4 Key Principles to Procurement and Sourcing Efficiency

"In the end, all business operations can be reduced to three words: people, product, and profits.” – Lee Iacocca, American Automotive Executive

Efficiency in product procurement and sourcing doesn’t happen by accident or by magic, but rather through a keen focus on attention to detail. DIS-TRAN knows a thing or two about this. Here are four key tactics we have learned over the course of thousands of successful substation projects.

1: Coupling product supply and design.

Our standard packaged substation procurement model couples physical product supply with the necessary design and procurement services inherent in the efficient supply of those products. One without the other – products without the services, or services without the product supply – erodes the value the customer gains by coupling both components together.

“We like to think we're pretty well skilled at the design of a substation,” says Alan Mobley, Commercial Manager at DIS-TRAN, “and when design falls within our responsibility, we have a pretty high level of confidence that we can get both – design and procurement – right.”

Mobley cites switches as a good example. The switches used in substations are typically large devices, mounted on big pieces of steel, with control mechanisms that also have to bolt onto steel structures. It’s much more difficult – and much less efficient – to manage procurement when DIS-TRAN ends up working through third parties and multiple people to access design drawings.

2: Ensuring procurement serves the needs of project managers.

Many organizations split procurement away from the project people, but when procurement works closely with project management staff, it benefits the project. Project managers have the greatest visibility into project needs and what will drive successful outcomes, and procurement should serve that end-goal.

3: Refraining from vendor commitments at the proposal stage.

“Especially if we have some design scope of work, the original material list may change as we go through and put pencil to paper,” say Mobley. He notes that sometimes entire vendors can change. By waiting to commit, the project owner can have greater flexibility to better the project as it moves forward.

4: Identifying specific items and vendors as early as possible in the process.

Still, lead time is an issue. Once the project begins in earnest, the earlier we can identify the vendor(s) whose products we’re going to purchase, the sooner we can place those orders properly. In fact, not having a materials list identified early enough in the process can cause delays and cost overruns.