The main objective of the procurement phase is to select suitable turnkey suppliers for your production lines – within a given budget. Ideally they come with their own project management team and your role for the next few phases could be reduced to monitoring, coordination plus escalation and change management. Assigning all operations to a supplier requires a high level of trust on both sides, so this selection has to be done carefully.

While the operational part usually is done according to corporate guidelines and business best practice there are several risks to pay attention to:

Decisions taken during this phase are setting the external risks of your project. Your suppliers are the interface to market resources like mechanical parts, engineers, specialists, robots etc. They manage availability and constraints. Their skills will define production quality and availability, so cheap might not be best value. Usually there is little chance to change a supplier once manufacturing deadlines are passed. Delays due to such a change are very likely to delay your start of production, which in turn reduces profitability and may pose higher risks on your company’s reputation – opening opportunities of getting blackmailed by a low performing supplier during a later phase.

Maturity of 3rd party suppliers is key to your project’s success. One way to judge this is references to prior projects. Your team has a chance to monitor their engineering and management skills while they prepare their offers. Use IPMA/PMI project management best practices to evaluate their plans. Besides the objectives defined in requirements documentation: Do they understand the environment and all stakeholder’s needs ? Do they address all identified risks and chances ? Does their project organization, PSP, schedule and resource management look plausible ? Do they address known market constraints ? How do they ensure management quality ?
This close monitoring offers an additional opportunity: use the skills of your suppliers. They might have been working on different projects for different customers with different experience. Be open to their ideas. They might have solutions more suitable than the ones you defined during engineering phase. Evaluate them: Do they fit into your standards ? Do they offer same or better production quality and availability ? Do they scale ? Check their intention: why do they introduce this solution ? Where are their benefits ? Where are yours ?
While the main focus during this phase is on management, product development still plays a certain role. Potential product changes have to be taken into account for decisions and communicated to bidding suppliers prior to contract signing if possible. In an ideal world there should be an internal formal process approval for the product (covered in this article) during this time frame to keep costs down and change management low.


At the end of this phase your external partners and budgets are fixed, contracts signed and you are ready to go into detailed design.


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