TOPIC ONE - Introduction to Project Procurement and Supply Chain Management EDITTED FOR 2022-23 INTAKE

Project Procurement and Supply Chain Management

Institution: University of Zambia, Department of Population Studies Monitoring and Evaluation Center of Excellence

Learning Objectives:

  • Define project procurement and supply chain management.

  • Distinguish between procurement and supply chain management.

  • Explain the objectives of project procurement and supply chain management.

  • Understand management flows in projects.

  • Connect procurement and supply chain functions to organizational roles.

  • Identify factors in deciding on in-house versus external purchases.

  • Discuss considerations for outsourcing versus internal work.

Required Readings:

  • Public Procurement Act (Zambia), 2020.

  • Public Procurement Regulations 2021.

  • Ayers, B. J. (2nd ed.). Supply Chain: Project Management. Florida: Auerbach Publications.

  • Fleming, Q. W. (2003). Project Procurement Management: Contracting, Subcontracting, Teaming. California: FMC Press.

  • Khan, N. Public Procurement Fundamentals: Lessons from and for the Field. UK: Emerald Publishing Limited, 2018.

  • Baily, P. et al. Procurement Principles and Management. Edinburgh: Prentice Hall.

Overview of Project Procurement:

Management teams purchase goods and services to achieve project goals. Procurement involves acquiring goods/services from external sources. Supply Chain Management (SCM) enhances organizational performance, reduces inventory/costs, adds value, and retains customers.

Definitions:

  • Procurement: Acquisition of goods/services (Public Procurement Act, 2020).

  • Project Procurement Management: Managing relationships with external resources necessary for project completion.

Outsourcing:

Procurement from external vendors for services/products provides budget flexibility and reduces training costs.

Types of Outsourcing Relationships:

  • Full Insourcing: All processes managed in-house.

  • Selective Insourcing: Some processes outsourced, others kept internal.

  • Full Outsourcing: All products/services sourced externally.

Managing Outsourcing Relationships:

Avoid outsourcing non-essential activities. Choose reliable vendors with clear contracts.

Supply Chain Management:

Integrates key processes to minimize costs and maintain customer service levels, connecting raw materials to final goods delivery.

Importance of Supply Chains in Projects:

Global competition demands cost reduction and value addition, as inventory is a significant cost driver.

Supply Chain Complexity:

Increased complexity raises risks affecting schedules and costs. Partnering and sharing information can mitigate uncertainty.

Challenges in Project Supply Chains:

Management execution challenges arise from complexity and variability.

Porter's Value Chain Model:

Identifies processes enhancing value generation and competitive advantage through internal analysis and customer value creation.

Value Stream Approach:

Analyzes material and information flow to boost efficiency and market responsiveness.

Value Chain Components:

Includes inbound and outbound logistics from supplier relationships to customer delivery.

Primary Activities:

  • Inbound Logistics: Receiving and storing inputs.

  • Operations: Transforming inputs to products.

  • Outbound Logistics: Distribution to customers, storing/products delivery.

  • Marketing and Sales: Enhancing product visibility through customer relationships.

  • Services: After-sale services enhance product value and customer satisfaction.

Secondary Activities:

Support activities: infrastructure, HR management, technology, and procurement.

Critical Areas in Supply Chain Management:

Focus on customers, suppliers, design, operations, logistics, and inventory management.

Role of Suppliers:

Key for adding value; partnerships improve efficiency.

Inventory Management Importance:

Influences project costs and customer service; requires collaboration.

Value Drivers:

Enhance value through customer focus, cost management, flexibility, time, and quality management.

Strategic Steps to Add Value:

Flowcharting, standardization, control of variations, supplier prequalification, auditing, and performance metrics.

Procurement Management Processes:

Involves six key processes from planning to contract closeout, varying in complexity affecting management style.

Procurement Categories:

Differentiates high-risk complex from low-risk routine buys.

Stakeholder Engagement:

Planning and mapping strategies enhances project outcomes through effective communication.

Risk Management:

Systematic approach to identify, assess, analyze and respond to project risks.

Project Manager Responsibilities:

Involves initiation, planning, coordination, vendor management, and communication.

5 Rights of Procurement:

Quality, Quantity, Place, Time, and Price are crucial for effective procurement.