Back to Volume 2 | Summer 2017

How to Unlock & Capture Value in Project Supply Chains

Executive Summary

Supply process flows are critical to the successful delivery of infrastructure projects and associated key business drivers (growth, reduced costs or lead times, reliability, etc.). Implementing a Project Production Management (PPM) structured approach with suppliers is essential to capture value within the supply network, extending beyond conventional procurement practices. We illustrate this by examining three examples of infrastructure projects.

PPM supports effective partnering with preferred suppliers by providing the means to map, design, control and synchronize process flows between and among the supply network to meet business drivers. Compared to conventional practice, mapping the supply network production system makes risks in the supply chain visible, particularly those beyond first-tier suppliers. It also helps identify ways to reduce cost and better manage business risk through the design of work activities and implementation of control mechanisms to synchronize the process flows across the supply chain production system.

When mapping the Production System implicit in large infrastructure projects, the system typically spans the organizations of several enterprises, including the project owner and the network of suppliers that provide the different inputs (raw materials, parts, capacity, information, etc.) that go into constructing the infrastructure.

To properly implement PPM, it is necessary to synchronize and control all work activities in the infrastructure project across the entire production system, spanning the organizational boundaries of the enterprises working throughout the supply network.

Implementing a PPM-structured approach with suppliers is essential to unlocking and capturing value within the supply network. The use of Process Flow Diagrams to assess supply networks has the added benefit of providing transparency for a project owner beyond their first-tier suppliers. This also establishes a platform for the identification of optimization opportunities, allowing them to identify risks across the entire supply chain and identify the participant(s) best positioned to manage the risk. PPM also allows the owner to strategically establish areas where collaboration with suppliers is key to 1) effectively reduce variability, 2) adjust process design as deemed appropriate and 3) quantify and place inventory or capacity buffers to mitigate remaining variability.

Mapping the entire production system and working with suppliers to implement improvement opportunities throughout the entire supply network provides benefits to all participants in the project execution and delivery process, including the project owner and the supplier network. Experience shows that “ways of working” are far more important than the form of contract used to procure discrete pieces of work.

Once in place, PPM underpins successful design and control of the planning and execution of work activities during project delivery, while illuminating areas ripe for joint continuous improvement.

Steps to map production system and optimize supply flows

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