Authors: Lonny Simonian
This paper examines the use of agile procurement within an electrical manufacturing, distribution, and construction supply chain. By using agile procurement, value may be delivered by engaging all supply chain members in partnering arrangements to jointly manage the flow of material and create greater efficiency of operations. The goal of agile procurement is to reduce job site material handling and other waste rather than focusing upon reducing the cost of materials. In agile procurement, manufacturers, suppliers, distributors, and customers come together to define their common assumptions in terms of the business value, implementation risks, expenses (effort) and costs associated with procurement. An indicative fixed price scope is initially agreed upon, but that is not yet contractually binding. This is followed by a test phase. At the end of this phase, suppliers and customers compare the empirical findings with their initial assumptions. They then decide on the procurement implementation strategy for the entire project. Agile Project Management (APM), a recent development in the management of projects, is an iterative method of determining and developing project requirements in a highly flexible and interactive manner. Many contractors believe that having multiple suppliers during the construction stage of a project better positions them to reduce supplier pricing and increase their own profits. Contrary to this, national surveys indicate that contractors may only realize up to a few per cent cost savings using this approach. Electrical contractors who partner with their suppliers, however, can receive supplier services that can reduce contractor material handling time by a significant margin. Furthermore, in developing a relationship with a preferred provider, these specialty contractors need issue only one purchase order for commodity goods, as opposed to multiple orders from numerous suppliers. This paper presents the results of a survey that was conducted on supply chain members, along with a case study approach focusing on opportunities for contractors to utilize manufacturer and distributor value added services.
Keywords: Agile Procurement; Electrical Supply Chain; Agile Project Management; Value Added Services