by Jurie Smith

Manage suppliers, manage success

PM Pointers

One of the areas critical to every project's success is procurement management
Manage suppliers, manage success

One of the areas critical to every project's success is procurement management, which requires supplies to be delivered in the right quantity, at the right time and in the right place.

Procurement management requires the ability to effectively manage multiple suppliers and to have an understanding of how to approach the needs of different projects while maintaining the quality of the product or service delivered.

The tardy delivery of supplies during the life of a project may impede or even halt the progress of the undertaking and it is therefore crucial that a number of activities are put in place beforehand to ensure the smooth flow of the process once the project begins.

Procurement management is a collection of related activities designed to attain provisions pertinent to the final product from competent suppliers while monitoring their performance throughout the project. This is often carried out using a procurement plan.

A procurement plan is one in which the inputs needed on the project are identified, quantified, qualified and scheduled for delivery at particular times as the project progresses. This involves determining in advance the critical products and services significant to the project in terms of quality, quantity and the period of time they will be required for. Primarily, it considers what levels of quality will be acceptable on the specific project.

Quality assurance activities go hand in hand with the receipt of materials or services to ensure defective ingredients are not used in assembling the product as well as mechanisms to tackle non-conformance.

Having done the procurement reconnaissance and prerequisites, it is essential to then determine if the suppliers have the capacity to deliver when the appointed time arrives on the undertaking. On certain projects, large quantities of materials may be required and it is vital for the sake of the project’s pace that suppliers are able to keep up with the requests.

The procurement management process involves formalising the activities involved in procurement such as ordering, receipt, monitoring and termination of the contract once full delivery has been attained.

Ordering

For all the items that are needed for use during the project, a formal purchase order should be issued based on the procurement plan. The purchase order describes the items to be purchased (service or product), payment terms, delivery dates, quantities, delivery terms and conditions.

Receipt

The supplier reciprocates, upon receiving the purchase order, by giving an estimated time of arrival of the goods so as to provide a time frame that will then be incorporated into the project’s plan and schedules. When the items are received, the procurement manager has to assess them to verify that they meet the required description on the purchase order. If there are any inconsistencies, the procurement manager raises an issue and the impact or severity of the issue is rated. The project manager then becomes involved in reaching an amicable solution with the supplier. After acceptance of the invoice, payment can then be approved.

Monitoring

Monitoring the performance of the suppliers involves establishing an official review point whenever a milestone is reached to assess if the deliverables are being attained as detailed in the contract. This makes room for the quick identification of deviations and subsequent rectifications.

Contract termination

Once the requested materials or services are delivered, the contract with the supplier comes to an end. The procurement manager has to notify the suppliers ahead of termination of the contracts and ensure any outstanding payments are finalised.

Ultimately, it makes good sense to keep an eye on everything that contributes to the success of the project, and maintaining a great relationship with suppliers will not only avoid a lot of stress but may also be useful in getting out of tight situations, procurement-wise, in the future.

Jurie Smith (MBA, PMP®, PRINCE2®and MSP® Practitioner) is the CEO at the PM Academy. He is an experienced business executive with over 24 years’ experience in project management consulting and training. He is a Project Management Assessor registered with the Services SETA, an Executive on the Steering Committee of the Project Management Standards Generating Body and has held various executive positions at Project Management South Africa (PMSA). For further details, jurie@pmacademy.co.za or visit www.pmacademy.co.za.

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