Procurement Plan - Supplier Management

Most Project Managers will agree that outsourcing to external suppliers is a key risk area within the project. To ensure that you procure the right products (i.e. goods and services) from the right suppliers at the right time, you need to create a Procurement Plan.

Creating a comprehensive Procurement Plan for Supply Chain Management can be daunting as it lists all of the products you need, the timeframes involved, the process for selecting preferred suppliers, the process for delivering the product and last but not least; the process for managing the suppliers performance! To help you do this, we have listed below the 3 key steps needed to create a detailed Procurement Plan for your project.

1. Identify your requirements. First, list all of the products you need to obtain from external suppliers. For each product define its purpose, the quantity needed, your budget and the reason for outsourcing rather than building or supplying it in-house. Knowing exactly what you need before you start will help make sure that the products you find in the market are fit-for-purpose. Remember, a ‘product’ can either be a Good (such as equipment or materials) or a Service (such as consulting) so you need to list both.

2. Research the market. Before you go out to find in a supplier, you need to ‘dip your toes’ in the market to check that there are suppliers and products available which could potentially meet your need. Complete a short research exercise by listing examples of suppliers and products which at a glance, fit the requirements of your project. Remember not to get to know them too well, otherwise it might bias your selection during the tender process.

3. Create your plan. To create your Procurement Plan, list all of the activities required to find, contract and manage a new preferred supplier to the project. The following activities are included:

Complete a Tender Process to find your supplier by:

• Creating a Statement of Work (SOW) which defines your procurement requirements in detail
• Distributing a Request for Information (RFI) to potential suppliers, to allow them to register an interest in becoming your preferred supplier
• Short-listing the candidates. Then release a Request for Proposal (RFP) allowing them to submit a formal proposal to you for the supply of products
• Selecting your preferred supplier based on the best proposal received
• Creating and sign a contract with your preferred supplier
• Your supplier is now ready to start delivering the products required for your project

Complete a Procurement Process to make sure that the products are delivered by the supplier on time, within budget and to the correct level of quality. You can do this by:

• Issuing Purchase Order to suppliers for products required
• Receiving, reviewing and accepting products delivered
• Reviewing and approving the payment of supplier invoices

Manage your supplier by running a series of reviews to determine whether they have met the procurement requirements of the project to date.

Having a structured template for completing each of the 3 steps above will help ensure that the entire procurement process is planned in detail. Click here for the Method123 Procurement Plan template to help you along the way.