Many organizations have implemented enterprise resource planning (ERP) software that they use to help manage their corporate procurement; unfortunately they often also try to use their ERP system to manage their project procurement.
There are significant differences in the way project procurement needs to be tracked and managed in comparison to corporate procurement. Corporate procurement systems are very seldom built with functionality that allows users to see the details that are necessary for project procurement– tracking materials and process equipment at the detailed level are required for projects.
For corporate purchases in an ERP system, there may be one line item on a purchase order for piping and fittings for a project, and then all related invoices are charged against that particular one line. This process may make processing invoices simple, but it’s impractical for a project in which there is a need to keep track of the delivery of each individual fitting or type of pipe separate.
For many projects, much of the material ordered is specialized; custom parts are often not easily acquired. Even missing one small part or piece can cause a significant delay to the entire project. For instance, an occurrence as simple as anchor bolts missing can grind an entire project to a halt– the workers arrive on time to install a piece of equipment, but the bolts are missing because they did not ship on time. Now the project is stalled waiting on their arrival.
Fortunately, project procurement systems support the level of detail necessary to track each and every piece of equipment and material separately to ensure none of those line items cause the project to fall behind schedule.
These project procurement systems also offer the ability to attach additional details to each line item to help reduce the potential of ordering the wrong goods. Project procurement software allows users to track key attributes like the technical requirements, write detailed descriptions, attach documents, and assign ID numbers to items– all of which are generally unnecessary for corporate procurement, but are critical for project procurement management.
For a deeper dive into the differences between Project Procurement versus Operational Procurement, check out our white paper.
Key takeaways from this project procurement white paper:
– 3 main processes of project procurement
– Compare project procurement to operational or corporate procurement
– Why project procurement is vital to project success
– Challenges that organizations commonly have with project procurement and possible solutions