- GANS Article
Organisations operating across several branches, facilities or service locations often begin with decentralised purchasing. Individual sites order the products they require, select familiar suppliers and respond quickly to local needs. This approach can work while the network remains small, but complexity increases as the organisation grows.
Different locations may purchase equivalent products under different descriptions, negotiate separate prices and maintain overlapping supplier relationships. Procurement teams then struggle to determine how much the organisation is spending, whether specifications are consistent and where purchasing volumes could be combined.
A coordinated procurement model creates one view of demand while preserving appropriate local flexibility. By standardising important products, consolidating expenditure and establishing common ordering processes, organisations can improve cost control, product consistency and supply continuity across their network.
Why multi-facility procurement becomes fragmented
Procurement fragmentation rarely results from one poor decision. It develops gradually as facilities respond independently to urgent requirements, supplier availability and local operating conditions.
Over time, the organisation may find that several sites are purchasing similar cleaning products, hospitality supplies, food products or operational consumables from different suppliers. Pack sizes, quality levels and ordering terms may vary, making direct comparisons difficult.
The first step is to create an accurate view of what each location purchases. This should include product descriptions, quantities, prices, suppliers, delivery frequency and stock levels.
Three areas generally provide the clearest opportunities:
A consolidated view of expenditure identifies duplicated products, price differences and categories being purchased outside approved arrangements.
Common specifications reduce unnecessary product variation and help every facility maintain consistent quality and operating standards.
Combining compatible requirements can reduce fragmented orders, improve supplier planning and create more efficient delivery schedules.
A 2026 indirect-procurement study reported that organisations worked with an average of 83 maintenance, repair and operations suppliers, down from 92 in the previous year. Half of respondents identified supplier consolidation as a tactic for managing cost and disruption. The study also estimated an average internal business cost of £77 to process one order, illustrating why reducing low-value transactions can matter even when product prices remain unchanged. CIPS summary of the RS 2026 Indirect Procurement Report
Furthermore, the merger provided Company with enhanced buying power through the combined volume benefits from shared suppliers. This advantage led to a reduction in the cost of goods sold (COGS), further contributing to overall cost savings.
Through our diligent efforts, we identified hundreds of millions of dollars in cumulative synergies that Company could capitalize on following the merger. The company has successfully reinvested a significant portion of these savings into strengthening its brands and fostering continued growth and success.
Build one view of products and expenditure
A multi-facility procurement programme requires reliable data. Product names and supplier references should be standardised so that equivalent items can be grouped together.
The organisation can create a central product and expenditure record containing:
- Product category and description
- Approved specification
- Supplier and manufacturer
- Price and pack size
- Quantity purchased by each location
- Order and delivery frequency
- Existing contract terms
- Lead time and availability
- Current stock coverage
This information creates a baseline against which improvements can be measured. It may reveal that the organisation is already purchasing significant combined volumes but is not receiving the commercial or operational benefits of that scale.
The exercise should not focus only on high-value purchases. Frequently repeated low-value orders can consume considerable administrative time across requisitioning, approval, receiving and invoice processing.
Standardise products without ignoring local needs
Standardisation does not mean forcing every location to use identical products regardless of its operating environment. It means defining a core range for common requirements and documenting where justified exceptions are permitted.
A hospitality group may establish common linen, towel and guest-amenity specifications while allowing a remote lodge to hold additional stock because of longer replenishment times. A healthcare or institutional network may standardise routine consumables while retaining specialised products for particular facilities.
Product standards should be developed with input from procurement, operations and the employees who use the items. Each specification should address quality, performance, packaging, maintenance and replacement availability.
Approved alternatives should also be identified. If the preferred product becomes unavailable, facilities can switch to a suitable substitute without making an untested emergency purchase.
Design a coordinated operating model
The organisation must decide which activities will be controlled centrally and which will remain with individual facilities.
Central procurement may be responsible for:
- Supplier selection and negotiation
- Product specifications
- Contract terms
- Consolidated forecasting
- Supplier-performance reviews
- Approval of alternatives
- Group-wide expenditure reporting
Individual locations may remain responsible for:
- Monitoring local stock
- Submitting requirements
- Confirming deliveries
- Reporting quality problems
- Managing urgent operational exceptions
This hybrid structure combines group-level control with site-level knowledge. Locations retain the ability to respond to genuine operational needs, while the organisation protects common standards and commercial agreements.
Clear responsibilities are essential. Facilities should know which products are approved, who may place orders and how urgent requirements should be escalated.
Coordinate ordering and delivery
Once demand is visible, the organisation can determine whether orders should be consolidated centrally or delivered directly to individual locations.
A central distribution model may support bulk purchasing and stronger stock control, but it requires warehouse capacity and additional internal handling. Direct delivery can reduce internal distribution, although smaller shipments may carry higher transport costs.
Many organisations use a combination of both. High-volume products can move through a central facility, while specialised or urgent items are delivered directly to the location that needs them.
Regular order cycles can reduce fragmented purchasing. For example, facilities may submit routine requirements by an agreed cut-off date, allowing the supplier to combine quantities and prepare a coordinated delivery schedule.
If ten facilities each place 75 routine orders per month, the network processes 9,000 orders annually. Reducing that volume by even 20% would remove 1,800 transactions from requisitioning, approval, receiving and payment workflows. This is an illustrative calculation, but it demonstrates why process efficiency should be measured alongside unit-price savings.
Balance scale with supply resilience
Supplier consolidation can simplify administration and create stronger commercial leverage, but excessive concentration introduces risk. An organisation should avoid becoming dependent on one supplier without understanding the available contingency options.
Critical categories may require:
- A secondary approved supplier
- Alternative product specifications
- Minimum safety-stock levels
- Defined emergency-delivery procedures
- Visibility of the supplier’s own sources
- Regular reviews of capacity and lead times
The objective is not necessarily to appoint the fewest possible suppliers. It is to maintain a manageable supplier network capable of supporting quality, value and continuity.
Supplier performance should be measured across all locations. On-time delivery, order accuracy, product defects, communication and invoice accuracy can reveal whether service is consistent throughout the network.
Turn consolidated demand into measurable value
The commercial benefits of coordination can extend beyond negotiated prices. Standard products may reduce training and maintenance complexity, while scheduled deliveries can lower urgent-freight requirements. Better visibility can also reduce duplicated and slow-moving inventory.
Consider an illustrative network of eight facilities, each carrying R250,000 of comparable operating stock. If coordinated forecasting and stock sharing allowed the organisation to reduce average inventory by 10% without affecting service, approximately R200,000 in working capital could be released.
The actual result would depend on usage, lead times and the criticality of the products. The example demonstrates why inventory should be evaluated at network level rather than one location at a time.
Broader transformation research from McKinsey found that procurement typically accounted for more than 20% of the total financial impact generated by the enterprise transformation programmes studied. This reflects procurement’s ability to influence pricing, demand, specifications, processes and working capital rather than purchase price alone. McKinsey procurement transformation research
Implement the change in manageable stages
A coordinated procurement programme does not need to cover every category immediately. The organisation can begin with a group of products that are purchased frequently across several locations and have relatively consistent specifications.
A practical first phase may include:
- Collecting expenditure and product data
- Selecting priority categories
- Agreeing common specifications
- Evaluating existing suppliers
- Negotiating coordinated commercial terms
- Introducing a common ordering process
- Monitoring delivery and user feedback
Early results should be measured and communicated. Demonstrating better availability, fewer emergency orders or reduced product variation can build support for expanding the programme.
Technology can assist with central catalogues, approvals and reporting, but the process and responsibilities must be clear before they are automated.
Building a more manageable procurement network
Simplifying procurement across multiple facilities is not solely a cost-reduction exercise. It creates a structure through which the organisation can manage products, suppliers and operational requirements more consistently.
GANS South Africa supports multi-location businesses and institutions with product sourcing, specification coordination and repeat-supply planning. Working from consolidated requirements, GANS can assist with developing an approved product range, coordinating suppliers and arranging deliveries according to the needs of individual locations.
The result is a more visible and manageable procurement model that supports consistent products, more efficient purchasing and dependable supply across the wider organisation.
* Published benchmarks provide general context and should not be interpreted as guaranteed savings. Actual results depend on expenditure, product categories, existing contracts, inventory and operating conditions.
