Supply Chain Management in projects is different. This is not obvious and not always identified by procurement specialists who stem from other industries such as manufacturing or operations. The main issues are the uniqueness of the purchases due to the specifics of the project deliverables, Client unique specifications/requirements and the driving delivery time factor relating to actual project progress. In our new White Paper 2017-14 ‘How Different Supply Chain Management is in Project-Driven Organizations’ we detail the reasons for these differences and what particular activities need to be emphasized in projects.
Procurement departments in other industries such as manufacturing or facility operations are generally heavily weighted towards pre-award activities. Their central concern is developing category strategy, supplier networks and get the best deals. The items and services procured are generally repetitive and commoditized, which allows for clear codification, strong benchmarks and continuous improvement initiatives, as well as initiatives to benefit from series effect, volume savings and discounts. Post-award is often not too much a concern, because some storage buffers often exist at the point of utilization. In some extreme cases such as lean manufacturing, the supplier takes the responsibility of adequate logistics, based on repetitive cycles, and the establishment of close-by production facilities justified by the volumes.
On the contrary in Projects, because the items or services bought are unique, pre-award activities cannot be so well optimized. On the other hand, availability at the right moment on site to allow the project to proceed is extremely critical. This is compounded by the fact that many industrial projects happen in remote or difficult to reach places, or involve inter-continental transportation of large equipment. Therefore, post-award management should be the focus of Project Supply Chain.
Supply Chain Management in projects encompasses some specific aspects that need to be considered. There is much more focus on post-award management that in most other industries and this needs to be fully understood by the Supply Chain Managers. Also, it requires more and stronger interfaces with other project disciplines and working as team is essential. Read our our new White Paper 2017-14 ‘How Different Supply Chain Management is in Project-Driven Organizations’ for more details!
This is a first Paper in a series of 5 papers on Supply Chain Management on Projects. Don’t forget to register to get those delivered directly on your email!
If you can’t access the link to the white paper, copy and paste the following link in your browser: http://www.projectvaluedelivery.com/_library/2017-14_How_SCM_different_in_projects_v0.pdf
