Some years ago the large corporation I was working for decided to combine its smallest company with another slightly larger company located in the same area and in some cases sharing the same facilities. The combined company struggled for a year amidst fighting over departmental controls and especially over the attempt to combine their computer systems including purchasing into a single integrated system. Finally the attempt to combine the two companies was given up. A much wiser approach would have been to keep the manufacturing integrity of both companies which were doing well and folding their service functions such as Human Resources and Purchasing under the corporations Human Resources and Purchasing Departments which were located in the same area. The corporation made a mistake in not identifying which company was to be dominant. When it came to deciding how items in the new purchasing database were to be named there was natural disagreement. The same item in different purchasing systems can be named differently. When two or more purchasing systems are combined into a new database only one name can be used to identify an item. This sounds like a small problem is its what killed the restructuring in the above example.

The process for consolidating purchasing databases should be done according to the following steps:
1. Invest in the most up to date purchasing application available for handling the state’s volume and make sure that the database uses the Structured Query Language (SQL). For more on this see Reader Question 5. “Efficiency and Automated Systems“.
2. Load the largest of the state’s old purchasing databases first into the new Purchasing database.
3. Load the second largest of the state’s purchasing databases next. Items from the second database that do not match those in the first database are printed out and must be reconciled. Any items from the second database which is the same as those in the first as a matter of choice must be renamed to match that found in the first database, which is now the new database. The renamed items are returned to the organization, which loaded the second database so they will know what to ask for when making future purchases on the new database.
4. The process is repeated until all of the state’s purchasing databases have been loaded.

Centralized purchasing by state government has enough volume purchasing to force suppliers to negotiate. Walmart has done this successfully. If you go to Bentonville Arkansas you will see that manufactures have opened offices there because they are in town negotiating all the time. Walmart uses a pull system where they have enough volume clout to pressure manufacturers into providing what Walmart customers want at the price they want to pay. The old push system meant that the manufacturer controlled the market and dictated the price to the buyer. Under the pull concept a single statewide centralized purchasing department with facilities for negotiating with suppliers should make all state purchases less expensive. Not only does the state benefit but county and city governments could also combine with the state in negotiating volume purchases thus benefiting the entire state. There is absolutely no reason why this cannot be done. Don’t settle for less go all the way to centralized purchasing to get the most benefit.