Purchasing and Supply Meet Project Management
According to the Project Management Institute (PMI)® in Newtown Square, Pennsylvania – an organization associated with project management as NAPM [National Association of Purchasing Managers] is with purchasing and supply – their membership has grown an incredible 156 percent since 1995. PMI® also notes that the project management community is becoming increasingly diverse with employees entering the discipline from all types of professions. NAPM has discovered project management in its own ranks. This past August, Purchasing Today® sent an informal survey to NAPM members that had “project management” in their title. While the survey does not report whether more purchasing and supply professionals are adding project management to their skill sets, it did reveal that 43 percent of survey participants have been project managers for less than five years, and most less than eight years (93 percent). The majority of survey participants see the use of project management in purchasing and supply growing (87 percent), with major improvements evidenced in improved cycle time, better communication, and greater interaction among departments, especially within the areas of supplier selection and management, and new product development. The survey also indicated that some came from other functions as well as purchasing and supply.
The reason for a greater shift to project management lies in the rapid change in business practices coupled with advances in project management software and other tools.
According to Tony W. Salinger, managing partner of AlexisGill Consultants, a Bernardsville, New Jersey-based organization specializing in organizational transformation, project work is becoming larger and more complex than ever before. “Projects are increasingly a major, enterprise-wide package. Often, millions of dollars are at stake. The time line may be a two-year minimum, and the work is usually difficult and integrative in nature. Given this, it pays to have the best pilot to captain the ship, especially since there’s already an identifiable body of knowledge available in project management.
But What is Project Management, Really?
“To understand project management,” says Douglas B. Boebinger, PMP, an independent project management consultant and trainer, in Plymouth, Michigan, “think of vacation planning. You don’t get into your car and drive aimlessly. You plan where you’re going, where you’ll stay, how much you’ll spend, and so forth. But amazingly, a lot of businesses just get into the car and go – taking the ‘just do it’ approach.” Essentially, project management oversees a business activity from concept to operational use, with emphasis on the functions, roles, and responsibilities of the project manager and project team member. To this end, knowledge, skills, tools, and techniques are used to meet or exceed stakeholder needs and expectations in a variety of areas such as scope, time, cost, quality, human resource, communication, risk, and procurement management. Project management is applicable to most business applications, not the least of which is purchasing and supply. The Purchasing Today® survey reports the most common areas where project management is used within purchasing and supply is in commodity and product development teams.
“In purchasing project management,” says Martha L. (Marty) Hawn, project manager at Phase Metrics in Fremont, California, “cycle time reduction can be accomplished since tasks, resources, and critical paths become visible.” Hawn, a strong advocate of purchasing project management, believes more and more that purchasing and supply professionals will move into a project management environment — confirming the Purchasing Today® survey results.
Boebinger also sees project management as a boon to purchasing and supply. “Even if project management never replaces the traditional purchasing department,” he says, “it’s definitely set up to make purchasing more efficient. Project management provides accurate information in a timely manner to send to suppliers and other important parties.”
According to Carl E. Hutchison, special projects manager at the University of Nebraska in Lincoln, Nebraska, project management works just as well in the institutional setting. “Project management in a university procurement setting involves the process of establishing contracts (with the assistance of users and management), the monitoring of theses contracts, and problem resolution and evaluation throughout the term of the agreement.”
Discovering the Benefits
Purchasing Today®’s survey found that 87 percent of respondents believe a project management structure works well in the purchasing and supply environment. Many also believe numerous benefits come from project management. Survey participants ranked better communication, positive department interaction, supply chain support, improved cycle time, and improved upper management support as the greatest benefits of a project management environment.
The project management structure facilitates a positive approach to project completion. For example, Phase Metrics’ Hawn points out that road blocks and problems can be identified and worked out before the project is adversely affected – something she believes makes project management so effective.
Bill Atwood, C.P.M., relationship team leader and purchasing and material control at the Illinois Power Company in Decatur, Illinois, finds that in project management the focus is on results rather than activities. The focus allows for measurable performance goals.
And Michele D. Cornette, project manager at Advanced Material Solutions in Fremont, California, likes the fact that, “You can see the whole picture and can better align your goals to those of the organization.”
Many believe there isn’t an inherent downside to project management. Problems, if encountered, usually don’t stem from the project itself. For instance, Phase Metrics’ Hawn says, “There can be a downside if management does not empower the project manager with the authority to drive completion of the tasks or deliverables, or if they underestimate the resources required to manage a project.” How well project management works in an organization depends largely on organizational culture and overall support. James J. Kapalis, C.P.M., supervisor, general company supply management at Deere & Company in Moline, Illinois, reports his organization has been using project management successfully with multidiscipline teams for about 12 years in the materials and supply management environment. The success of Deere & Company’s efforts in this area can, in part, be tied to the organizational culture.
If project management is not understood it may not be supported or be a key driver in the organization’s business plan. Illinois Power’s Atwood agrees, “Project management waxes and wanes within our organization depending on management’s perceptions.”
University of Nebraska’s Hutchison adds, “Project management has probably always been used in some fashion here at the university. The big difference now is the structure and the intent has become more formalized. Project management has become so successful as a way to encourage stakeholder input and develop support that we apply the process whenever feasible.”
The Making of a Project Manager
Perhaps because project management is still relatively new to purchasing and supply, many project managers get into the field by default. Training comes on the job and through classes and seminars taken internally, at colleges and universities, and through professional organizations. In the survey, 72 percent of the participants attended classes and seminars to learn about project management. Examples of continuing education in project management are cropping up in organizations. AT&T, for example, encourages employees to obtain a certificate in project management. Employees can go to more than one institution and the coursework covers contracting for project managers, project leadership, management skills, risk management in a project environment, quality for project managers, project scheduling and cost control, and project management application.
Frank Elsesser, C.P.M., test and measurement supply chain manager for Hewlett-Packard’s Global Support Logistics division in Roseville, California, says he began as a senior buyer in an informal team setting and then migrated to project management.
“I had to formalize my skills. I learned by trial and error, by self study, and by taking classes offered by Hewlett-Packard, the University of California-Davis and Berkeley, and the American Management Association.”
Advancing her knowledge in project management was an apparent consideration for Advanced Material Solutions’ Cornette too. As a senior buyer, Cornette took various courses with an eye toward project management to work in both planning and purchasing. She reports that she “likes the idea of being in control and of seeing the big picture.”
For Atwood, formerly a traffic manager, a fuel buyer, a reengineering implementation team member, and an alliance manager in purchasing, project management came from the vision that was attached to the supplier alliance concept. “We would bring the expertise of the alliance suppliers together with the needs of our users and improve the processes through commodity teams.” He has taken facilitator training courses and has learned to use project management software. In Hawn’s case, she had been informally managing projects as a contract specialist in a materials and purchasing environment. Hawn’s director of operations at her previous employment mentored her in the concepts of project management. She has also taken courses related to teaming and project management.
Carlton W. Bradshaw, C.P.M., procurement project manager at the Eaton Corp.- Implant Systems Division in Beverly, Massachusetts, says he got into project management “by the back door.” Bradshaw was formerly in technology at Polaroid and then sought classes to enter management positions.
Boebinger, originally in construction engineering, says, “Project managers come from everywhere. Typically, they are people from various industries who look for management opportunities, are customer focused, and tend to be entrepreneurial. Ultimately, project management is a lifestyle. If people are going into it thinking about salaries, they’ll fail. Project managers are people who are driven more by the project goals than by the paycheck. You need to have a passion for the project to be successful.”
Skills for Proficiency
The skills needed for proficient project management may well describe the near perfect working professional as being able to lead, influence, make the right decisions, and “get things done.”
Elsesser says that one of the hardest aspects of project management is “getting all the skills required for the job.” Adds AlexisGill’s Salinger, “If you could enumerate the skills, you can’t find them all in one person. Finding the really effective manager is like finding the Golden Fleece. Therefore, you have to find the ‘most of’ in any one project manager.”
The Purchasing Today® survey asked respondents what skills are needed to be effective in project management environments. Leadership, time management, conflict resolution, organizational management, and communication were the top picks. Some even listed a sense of humor and flexibility.
“The project manager has to be creative and think outside of the box, to find new ways to accomplish tasks,” says Hawn. Bradshaw agrees. “The project manager should be a forward thinker, a big picture thinker.”
In Salinger’s estimation the skilled project manager is primarily a systems thinker. “Project managers have to see things as a whole, and know how each part of the whole will affect the other. They have to know the business, and should have people skills beyond communications – they have to be able to tap into people and know what they are thinking. They must have skills in boundary spanning, that is, the ability to build bridges and to be able to make decisions in an atmosphere of ambiguity and change.”
Atwood adds, “Probably the best skill to learn is actually a mindset. A project leader must focus him- or herself on the team’s objective, leaving aside some of the more personal agenda items.”
Hutchison believes that, “The project manager should have a thorough knowledge of the policies that govern the procurement process, the ability to lead and keep a project on track, and a sincere interest in improving the outcome and learning from team members and mistakes made. People and communication skills are essential training for project managers.”
Elsesser points out that being able to manage cross culturally is extremely critical to project management success. And Boebinger adds that a good project manager should be able to gather, decipher, and explain information; have excellent coping skills; and recognize his or her abilities and limitations – and be able to admit them.
As for the skills needed by the team, beyond their respective bodies of knowledge, effective participation is on the shoulders of the project manager. “It’s up to the project manager to choose wisely, to build an effective team and instill in them a high degree of motivation and commitment,” says Cornette.
Kapalis adds, “A team is often only as effective as the leadership of the project manager, who must have a consciousness to the team environment and have the vision to know where the team is and where it is headed.” Kapalis believes a good mix of personalities is essential for a successful team, and that team members will work well together if the project manager can create a sense of ownership and be clear in assessing and guiding the team. The project manager has to be able to recognize each team member’s strengths and weaknesses to effectively guide the team. Boebinger also looks for people who are diversified. “Personally, I don’t look for the best of, but for people who are willing to look at the whole, and who are open and creative. Also remember that teams should be dynamic. No two teams are alike. They all look to the project manager for vision.”
On a practical note, Hutchison’s recipe for a successful team is to “keep the team relatively small (no more than seven members), and obtain experts available from the organization’s resources to take advantage of the experiences and the results of similar projects from peer organizations.”
Purchasing Fits Here
In a well-developed project management system, purchasing becomes one facet or component of the project, not necessarily a central function. No other function should be central either – and that’s the main point of project management. However, purchasing and supply professionals should not exclude the use of project management within the purchasing and supply department itself. Even if project management is not used across departmental functions, it can be used within a department, and purchasing and supply departments are suited for such a structure. Hutchison’s observation is that, “In most cases, the purchasing and supply individual involved in project management goes on to administer the project and the team becomes a valuable source of ongoing evaluation.”
Kapalis is another believer. He says, “If purchasers can become confident and proactive, they can lead the project management process, especially for those areas that have a more direct impact on purchasing and supply processes. If purchasing will develop the vision of wider business skills, it will not only be an automatic part of the process, it can step up and be a leading influence.” The areas of project management in which purchasing fits best vary. For Cornette, whose business is printed circuit board assembly, it’s cost reduction and improving efficiencies.
Bradshaw reports that in his organization, which makes capital equipment for the semiconductor industry, purchasing makes the biggest contribution in setting up the supply chain, keeping costs down, and helping to develop standards of work. Elsesser, whose division provides support material and services, sees supplier evaluation and cost reduction as the two prime areas for purchasing input in the project management environment.
At Deere & Company, Kapalis takes a broad view saying supply management must lead the sourcing process and manage the relationships with suppliers. Boebinger sums it up this way: “The parts of purchasing that work best in the project management environment depend on the types of resources being acquired. It’s not about each purchase order,” he says, “but about each component of the purchasing process.”
Overall, the way purchasing and supply management fits into a project management structure depends on what is going on in the industry and in the organization, and the culture of management,” states Salinger.
“Every organization is different,” says Hawn. “If management is proactive and strategic, project management will work in the purchasing environment. If management is tactical, purchasing has little chance to succeed.” Given this, the future is still one in which project management will grow. Atwood says, “I don’t believe embracing traditional purchasing practices is a viable option anymore.”
Cornette believes that “in traditional purchasing you fight fires without necessarily knowing the reason behind what you’re doing. Project management lets you know what needs to be done.”
Bradshaw agrees. “Even if the idea gets repackaged, the underlying concept has proven itself.”
Salinger sums it up this way. “The nature of business now demands project management. The Internet, the psychology of business and its effectiveness, the expansion of consultancies, globalism, and all that evolving ‘stuff’ becomes part of business and part of managing a project. Project management is here to stay as far as we can see.”
By Marilyn Lester, freelance writer based in New York.
The Keys to the Project Management Kingdom
“Box page 35”
Many factors go into making a project a success.
Keys to a successful project:
- On or under budget
- At or under time limits
- At or above quality requirements
- Adequate resources
- Customer satisfaction
Keys to a successful project environment:
- Holistic approach to the organization
- Balanced sharing of resources
- Harmony in all aspects of the project
- Participant skill sets which include a high level of discipline, accountability, and integrity
- True empowerment of participants
Keys to a successful project manager:
- Proficiency in finance and accounting, sales and marketing, research and development, strategic planning, tactical planning, operational planning, organizational behavior, and personnel administration
- Ability to manage work relationships through establishing direction, aligning people, motivating and inspiring, delegation, supervision, team building, negotiating, and conflict management
- Self discipline, especially with regard to personal time management and stress management
- Good self esteem
- Has the respect of the team
- Serves as a guide
- Knows how to weather storms
- Does not get discouraged
- Can keep the focus
- Main interest is the project itself
- Does not take individual credit for successes or point the finger of blame in setbacks
- Ultimately has people volunteer for his or her projects
- Has a record of multiple successful projects
Information provided by Doug Boebinger, PMP, an independent project management consultant and trainer.
Functional Manager and Project Manager: Take Your Corners
“Box page 33”
The differences between project and functional managers are significant. The functional manager is a specialist, analyst, and supervisor, where the project manager is a generalist, synthesizer, and facilitator.
Doug Boebinger, PMP, an independent project management consultant and trainer, says, “The functional manager usually exists in a hierarchical organization, where the work is divided up. This manager is responsible for an aspect of a product or project. The project manager has to understand the entire product or process from start to finish.” Among the many unique demands and skills required of a project manager are the ability to acquire adequate resources, deal with obstacles, make goal trade-offs, maintain a balanced outlook in the team, communicate with all parties, and be politically sensitive.
How then does the rest of the organization, particularly those in traditional purchasing and supply roles, examine the options, and how can a project manager work successfully with those in traditional roles? James J. Kapalis, C.P.M., of Deere & Company puts it this way: “Project managers focus on making a project happen, working with functional managers. You might say functional managers support it and project management owns it.”But Eaton’s Carl W. Bradshaw, C.P.M., warns, “If you’re not careful, there will be pockets who resent what they perceive as special treatment for project team members, and who resent that these people are doing the fun stuff.” Boebinger adds, “Infighting generally happens in a functionally oriented organization, where practitioners follow a detailed path, identifying tasks and deliverables. The functional manager is forced to prioritize, which can become a wrestling match for resources. The answer is to balance the projects.”
The reality of project management is that conflicts will arise, so a project manager must know how to use “organized disagreement” to achieve creative alternatives and solutions to the changing nature and intensity of conflict as the project progresses. Bradshaw says the way to handle problems is to be inclusive. “You can’t isolate others or you get friction. The project management team needs their [functional] support.” Kapalis agrees and says users must be kept informed. “Cooperation between project managers and functional managers comes from proper planning and involvement. If there is involvement, there will be buy-in,” he says. Hewlett-Packard’s Frank Elsesser states that the “challenge is in finding a leader who will constantly reinforce positive communication across the spectrum of the project.”
In the final analysis, Boebinger sees the answer to function versus project in the maturity of an organization. “Where there is a project management environment, you optimize the total profit. Therefore, there is a give and take across the entire organization – a macro approach to the organization as a whole.” He warns though, that achieving maturity is no short-term event. It can be a long-term prospect. “But,” he declares, “the benefits are certainly substantial and worth the effort it takes.”
“Box page 32”
Project management was successfully used in one large cross-functional project at Northeast Utilities involving the implementation of a new purchasing, materials management, and accounts payable system called MIMS in the fall of 1996. This implementation was done all at once throughout the entire company. The immediate impact was that about 3,000 people would have to learn a new way to request materials and services, approve those requests, transform those requests into purchase orders, issue purchase orders, receive materials, store materials, issue materials, return nonconforming materials, and eventually pay for materials and services rendered. Many existing purchase orders had to be converted from our old system to our new system. As can be imagined, the impact on our employees and our suppliers was considerable.This project was so large that it eventually became a program comprised of several distinct, yet interrelated, projects – the actual IT implementation, a reengineering project, a change management project, and a training project – each with its own schedule and budget. Only by using the principles and tools of project management could we ever “get our arms around” the program. We could tell if we were ahead or behind, required additional resources, or needed to address competitive issues.In the final analysis, the implementation was an experience to behold, but there is no doubt that it would have been much more chaotic without the use of project management.By Rick Bigelow, project manager, purchasing department at Northeast Utilities Service Company in Hartford, Connecticut.
Project Management in Purchasing and Supply
“Box page 31”
Do You Use Project Management Software?
Yes 63% No 37%
Does Purchasing and Supply Work Better Under a Project Management Structure?
Yes 87% No 13%
Staying about the same 2%
Source: 1998 Purchasing Today® Project Management Survey
Day in the Life of…
“Box page 34”
Carlton W. Bradshaw, C.P.M. Procurement Project Manager, Eaton Corp.
Carlton W. Bradshaw, C.P.M., procurement project manager for Eaton Corp., arrives at the office between 7:00 and 8:00 a.m. and prepares for the day “checking the wires” – e-mail, voice mail, facsimiles, and so forth. Big question: Just how unusual or normal will today be? It can be said that the day in the life of a project manager is never really typical and for many that’s what makes this specialized working system exciting to some. Meetings, check-up on progress, evaluation of project by key players, checking future needs for upcoming critical events, and much more – these elements keep project managers hopping. And here’s what it looks like.
8:30 a.m.: It’s Wednesday and time for the “core teams” meeting – the people who are functional representatives of a project team. The meeting lasts an hour and a half and several issues are reviewed. Each team member takes information back to his or her respective functions.
10:00 a.m.: Next comes a meeting with Susan Whalen, engineering process development manager, whose responsibilities include engineering processes. Bradshaw and Whalen discuss how procurement will support engineering on various projects and Bradshaw identifies any special needs that might arise. All this takes place on a high process level.
11:00 a.m.: Back in the office, Bradshaw does follow up and department management tasks.
1:00 p.m.: A sub-project team that supports larger project teams in connection with materials in the pipeline and cost reduction meets. This is a detail-oriented working meeting. Engineering could have from 15 to 30 mini-projects going under the umbrella of a larger one, and this sub-team works out the details of these aspects. A weekly meeting establishing engineering priority also takes place. This focuses on the larger horizon of engineering marketing – where are the markets going farther out? Bradshaw represents procurement at these meetings. They are typically two hours long and focus on three market segments, one per meeting.
3:00 p.m.: A weekly supplier driven cost-reduction program meeting is held. Bradshaw leads a small team on this one. Ideas from suppliers are evaluated and fed to engineering.
4:45 p.m.: Bradshaw meets with staff within the procurement function of procurement project leaders to get “caught up.”
Overcoming Conflicting Priorities
“Box page 37”
Co-located, cross-functional teams present opportunities and challenges for purchasing and supply professionals. Being invited to join such teams signals that the purchasing function adds value in complex business problems. However, such involvement may create conflicting priorities and loyalties. Therefore, managing the potential conflicts requires understanding.
Know Why You’re Needed
If joining a cross-functional team, a purchasing team member must first understand his or her role. The team could need purchasing representation for a number of very different reasons:
- To provide the process expertise of purchasing in areas such as supply base research, supplier cost modeling, or (more typically) negotiation<
- To supply content knowledge of a specific supply market or commodity area that the purchasing individual directs
- To serve as the liaison with the purchasing organization to ensure project needs obtain priorities among other staff in the corporate organization
Providing process expertise produces the least conflict for the purchasing team member. In such a role, the purchasing professional simply conducts the job he or she is trained for – but now within the scope of the project team rather than his or her normal job scope.
Offering content knowledge creates a little more conflict – but the natural bias typically remains with the functional discipline. In a content role, the team has positioned purchasing as an expert to provide answers based on more than just process expertise but also deep current knowledge of an area of spend. The liaison role presents difficulty on two fronts. First, the project team expects the purchasing representative to focus on the project’s goals and manage his or her home organization for support. Obviously, the team’s priorities may not always match the functional organization’s priorities, which could present conflicts.
Second, the liaison role requires the least functional expertise since the team merely expects the purchasing manager to operate as an administrator. If the role requires providing the purchasing point of view, a new set of challenges arise. In a sense, the team member has been asked to speak for the entire organization.
He or she must draw from his or her process, and possibly content knowledge, to provide the appropriate input to the project team.
Know the Expectations; Know the Facts
Understanding the expectations of the cross-functional team allows the project manager to proactively identify the likely sources of conflict. Achieving the right balance between the conflicting demands requires rising above an issue of “loyalty” to either the function or the team. The answer emerges by focusing on what is right for the whole organization, not the sub-units.
To achieve proper focus you must understand all of the facts. The real facts must precede debates upon the logic of an argument. In addition, clearly communicate and actively listen to team participants.
So, managing the conflict inherent in cross-functional project work requires managing expectations and maintaining the high ground of doing what is in the best interest of the organization – not the function or the project. Strive constantly to build a common set of real facts to unearth and eliminate the sources of conflicting priorities.
By Timothy M. Laseter, vice president, Booz & Hamilton, Inc. in New York.
Originally published in the Purchasing Today, December 1998
Article and related sub-articles reprinted with permission from the Publisher, the National Association of Purchasing Management for article “Purchasing and Supply, Meet Project Management” by Marilyn Lester, Purchasing Today, December 1998, Vol 9, No 12.