The procurement management plan is a strategic element for any project manager. The project aims to produce such a result that serves a specific purpose.
A procurement management plan may be designed to cover part of the life cycle and/or the specialized plan. Reference: “Procurement Management Plan Example (in project management practices)”, https://stc-montreal.org/procurement-management-plan-in-project-management-practices/
The procurement management plan must include:
- Dependencies (all external factors: interrelations with other projects and/or programs, legislation, market research, etc.)
- Lessons (details from previous projects)
- Scope (what is included and what is not)
- Schedule (generates various types of reports)
- Financial resources (factors influencing the course of the project are taken into account: change control, risk response, management reserves)
- Control (details of how the plan will be monitored and controlled, with tolerance for delivery components)
- Additional documentation (the plan does not exist in isolation, has points of contact with other documents; it contains references to documents with information relevant to his, such as the Risk Register, Specifications, etc.).
Many software systems offer the information needed to make decisions about stock availability, cost optimization, collaboration with suppliers.
In my practice, I have used a system that automatically informs about an upcoming meeting with a supplier, stores the history of contacts with him, notifies him about the current status of the project and documents, etc.
Through order data, the system generates the set of needs (of the organization), as presented in the Calendar of Purchases. Delivery planning can also be done by storing data on potential purchases (based on data from previous periods).
For each delivery order, the delivery date, as well as the delivery payment date, must be indicated. The Statement tracks the execution of the orders made to a given supplier plus the orders for a given element/detail (for example).
Each order movement is entered into the system in a specific document; thus, at any time, information can be obtained about the execution of orders, as well as about the relationship with a particular supplier.
The physical receipt of the delivery is fixed, for example, by a Revenue Order for goods (or Receipt of goods).
The use of a good software program related to the project deliveries “prevents” the daily, sometimes fruitless telephone calls and emails aimed at tracking the goods/supplier/deadline, etc.
In the best case, the provider can use the same program/application, so the actions are synchronized and the actual cooperation is based on a clear basis.
We should try to minimize daily / weekly deliveries. Although we do not have to think about storing and preserving the product, for example, a lot of resources (time, labor, financial resources) are spent, which can be used for more productive purposes.
Each stage of the project is bound by deadlines and estimated resources. Ordering the optimal large amount of a given type of raw material on time saves a lot of effort and money (considering discounts, building trust with the supplier, etc.).
Again to save time and effort: we can agree (in writing) with the supplier to distribute the specific quantity of a product (we need for the specified stage of the project) in appropriate packaging/carton, and delivery is made according to the agreement (not day later, for example). Thus, the project manager will be able to concentrate, for example, on meeting the requirements at the very stage of the project, and not to track the receipt/sorting/receipt of deliveries.
The requirements of the Quality Control must be observed during the delivery. It guarantees the correct type/model of the delivered goods, its intact commercial appearance, quantities, etc. If the necessary goods/quantity are not delivered on time, the team cannot work. Quality control and effective communication are key to the prevention of project delays.
I believe that the delivery (timeliness, quality, quantity, etc.) is “tied” to the customer’s expectations. We know that there is an explicit expectation (number of innovative washing machines produced, warranty period, etc.) and implicit expectation (for example, if the customer, because he is our long-term partner and/or because he has guaranteed the purchase of the first 1000 pilot units, considers that for us it is the only priority …). On the other hand, we have the desired level of customer expectations (benefits) and a sufficient level (acceptable service).
We come to the so-called ‘customer difference’, which is the difference between customers’ expectations and perceptions: this’ difference ‘must be as small as possible (and if there are supply problems, this would be difficult to achieve …).
Among the leading principles in the procurement management plan are the so-called time parameters. Reference: “Procurement Management Plan template with real example data”, https://wikipedia-lab.org/procurement-management-plan-template-with-real-example-data/
These include planning interval, size in days of the unit interval for drawing up the plan, the total length of the plan in intervals, time window (in which the delivery plan “becomes” an order, and hence: a purchase). Parameters for the scope of the plan/products: warehouse, product number, product group, supplier.
Briefly, in our Procurement Management Plan we consider the following:
- Delivery planning: calculation of net needs and then: the creation of a delivery plan for a given period
- Defining the plan: by creating, activating, updating
- Net needs: calculate net quantities and net needs for future periods of the plan
- Deliveries: as a result, the planned quantities and delivery dates for each item must be submitted
- Contract schedules: the dates of placing orders to suppliers are taken into account, taking into account the time of delivery/processing of the order
- Adjustment: sometimes it is necessary to reschedule some orders in order not to affect the plan from previous stages
- Delivery schedule: represents the single result of the process, containing planned/issued orders, orders with the given quantities, estimated release date, planned delivery date; a list of special orders is also available.
The basic parts of our innovative washing machine are housing, casing, suspension, balancing weight (with a damper), electric motor, cover (upper, rear), hose (for clean, dirty water), valves (for passing water to the compartments for prewash, detergent and fabric softener), front door, programmer, display (with touch screen), cable (power supply), pump and filter (for dirty water).
We accept that for the construction of the pilot units of the innovative washing machine, in one of our production bases (located in Varna) priority should be delivered:
- the PLA material of the Belgian company KU Leuven for the construction of the body of the innovative washing machine from biodegradable plastic
stainless steel for the drum
- touch display, with capacitive fingerprint (user is recognized based on its specific electrical properties; users of the machine have a different profile; this allows personalization of the user’s screen and prevents unintentional start-up of the washing machine by children, for example)
We also accept that we work with a subcontractor, BIS, guaranteeing the control of our deliveries. This is a practice in large organizations and I believe that the benefits and guarantees are optimal for the hired BIS.
- coordinating the shipment with all service providers
- monitoring of the shipment of materials
- on-site visits during dispatch
- On-site and document delivery control services (in the office)
- recommendations for necessary measures
- assessment of the status of your overall project
- monitoring of suppliers
Currently, supply is one of the most difficult planning points. Goods considered easy to deliver, almost universal, have recently become more expensive and less available in warehouses (including outside Europe).
Contracts with suppliers must carefully formulate the text of the penalty clause, for example as regards non-compliance with the established delivery deadlines, possible damage to goods during delivery, lack of a required delivery document, etc.
However, cases are no longer an exception. , in which the supplier is ready to take responsibility for non-compliance with a clause, but there is no real possibility at the moment (due to bankruptcy for example or because the two sources of supply of the raw material have suddenly stopped production … Thus, in the “chain” victims we all do.)
Our experience already shows that in a pandemic the risks increase, unforeseen and unprecedented problems appear, the resolution period of which is unpredictable. Therefore, I believe that the Delivery Plan should pay special attention to the Risk section. They may occur
- Problems due to absences due to health reasons
- Stealing the interest of consumers
- Decrease in the amount of funding agreed with the sponsor; can even lead to the bankruptcy of the main sponsor
- Drastic increase in suppliers’ costs (worldwide, currently transcontinental transport costs have increased many times; the same applies to port stays, warehousing, storage of goods, etc.)
Bankruptcy of suppliers
The above immediately creates the risk of impossibility for us, as producers, to achieve the agreed production capacity
Attacks from the competition (having greater financial stability, obtaining inside information, hence, the opportunity to attract a leading specialist in the project and start a similar project, with even more innovative parameters of the washing machine, with guaranteed deadlines for successful completion, etc.)
We accept that the issuance of a Euro1 Certificate has been agreed for our innovative washing machine. For this purpose, at least 51% of the materials, goods, etc. used in the prototypes and each of the manufactured machines should be of European origin. In the present period, we are facing a problem that until recently seemed unthinkable.
Production facilities in China do not produce or supply to Europe many types of raw materials and materials, and the same is exhausted in warehouses. For some of the raw materials, a European equivalent can be found, but at a price many times higher. It follows, at least, that the cost of our innovative product cannot be met