QSO 349 Milestone Two Guidelines and Rubric

01/18/2026

A procurement management plan is an essential strategic document that outlines the way an organization will acquire goods and services from outside sources. It is mainly used to give a formal guideline to the overall procurement cycle so that all purchases can be justified, right, and in line with the project objectives. The fundamental elements of such a plan are the roles and responsibilities, procurement schedules, the standard procurement forms such as Requests for Proposals (RFPs), selection and evaluation criteria, and ways of managing vendor performance. These elements allow the project team to ensure transparency and uniformity in the procurement process by setting them out at the beginning.

These plan elements directly respond to the complicated organizational needs in the case of the SiL’K project in Harley-Davidson. The component of selection criteria is especially crucial, since the team needed a software solution that had a 90 percent functional fit and was able to be compatible with the unique Harley corporate culture. Also, through formalization of roles and responsibilities of the Purchasing Unity Group (PUG), the procurement plan guarantees cross-functional buy-in, which is crucial to overcome the internal propensity of site-specific processes instead of an enterprise-wide system. This formal methodology is regarded as an extension of the Supply Management Strategy (SMS) of the company to shift to strategic supplier relationships.

The procedure of implementing a procurement plan presupposes the choice of a suitable type of contract, and three major types are extensively utilized: Fixed-Price, Cost-Reimbursable, and Time and Materials. A Fixed-Price (FP) contract entails an agreed price of a specific item or service, the financial risk of which falls on the seller (Górska-Warsewicz,2024). A Cost-Reimbursable (CR) contract pays the seller his actual costs incurred and a profit margin, which gives flexibility where the scope is not precisely known. Lastly, a Time and Materials (T&M) contract is an interim contract in which the buyer pays in terms of an hourly labor rate and the actual material cost, commonly applicable to smaller or less expensive contracts.

These contracts are not always appropriate according to the character of the project. Fixed-price agreements are the most relevant in the case of products and construction projects whose requirements are fixed, and the scope is clear. Cost-Reimbursable contracts are best applicable in design, research, and development work where the results are not predictable and where they need a process of trial and error. Time and Materials contracts are generally employed for services or staff augmentation in situations where the demand is identified at the moment, but the amount of work or the duration of the work cannot be accurately determined at the beginning of the engagement.

As a buyer, the various types of contracts have multiple ways of maximizing value as well as minimizing the risk. Fixed-price contracts significantly reduce financial risks to the buyer, since the price is certain, but they do not allow flexibility in case modifications are necessary. Cost-Reimbursable agreements are the most efficient to maximize the value of complex projects because the buyer can reassign the work upon finding out more information, but has an increased risk of cost overruns to the organization (SETYAWAN,2022). In order to balance these two, incentive clauses may be inserted in either of the types to bring the profit goals of the seller into line with the objectives of the buyer, like achieving specific quality standards or completing before the scheduled date.

In the case of Harley-Davidson SiL’K, a Fixed-Price Incentive Fee (FPIF) contract would be the best to implement the project. Although the fundamental software licenses might have been bought on a typical fixed-price contract, the implementation has brought about enormous transformational change in the various manufacturing locations. The FPIF structure will offer a price ceiling to manage the financial risk of Harley and give incentives to the partner to meet the cost-reduction target of the project of 34 million dollars. This choice is reasonable as it corresponds to the vision of Garry Berryman when he considers the partnership with suppliers, making sure that the vendor is interested in providing a high-quality system that can merge effectively into the business processes of Harley-Davidson.

References

Górska-Warsewicz, H. (2024).  Trust and Brand Management: The Role of Brand Heritage. Taylor & Francis.

SETYAWAN, B. (2022). Understanding The Impact Of China’s Belt And Road Initiative Policy (Bri) On The United States From 2016-2021 Through Hegemonic Stability Theory Analysis.