| Purchasing
and Supply, Meet Project Management
To see the silent
pictures Judith of Bethulia (1913) or The Birth of a Nation
(1915) is to witness the results of project management by one
of the world's first and great project managers, movie
director D.W. Griffith. But while Hollywood has been project
managing since the beginning of film, it's usually the
construction and aerospace industries that are traditionally
associated with the discipline, followed more recently by the
telecommunication and computer industries. Yet over the last
decade, project management - a team-based approach to work -
has leapt out of the box and is being recognized and embraced
by more and more organizations in a wide spectrum of
businesses.
According to the Project
Management Institute (PMI®) in Newtown Square,
Pennsylvania - an organization associated with project
management as NAPM 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, P.M.P., president of Integrated Process Developers
in Canton, Michigan, and project management faculty curriculum
chair at the University of Phoenix Michigan Campus,
"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, P.M.P.,
president of Integrated Process Developers. |
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. Integrated
Process Developers' Doug Boebinger, P.M.P., 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." |
Project:
Purchasing
"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%
The Forecast
Decreasing 11%
Staying about the same 2%
Growing 87%
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
- To
represent the purchasing point of view in
considering tradeoffs, setting priorities, and
making decisions affecting policy
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. |
|