Material Procurement Risks Your Project Team Might Miss

Is your organization launching a new facility? Whether it represents an expansion of existing operations, a relocation from a previous site, or an entirely new function for the company, there are a number of risks around material procurement that must be identified and properly addressed before your facility startup project can deliver the expected results.

Start with how. How will material procurement occur? As is the case with many new facility launches, there may already be a procurement team in place that will simply add the location and its needs to their workflow. On the other hand, it’s possible that regional legal requirements, regulatory mandates, or routine logistical issues may necessitate the development of new processes and procedures for specifying, procuring, receiving, and storing materials at the new location. To avoid gaps in material availability and the potential for the work disruptions that may follow, the team should be diligent in working out the specifics behind how these tasks will be handled long before the first items are needed.

Look at where. Another question project teams must answer early in the process is where the new facility’s materials will come from. Is it better to leverage existing vendors or to select new suppliers? Uncommon materials or niche manufacturing methodologies could make the expanded use of an existing vendor more practical. The need to minimize lead times or to procure more materials than any one supplier can provide may lead the organization to develop relationships with new vendors. It’s also likely that some materials will be re-routed from existing locations to the new facility, and those logistics must be carefully coordinated as well. Any delays in sourcing the right materials could severely impact the efficiency and production capabilities of the new facility, so be sure to give “where” the attention it deserves.

Consider when. With the potential vendor list in hand, confirm that each is able to meet your organization’s timeframe requirements. A vendor that can’t provide the necessary materials in sufficient quantities could trigger delays in downstream operations and may even put the project’s results in jeopardy. As your team develops the material procurement plan, think about specific timing requirements. Will sales or production cycles create a material delivery schedule that is highly dynamic? If operations are moving to the new location from an existing one, will your suppliers need to help you build inventory buffers for those materials that will be required to satisfy customer demand during the transition? Can your chosen suppliers successfully fill not only your organization’s orders on time, but also those coming in from their other customers? Each of these details should be addressed and reviewed with each vendor ahead of time to ensure everyone understands the requirements, expectations, and risks.

Savvy teams also develop their project plans with an eye toward how often materials can and should be procured. Among the factors to consider are any limitations of the new facility. Are the staging areas, storage rooms, or loading docks modest in size? If so, smaller, more frequent deliveries of key materials may be necessary. How quickly will incoming materials be consumed? How far in advance can critical items be ordered and how long is the typical lead time? How often will fluctuations in operational levels occur, and how will each of them affect the need for—and the ability to store—incoming materials? Because the startup phase of any new facility is often hectic and multiple groups may be vying for the same loading dock space and personnel, getting the timing details right is imperative if the facility is to launch on time.