Procurement Management Plan, Essay Example

Purpose

The main objective of the reflective essay is to demonstrate overall knowledge of the procurement management plan and apply the knowledge to the real world.

Overview

According to the project management book of knowledge, the project procurement management consists of inputs of scope baseline, requirements documentation, team documents, risk management documentation, resource requirements, project schedule, cost estimates, performance baseline, enterprise environmental factors and organizational process assets (PMI 2008).  The procurement management portion of the project lifecycle incorporates the inputs while evolving the project around negotiations, risk mitigation, contract execution and management and financial management to bring the project the goods and services needed to be successful.  A real life scenario involves U.S. based appliance manufacturing companies choosing to outsource services or manufacturing while some are deciding to bring efforts back to the United States.  The procurement management plan emphasizes contract, cost, and schedule management which in order to be competitive with outsourced products and services must be expertly executed.

Procurement Management Plan

The project management lifecycle has five basic processes groups and nine areas of knowledge which are typical for almost all projects whether they are in IT, human resources, manufacturing or construction.  The project lifecycle and areas of knowledge are listed

Project procurement management’s goal is to ascertain goods and/or services outside of the main project team in order to facilitate the advancement of the project as a whole.  Through the procurement management lifecycle areas of impact and investment are procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract closeout.  Throughout the project the focus of senior management was to obtain landscaping materials such as shrubs, bricks and tiles.  This was accomplished by mitigating risk, controlling costs, negotiating and awarding a contract with an outside vendor as well as managing the financial implications of the outsourcing purchase.  Managing the procurement of outside goods or services impacts the entire project which including scope, schedule and cost.  Management of these three constraints is critical in project success.

Another scenario involving procurement management involves the recent trend of outsourcing of American manufacturing labor for input parts, components and branded goods.  The appliance manufacturing business segment in the United States include multiple companies but we can focus on General Electric and Whirlpool as examples to show how procurement management dictates business decisions.  Whirlpool entered a five year planned outsourcing effort for their financial and sourcing SAP application for their North American, Latin American, European and Asian territories. A normal consensus of outsourcing the thought is that IT services, customer support and call centers are outsourced as well as small parts and pieces going into a larger unit for ultimate production.  In order to bring manufacturing back into the manufacturing plants and streamline the business and manufacturing process General Electric announced they are going to build multiple new line introductions wing-to-wing utilizing in-sourced efforts and home based operations.

In order to be successful project procurement management is a vital keystone to the success of General Electric’s strategy.  When competing with outsourced goods and services for many years cost of the main driver with quality as a secondary or tertiary impact factor.  The cost of labor in many overseas locations negates the fact that rework, quality control, shipping and back-end support such as service calls would be necessary to have a successful product line.  The company that is uprooting their outsourced vendors is facing a daunting balance between the established process of outsourced vendors and onboarding new U.S. based vendors and in-plant manufacturing ability.  Planning and execution must adhere to the project lifecycle inputs and outputs so that management can make fully informed business decisions.

Project procurement must look at the larger areas of Make vs. Buy, multiple vendors or sole-source vendor, quality, schedule, cost, risk, and contingency to name a few.  Cost is a driving factor when deciding to move the business from overseas to the U.S. so sourcing and procurement receives a heavy burden of cost savings.  Driving cost out of the product to establish a favorable playing ground for in-country purchased products is a main component of procurement management.  When executing the procurement plan it was necessary for General Electric to re-engineer its sourcing procedures to meet the new demand of stateside vendors.  It was the responsibility of the procurement experts utilizing the tools in the procurement management plan to execute to a specified budget while maintaining the integrity of the project schedule and getting their product to market.

Procurement management is a critical management area of knowledge in the project management lifecycle.  It focuses on the procurement of goods and services necessary for the successful implementation of the project and meeting the trinity of constraints known as cost, schedule and quality.  Documenting and emphasizing the controls during the procurement plan process allows for improvement and management of the inputs and outputs during the process.  The post-implementation review establishes the groundwork for future improvements allowing future procurement plans to become more effective in managing cost, quality and schedule based upon a continual process improvement model.

References

Baily, H., Crocker, B., Farmer, D., Jessop, D., and Jones., (2010). Procurement principles and management. Harlow, England: Prentice Hall Financial Times.

Brown, D., & Wilson, S. (2005). The black book of outsourcing, how to manage the changes, challenges, and opportunities. Wiley.

Project Management Institute (PMI)., (2008). A guide to the project management book of knowledge (pmbok guide). Project Management Institute. 4^th Edition.

Schniederjans, M. J., Schniederjans, A. M., & Schniederjans, D. G. (2005). Outsourcing and insourcing in an international context. M E Sharpe Inc.

Wire Reports. (2011). Reverse sourcing: GE bringing some IT jobs back to US. Retrieved from http://wraltechwire.com/business/tech_wire/news/blogpost/9966371/