Program Supply Chain Management

When the owner integrates the supply chain (on behalf of contractors)

 

If you’re running a major project and you’re still leaving every critical material decision to each individual contractor package, you’re probably accepting avoidable schedule and cost risk. The market doesn’t care about your contract boundaries.

Transformers, switchgear, pumps, values, SCADA component, specialist mechanical equipment, treatment process packages, even simple materials with constrained suppliers – they all sit on the program critical path. Yet they’re often procured in fragmented ways across multiple delivery partners.

That’s where Program Supply Chain Management (PSCM) comes in.

PSCM is an owner-led model where the asset owner (or program authority) integrates the supply chain across the whole program and, when appropriate, procures and manages principal-supplied items/materials on behalf of contractors – all while still holding contractors accountable for installation, integration, and performance.

What PSCM is (and what it isn’t)

PSCM is:

• A program-level supply chain operating model (not just procurement).
• An approach that creates one demand signal to the market (not three or ten).
• A way to remove long-lead supply risk from individual contractor packages when it’s smarter for the principal to hold that risk.
• A mechanism to standardise, leverage buying power, and improve transparency, without crushing delivery partner autonomy.
• A practical framework for Principal Supplied Items (what the owner should supply vs what the contractor should supply).

PSCM is not:

• The owner doing the contractor’s job.
• Centralised procurement for everything.
• A silver bullet that replaces good engineering, project controls, or site execution.

Why owners are leaning into principal-supplied items

There are a few reasons this model is showing up more often in major programs:

1) Long-lead risk is now a program risk

Long lead times, manufacturing slot constraints, and global shortages mean the commercially neat contract boundary is rarely the operationally sensible boundary.

2) Multiple contractors can unintentionally bid up your own market

Three delivery partners chasing the same OEM capacity is a great way to:

• lose leverage,
• lose schedule certainty, and
• create competing expediting priorities.

3) Standardisation creates compounding benefits

When you standardise key materials/specs, you get better:

• maintainability,
• spares strategy,
• training and competence,
• asset data quality, and
• lifecycle cost outcomes.

What “owner-integrated supply chain” looks like in practice

In PSCM, the owner establishes a Program Supply Chain Office (or similar) to sit alongside Program Controls. The office typically owns:

• Demand aggregation & forecasting (linked to the master schedule and cost baseline)
• Contracting strategy & packaging (what’s principal supplied vs contractor supplied)
• Framework agreements / shared purchasing (so delivery partners can buy consistently and quickly)
• Supplier relationship management (including capacity planning and slot reservation)
• Expediting, logistics & quality assurance (route surveys, inspection regimes, storage/handling strategy)
• Integrated reporting and governance (a program Procurement Status Report becomes “the bible”)

This “integrate and enable” posture aligns naturally with collaborative delivery models and contracting suites that promote proactive management and collaboration (for example, NEC’s approach to collaborative contracting).

Where Critical Input has seen this work (and why)

Critical Input’s experience across utilities and major infrastructure recognises that owner-led supply chain integration succeeds when it’s treated as an operating model as opposed to a procurement “initiative”.

• In a major water utility, we supported practical enablers across process, people, project management and supply chain – including integrated project management processes aligned to the delivery model, management operating systems, contractor operating manuals, and the development of a Supply Chain Shared Purchasing function/process/manual that enabled consistent purchasing across delivery partners.
• In constrained equipment markets, we’ve supported principals to take a more deliberate approach to supply risk – including early market engagement, resilience planning, and deliberate strategies to secure supply capacity.
• This matters most in major equipment categories and complex assets where supplier markets are constrained and delivery windows are measured in years, not months.

Designing PSCM: what should the owner supply?

A pragmatic way to decide what the owner should supply is to ask:

Should the owner hold this risk?

Owner-led supply is often justified when the item is:

• long-lead and schedule-critical
• constrained by limited suppliers / manufacturing slots
• highly standardised across the program
• high consequence of failure (safety, compliance, operability)
• better leveraged as aggregated demand

Contractors should generally retain ownership where:

• performance depends heavily on their means/methods,
• supplier choice is integral to their design responsibility,
• the item is not supply constrained and is easily substituted.

The 7 building blocks to implement PSCM (without chaos)

1. Scope & boundaries: define principal-supplied items and interfaces (who does what, where, and when).
2. Demand planning: create one integrated demand signal tied to program controls.
3. Market & category strategy: package scopes to suit market capacity (and avoid self-competition).
4. Contracting model: frameworks, direct supply, shared purchasing, incentive alignment.
5. Logistics & quality: expediting, inspection, route surveys, storage, quarantine, and handling.
6. Governance & controls: RACI, probity, change control, procurement status reporting.
7. Data & capability: master data, systems integration, SRM, analytics, and skills.

Common pitfalls (and how to avoid them)

• Ambiguous accountability: if the owner buys it, who owns specification, expediting, warranty, defects, and interface risk? Fix with a clean RACI and contract interface schedule.
• Duplicate expediting: multiple parties chasing the same supplier creates noise, not outcomes. Establish a single “supplier interface owner”.
• Non-integrated reporting: if procurement status isn’t linked to schedule risk, it becomes a spreadsheet ritual.
• Over-centralisation: don’t try to principal-supply everything. Focus on the 20% of items that drive 80% of risk.
• Ignoring the “last mile”: logistics and site readiness can break even the best sourcing strategy.

Supply chain is not a support function: it’s a delivery system

Most mature programs are realising that.

When owners integrate supply chain at the program level, and selectively manage principal-supplied items on behalf of contractors, they can unlock:

• schedule confidence,
• cost leverage,
• risk transparency,
• repeatability and standardisation, and
• better lifecycle outcomes.

If you’re considering a PSCM or Shared Purchasing model – or, if you’re already in one and want to sharpen it – we’re always happy to compare notes.

We understand the importance of streamlining supply chain to be both cost-effective and aligned with business’s strategic vision, and it’s our mission to deliver value at every link of the chain.