Project purchasing

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Material bottlenecks are a well-known phenomenon that can be observed in economic upswings following a severe slump. For the year 2021, this effect is stronger - compared to previous crises that have been overcome.

Companies from the mechanical and plant engineering sector are strongly affected by material bottlenecks because they are at the end of several industrial value chains. This position means that if a single one of these supply chains fails, which are brought together in the creation of a complex plant, the functioning of the remaining supply chains is generally of little use.

Mechanical and plant engineering companies also service custom orders and projects to varying degrees. In doing so, they are often not a pure engineering company with its own project organization. Accordingly, two areas come together in the company: the project organization and the functional organization.

On 29 June 2021, ProduktionNRW organised a virtual exchange of experience with specialists and managers from the areas of purchasing and materials management. Among other things, the experience with purchasing in the project business and the possible compensation of supply chain disruptions were on the agenda. Michael Wolf, VDMA Business Advisory, started with a keynote speech on purchasing in the project business. A project in purchasing must be a project that is essentially characterized by the uniqueness of the conditions in their entirety. Purchasing in the project is, for example, based on order-specific engineering.

The challenges in project management relate to internal coordination, the consideration of order-specific components, and time synchronization. To avoid potential problems in project business, early involvement of purchasing is advisable. Engineering components are sometimes requested by the sales or design department - bypassing the purchasing department. Ideally, however, purchasing should take over the inquiries here as well. This ensures that realistic suppliers and costing data are used. After all, the project risk increases with the degree of novelty of a procurement.

Identify project risks

In the individual project, it is recommended to analyze and evaluate possible project risks.

Project risks can be reduced, for example, by...
- ...reducing the degree of novelty through modularization or platform strategy
- ...extending framework contracts with supplierswith suppliers
- ...adjusting logistics agreements with suppliers with regard to quantity corridors
- ...product analysis and supplier agreements for bottleneck materials that are decisive for delivery times

A fixed structure or committee should be set up in the company for risk assessment and approval. The analysis helps to identify new opportunities in the project business.

In the discussion, the participants asked themselves how purchasing can get through the current material bottleneck with as little damage as possible. After all, those present were united by the current challenges posed by material shortages and rising prices in purchasing. It became apparent that required materials are purchased even if they are completely overpriced. The main thing is to be able to restart production in one's own company. Michael Wolf concluded that certain problems in purchasing are often repeated due to the recent economic crises. This gives purchasing the opportunity to analyze these problems and subsequently make structural adjustments in purchasing in order to position companies for the future.

Organizer

The event was offered by ProduktionNRW. ProduktionNRW is the competence network of mechanical engineering and production technology in North Rhine-Westphalia and is carried out by the VDMA NRW. ProduktionNRW sees itself as a platform for networking, informing and marketing companies, institutions and networks among themselves and along the value chain. Significant parts of the services provided by ProduktionNRW are funded by the European Regional Development Fund (ERDF).