Procurement Project Management Details You Need to Know

POSTED ON September 9, 2021

Procurement Project Management can be defined as the discipline of applying principles and processes to initiate, plan, manage and execute the way that new initiatives are implemented within an organization. In this context, procurement project management involves planning, implementing and controlling a procurement project. Project management becomes particularly important when the volume involved are large, there is new product development involved or there are multiple suppliers to be engaged and managed. Managing a procurement project like this requires a wide range of skills and competencies, methods, processes, knowledge and well-defined objectives.

Having a professional Procurement project manager onboard becomes extremely important when your procurement project is fairly large and when you are sourcing from another country where you don’t have any local presence. Project management enables a better understanding of the expectations, streamlines communication and ensures better compliance to budget and quality standards.

Procurement Project management begins as soon as a project is conceptualized. So, as soon as you identify the sourcing need, particularly the one that involves import from another country or new product development, you should have a project manager on onboard. Let us have a closer look at why procurement project management is important and what are the key steps involved in it.

Procurement project management involves using a structured project management approach for all sourcing-related activities. When used properly, project management principles can offer many benefits including:

• Sets measurable objectives
• Helps better align with procurement strategies
• Ensures operations success
• Streamlines processes
• Better negotiation opportunities
• Risk mitigation
• Lot more

These are just some of the benefits of procurement project management. You can achieve a lot more by having a structured approach to project management than just going by the hunch and taking things as they come.

An effective procurement process involves a detailed and in-depth understanding of requirements, identifying the right supplier to meet those requirements, evaluating supplier performance at regular intervals and negotiating contracts that can offer true value for money and the highest possible quality.

Talking of procurement project management, there are several models used, but generally, most of them involve several similar steps. Here are some of the key steps involved in procurement project management:

• Identify the Requirements for the Product

In the realm of China sourcing, this step occurs at the level of the business owner, who identifies the need/demand for a product. They create a business case, and research and define the scope of their sourcing project.

• Define the Specifics of the Requirements

At this stage, the exact product specifications and drawings are prepared. Whatever happens in the next stages is decided by how precisely the technical specifications and design drawings are created.

• Actual Sourcing

This is where the role of project management becomes very crucial. The project manager will help research suppliers, request quotes for the product required, and then select the right vendor. This is the most critical part of the entire procurement process because the procurement project manager will have to qualify the vendor based on their technical capabilities, speed of service, experience, dependability, cost and other criteria.

• Negotiation and finalizing the price and terms of purchase

Again, your procurement purchase manager will play a huge role here. They send requests for quotes to the shortlisted suppliers and once the quotes are received, they inspect them for speed, competitiveness and cost. The quotes are also evaluated for quality and reliability. For large volume orders or more complex orders, they will help you identify multiple suppliers. Finally, the supplier is identified, and prices and terms of purchase are decided upon.

• Performance Management and completion

Also known as the implementation phase, this stage requires the project management to oversee the performance and make sure the project is on schedule and the milestones are defined and adhered to. The performance is also evaluated against the budget and ensured that there are no cost overruns. Once the project is delivered, feedback is also sought on how well the project was managed and what are the lessons learnt.

If you are looking for a sourcing manager who can manage your project professionally as an extension of your own team, please get in touch with us now. We offer a full range of sourcing and project management services across industries.