Project Supply Chain Management - Extending beyond the Internal Resources
Summary
In today’s competitive environment, few if any organizations perform all the work internally. More likely, organizations focus on what they do best and then find ways to build a supply chain that makes the most sense. Depending on the situation, the supply chain can be composed of business partners who they work with together intimately, suppliers and sellers who manufacture parts or provide services, and outsourcers who essentially take over a part of the organizational activities. This tendency to work with external vendors is likely to be more prevalent with projects. By definition, projects are one-time and often unique endeavors, and organizations are more likely to require outside support as important resources for project implementation. In short, the reality of today’s project requires multiple parties, many of which may be external to the organization.
This chapter focuses on planning, managing, and controlling the entire project management supply chain. Although products and services can sometimes be developed internally, these often need to be procured from external entities. Since supply chain management is a vast field, this chapter primarily concentrates on supply chain in the context of projects only and not supply chain management in general. The goal of project supply chain management is to strive toward achieving mutually beneficial relationships and exchanges between all parties.
This chapter examines the three important questions in project supply chain management:
- 1. How to extend the capability of client organizations through mutually beneficial relationships with external parties?
- 2. How to align interests between client organizations and sellers?
- 3- How to manage and control project procurement?
What Is Supply Chain Management?
Today, most organizations are Lean. This means that they rely on their partners and suppliers for products and services. On projects of any significant size, organizations must work with their supply chain and procure products and services. Project supply chain management is a knowledge domain that addresses how to work with all parties in a continuous chain of activities. The emphasis of project supply chain management is on the procurement of external parties for goods and services and to ensure proper integration with the project team for the successful delivery of projects.1
Within supply chain management, the emphasis for projects is the strategic augmentation of project resources beyond the internal capability and capacity. These activities include the acquisition external resources, such as people, materials, or intellectual property, from a multitude of sources. For larger and complex projects, managing supply chain can be a significant responsibility. There are many factors to consider in supply chain management. For example, on smaller and local projects, it is important to consider the timing of resources being utilized on projects and the capability of internal teams and to analyze gaps. The number of suppliers, supplier attributes (such as capability, pricing, and stability), and supplier management processes and guidelines should also be considered. For larger, global projects, there are additional considerations, including global resource acquisition strategy, currency considerations for remunerating vendors, cultural considerations, time zones, and working with virtual or remote teams. Since projects can vary in size, complexity, vendor requirements, governance and regulatory requirements, and physical location, project managers need to tailor their acquisition approach. Advancements toward Lean thinking and Agile methodology for supply chain management, such as migratory models, are yielding new approaches to deal with changing environments.[1] [2]
There can be a number of challenges to supply chain management, both in sourcing vendors and suppliers and in managing relationships with them during the project. Some of these challenges include identifying how to procure products and services, finding and determining suitable vendors, engaging vendors in Request for Information (RFI), Request for Quotation (RFQ), and Request for Proposal (RFP), short-listing vendors, and vetting vendors to ensure that their capabilities and deliveries match organizational needs. It can also be challenging to negotiate with vendors, to abide by organizational policies for working with vendors, and most of all, to manage the entire supply chain of project activities and capabilities, in turn connecting internal resources with external suppliers.
This chapter on project supply chain management discusses four important processes:
- 1. Initial evaluation of external resource needs (Ideation and Initiation Phases)
- 2. Planning project procurement (Preparation Phases)
- 3- Managing project supply chain (Implementation Phase)
- 4. Transitioning and/or closing procurement (Transition and/or Closure Phase)
- [1] Adopted from the PMBOK Guide (6th ed.) Project Management Institute. 2017. A Guide tothe Project Management Body of Knowledge (PMBOK* Guide) (6th Ed.). Project ManagementInstitute, Newtown Square, PA.
- [2] Potter, A., Towill, D. R., Christopher, M„ 2015. Evolution of the migratory supply chainmodel. Supply Chain Management: An International Journal, 20(6):603—612.
