Procurement is the Lifeblood of your Project

For any major project, it’s likely that every single dollar spent on that project will have gone through the procurement department. Think about it … the entire project essentially lives in a big stack of purchase orders – contracts that define the supply and services, terms and conditions, and other instructions for vendors.  There’s a lot riding on the successful execution and timing of those contracts.

Without a smooth and efficient procurement team – and the right tools – to manage the timely delivery of the volumes of materials and services required; a project could be doomed. Effectively strangled by the overwhelming amount of data and logistics faced by big-project procurement.   Many organizations try to manage the logistics risks by inserting dependencies, milestones and critical-path items into the schedule. But schedules are largely theoretical. If you don’t have visibility and deep reach into how your vendors are performing, you won’t have the key information to modify that schedule (and project budget) to reflect newly forecasted delivery dates that result from delays in supply or service.

The information that goes into, and comes out of, procurement is vital to project success. The rest of the project team needs to have continuous detailed reporting on the status of all vendor deliverables. The whole team needs to be in sync with what’s happening beyond their walls and beyond the jobsite. Delays and failures most often occur long before the scheduled delivery date. Delays in fabrication, shipping, customs, or pending labor issues are just a few examples of the types of upstream challenges that can lead to major setbacks in productivity.

Just being at the jobsite isn’t going to give you information like that. The procurement team is the group who has (or, should have) their hand on the pulse of all those upstream milestones. They also have the history of vendor communications, vendor confirmations and delivery forecasts that should be transparent to the rest of the project team.

The buyers carry the weight of preparing contracts like purchase orders and requests for proposal/quote and are one of the main cornerstones of successful projects. Once the contract has been issued however, the torch is passed to the expeditors who manage the successful and timely delivery of supply and services. It’s the expeditor who has the pulse on the project critical path. The Critical Path according to the Expeditor is a continuous monitoring and, well, “expediting”, of key dates and milestones (scheduled, forecasted and actual) achieved by vendors.

Additionally, Vendor performance management and review isn’t something that should happen only at the end of a project. It needs to occur throughout the project lifecycle and procurement lifecycle. You don’t want to repeat the same mistakes within the same project.

All of this is just chat, of course, unless it results in meaningful execution. “Ya, we need better reporting and tools for procurement”, doesn’t do much if it’s just words. What it boils down to is me reaching out to everyone to recognize where to reduce project risk: improve transparency by providing the best tools and processes for your procurement teams.

Always happy to hear your thoughts!

Mike