Material procurement planning plays a key role in successful implementation of the project. Normally the decisions are delayed and once the procurement starts there is a mad rush to complete the project, which results in overlooking many key aspects which eventually further delays the project.
while finalizing the commercial ensure that hidden cost are identified and sorted out earlier as in later stage it will badly effect the budget. Consider the following:
Ensure all documentation required for overseas consignment are agreed upon and no delays are noted while getting materials cleared. Select supplier which can give benefit of taxes, transport & time. Product code should be clearly defined to get identified by end user. (See table ‘Panel Coding’).
Inform clearly to supplier not to proceed with next lot until the earlier one is completed. Optimization priorities differ at both ends. When each lot has big quantities, communicate to supplier to ensure he supplies all the items in the lot proportionately as in most case 99 per cent is considered as ZERO.
Negotiate and finalise the rates in early part of the project as you have the options and time to look for alternatives. Once we are in the mid of the project and ordering a new item with fixed supplier then he tends to bargain for higher price. Communicate all specs and requirement of the project clearly to the supplier to ensure arguments are avoided. Fix the rates by avoiding escalation in due course of the project by setting out project completion dates.
All materials should have same warranties as required by the project. If any one of the supplier is giving lesser period warranty than the entire warranties will fall off. Ensure that the warranties are project specific and not generic in nature.
Define standard packing procedures at the time of order. A little more investment might be helpful at later stage than damaged quality of products.
All needed test as per the specification should be taken seriously and carried out in accordance to it.Considering all the above mentioned points before finalizing any contract will be beneficial for all the stake holders. Hence a thorough study of the project requirement at the start of the project is very much needed.
By following correct procedures putting materials on hold, rejection of materials, transit breakages, arbitrations, rate escalation, billing variations etc., can be avoided which normally consumes lot of energy and time of project management team.