How do you manage purchasing projects?

The main objective of purchasing departments is to reduce :

In the first case, these are often development projects requiring a contribution from the purchasing function. The buyer's activities are dictated by the project, and the project manager generally has the appropriate management tools.

In the second case, the buyer initiates the action. This is a " purchasing project ". In a company of a certain size, 10 to 15 buyers will manage between 10 and 20 actions over the course of a year. We can easily reach 250 to 300 actions.

Each one must be considered as a project, having the same characteristics as the major projects:

Monitoring a purchasing action is not complicated. However, managing a series of actions becomes complex depending on the number and variety of actions undertaken by the purchasing team.

Process best practices

Buyers follow their projects "as best they can". The biggest risk is that the project will drift over time, resulting in a result (within budget) that is not achieved on time. Purchasing performance is then diminished.

In terms of steering a purchasing department, we propose monitoring by milestones - which originate in the purchasing process:

  1. Expression of need: Functional specification; Scope of quantities; Delivery dates & times; Quality & cost objectives
  2. Supplier identification: Market; Existing suppliers; New suppliers; Innovation
  3. Invitation to tender: tender documents; cost structure; selection criteria
  4. Selection & Negotiation: Evaluation matrix; Negotiation; Choice
  5. Contract: General or specific conditions; Duration & quantities; Conditions; Performance
  6. Launch & Follow-up: Deployment, Reporting, Indicators, Measuring results; Continuous improvement

Effective monitoring can detect risks and delays. This enables the project manager (the Purchasing Manager) to take the necessary corrective action. A simple milestone plan is not enough.
Without this milestone/process tracking, we often see the "tunnel effect".

Measuring and consolidating results

First of all, it's important to validate the target gain, and the method of evaluating its implementation. Each project generates a " purchasing " or " operational " gain. It is necessary to define the beneficiary of this gain for each project. Profit forecasts will logically be allocated to operational budgets, and managers will want to monitor their achievement.
Similarly, a Profit Sheet will be drawn up, giving details of the calculation of the action's profit. This sheet will be validated by the finance department, for two reasons:

Read also: What is good purchasing strategy management?

The winnings sheet

In conclusion, the application of project management techniques to the purchasing process makes it easier to monitorprogress in achieving expectedresults. A Gain Sheet is a tool to describe and manage gains and their consolidation.