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Optimising procurement in project-centric industries: the project-led centrally enabled approach

Project Led

In this insightful article, Brendan Batch, Head of Enterprise Strategy & Development at Felix, discusses the benefits of project-led, centrally enabled procurement, plus the key elements that support a successful implementation and why purpose-built procurement software can help.

Project-centric industries such as construction, mining, utilities, resources and defence have different procurement needs to industries that operate in a single location. 

Although procurement activities are project specific, reporting and ESG requirements are organisation-wide, which requires a different approach to procurement management.

Managing procurement through a project-led but centrally enabled system enables projects to operate independently whilst keeping all data centralised. 

This means that management can benefit from having a single source of truth, enhanced decision-making capability and ease of reporting that a central system provides.

Benefits of project-led, centrally enabled procurement

Let’s discuss some of the reasons why you may want to adopt the procurement operating model:

Standardisation

It promotes the use of standardised procurement processes, tools and templates, which can enhance efficiency, reduce errors and facilitate consistency in procurement practices across projects. 

Cost savings

Centralised category management can enable cost savings/control via negotiation with preferred vendors, whilst local project teams having access or knowledge of local supply chain can also enable savings.

Risk mitigation

Centralised oversight ensures that procurement activities adhere to legislations, company policies and industry standards, whilst also allowing for robust risk management strategies that can help identify, assess and mitigate potential risks linked to procurement, supply chain interruptions and contractual responsibilities.

Flexibility and speed

Projects are given a degree of autonomy to make procurement decisions tailored to their specific needs, budgets and timelines. By streamlining procurement processes and utilising standardised templates and procedures, organisations can often expedite the procurement process and reduce administrative overheads.

Knowledge sharing

Lessons learned or vendor experience information from previous projects can be shared across the organisation, enabling continuous improvement in procurement practices.

Enablers of project-led centrally enabled procurement

If you are thinking of switching or moving up to this hybrid procurement operating model, it’s essential to consider the key elements that would support a successful implementation:

Central procurement team

The essential element of this approach is a proficient and well-informed central procurement team.

This team bears the responsibility of formulating and upholding procurement policies, standards and strategies that can be tailored to the distinct requirements of individual projects.

Project autonomy

On the other hand, projects should have a degree of autonomy to make procurement decisions based on their specific needs, budgets and schedules.

Standardised processes and tools

The use of standardised procurement processes, templates and tools helps to ensure consistency and efficiency across projects. These include procurement guidelines, contract templates and software for procurement management. 

These policies establish the framework within which both central and project teams operate.

Training and skill development

It is essential to provide training for both the central and project teams to ensure they have the skills and knowledge needed to make informed procurement decisions and comply with standardised practices.

Technology and data management

The use of procurement technology and data management systems helps central and project teams efficiently track, document and manage procurement processes and decisions.

Why purpose-built procurement software?

Zooming in on technology as an enabler, let’s see how having purpose-built software can help project-driven industries specifically. Depending on where your organisation is on this spectrum, the benefits reaped will vary.

Why purpose-built procurement software?

Tailored to unique industry needs

Purpose-built software is specifically designed to support the intricacies and processes of project-led centrally enabled procurement. 

Moreover, the nature of high-risk and subcontractor dependent supply chain in industries such as construction and mining adds a degree of complexity that not all software packages are made for.

Optimised workflow

Purpose-built software streamlines procurement processes in a way that complements the approach’s unique structure. It can spit out prompts/alerts and automate routine tasks, making the entire procurement process more efficient.

Cost effectiveness

Rather than spending money on customising off-the-shelf software that may not yield desired results or may chew up significant resources, leaning on purpose-built software can help get teams up and running faster; hence quicker ROI.

If you’re further down the spectrum above, it’s quite obvious that having software would help cut down on so many hours of admin burden.

Risk management

The risk of duplication, spend maverick, inaccurate data — to name a few — is greatly reduced as you move up the spectrum of tech maturity, thanks to functionality such as audit trail.

Innovation

Good software vendors release new features in response to market demand, enabling organisations access to best practices to grow with the times themselves. Think new regulatory requirements and how having purpose-built software can let you roll that out smoothly.

Felix has built software tailored to the needs of project-driven industries from the ground up — such as construction, mining, utilities, facilities management, etc. — helping the central procurement team and, in turn, upper management with visibility, governance, single source of truth, shared insights and ESG.

Meanwhile, the vendor management and procurement platform also helps project teams get more time back in their day through streamlined workflows, faster approvals, independence and visibility.

Find out more about Felix here.

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