision-making,
Consistent processes and
Increased flexibility, Better
policies, Economies of scale,
Advantages understanding of local needs,
Stronger supplier relationships,
Improved employee
Reduced risk
satisfaction

Inconsistent processes and

Slower decision-making, Less policies, Potential for
flexible, Potential for increased costs, Reduced
Disadvantages
bureaucracy, May not meet bargaining power with
specific local needs suppliers, Increased risk of
fraud or corruption
Shared Services Approach

 A shared services approach involves consolidating various support functions, such as HR,
finance, IT, and procurement, into a centralised unit. This unit then provides services to different
parts of the organisation, often charging a fee for these services
 Key benefits of a shared services approach:
• Cost Reduction: By centralizing functions, organizations can achieve economies of scale, reduce
overhead costs, and eliminate redundancies.
• Improved Efficiency: Standardised processes and centralised expertise can lead to increased
efficiency and faster service delivery.
• Enhanced Quality: Shared services can improve the quality of services by implementing best
practices and leveraging specialised skills.
• Increased Focus on Core Competencies: By outsourcing non-core functions, organisations can
focus on their core business activities.
• Improved Decision-Making: Centralised data and analytics can provide better insights for
informed decision-making.
Cross Functional Teams

 Cross-functional teams in procurement bring together individuals from

various departments to achieve specific procurement goals. This
collaborative approach enhances decision-making, improves efficiency,
and drives innovation.
 Team Examples

Cross-Functional Team Purpose Members

Identify and select suppliers, negotiate Procurement, finance, engineering, quality
Sourcing Teams
contracts, and manage supplier relationships assurance, and legal

Develop and implement category strategies,

Procurement, finance, operations, and
Category Management Teams identify cost-saving opportunities, and
engineering
manage supplier performance
Develop, negotiate, and manage contracts
Contract Management Teams Procurement, legal, finance, and operations
with suppliers
Build and maintain strong relationships with
Supplier Relationship Management Teams Procurement, sales, marketing, and operations
key suppliers
Develop and implement sustainable Procurement, sustainability, engineering, and
Sustainability Teams
procurement strategies marketing
Implement technology solutions to improve
Digital Transformation Teams Procurement, IT, finance, and operations
procurement processes
Risk Management Teams Identify, assess, and mitigate procurement risks Procurement, finance, legal, and operations
Consortium Procurement

 Consortium procurement is a collaborative approach where multiple

organisations join forces to pool their purchasing power and collectively
procure goods or services. By combining their buying power, these
organisations can achieve significant cost savings, leverage economies of
scale, and improve their negotiating position with suppliers.
Consortium Examples

Consortium Focus Benefits

Reduced costs,
Infrastructure projects, IT improved efficiency,
Public Sector Consortia
services, office supplies access to specialist
expertise
Lower drug costs,
Medical supplies,
improved patient care,
Healthcare Consortia pharmaceuticals,
reduced administrative
equipment
burden
Lower costs, improved
Textbooks, IT
access to resources,
Education Consortia equipment, school
standardised
supplies
procurement processes
Consortium Benefits

Benefit Description
Larger volume purchases can lead to significant
Increased Buying Power
discounts from suppliers.

By streamlining procurement processes and sharing

Reduced Administrative Costs
best practices, organisations can reduce costs.

Consortia can set higher standards and demand

Improved Quality and Service
better performance from suppliers.

By collaborating, organisations can access new and

Access to Innovative Solutions
innovative products and services.

Sharing risks and costs can reduce the overall risk

Risk Mitigation
exposure of participating organisations.