Let’s give it a shot. Let’s do this in the form of the procurement version of a self-Q+A.
Pretend interviewer: What do you mean by project buying or project purchasing?
Me: When companies buy things for a specific project rather than as inputs/services to an ongoing product or service offering. As an example, there are firms that build plants of various types for other firms. These plants have unique specifications and requirements, and therefore, the companies doing the plant-building are buying different things all the time.
Pretend interviewer: Must I continually vocalize these questions even though we are the same person?
Me: Yes. Next question.
P.I.: What makes project buying different from other types of buying?
Me: There is greater time pressure since there are clear incentives to deliver on time. Project buying really brings assurance of supply into focus since not having inputs on time has very clear, tangible consequences. I understand that in some parts of the world, caning is involved. It also tends to operate in difficult markets since suppliers have a great deal of process knowledge, technical knowledge, capital barriers to entry are high, etc.
P.I.: What are the implications?
Me: If we just continue to buy project to project, we’ll likely encounter the same problems that we currently have. We can’t do the traditional ‘I’m-the-buyer-use-leverage’ thing, so we need to be a bit creative. We also can’t predict the specifications for things like tooling and machinery. The keys are developing supplier relationships…and I’m not talking about just being nice to the suppliers. Having joint systems in place to react quickly, developing mechanisms for innovation, and working together on longer term plans and strategies are the keys.
P.I.: So, will category management work in this scenario?
Me: Yes. Going through a strong process (I would have said “robust process,” but then I would have had to ask the pretend interviewer to slap me) will help (whew, narrowly avoided “add value”). If done well, we’ll acquire and share knowledge, improve supplier relationships, and be ultra-prepared for the next project that the CEO tells us we must deliver by tomorrow. Under budget. And wows the client.
P.I.: What is your favorite word that is the opposite of “robust”?
Me: Well P.I., I’m glad you asked. “Sapless” is my favorite opposite. Whenever someone’s process does not quite make the grade, I will refer to it as a “sapless process.”
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