Certification in Supplier Diversity Practice Exam

What characterizes a centralized organizational structure model?

1. Authority is delegated to individual managers

2. Supply management decisions are made centrally

3. There is no specific location for supply management staff

4. Supply management is purely functional without oversight

The correct answer is: Supply management decisions are made centrally

A centralized organizational structure model is characterized by having supply management decisions made centrally. This means that a central authority or governing body, such as a head office or executive team, makes key decisions regarding procurement, supplier selection, and other critical supply chain components. In a centralized model, policies and processes are uniform across the organization, allowing for consistency in decision-making and potentially enhanced negotiation leverage with suppliers due to consolidated purchasing power. Centralization can lead to efficiency by reducing redundancy and ensuring that strategies align with the overall organizational goals and objectives. In contrast, the other options involve a more decentralized approach, where individual managers might have the authority to make decisions on their own (which could lead to inconsistencies), where supply management staff might be spread out rather than located in a central place (which could complicate communication), or where there might be a lack of oversight resulting in disjointed operations. Centralized decision-making addresses these potential weaknesses by maintaining control and cohesiveness across the supply management function.