Central buying definition

Central buying, or central purchasing, is the practice of locating the authority and responsibility for purchasing at one location for the larger group.

Central buying is commonly used by multi-site organizations, such as retailers, to buy centrally for the individual units. Central buying can be highly effective in controlling inventory levels and improving profitability and cash flow.

Central buying has the benefits of consolidated purchasing power, the opportunity for standardization of purchases, the justification for greater purchasing professional skills and easier management of the buying function.

Individual businesses can organize in a buying cooperative or join a buying organization that uses the group purchasing power to obtain better discounts.