How are the complexities of Supply-Chain managed by Project Management?
When we read or hear the term supply-chain, we can relate the term with the management of the supply to meet the demand efficiently. Thus, we can elaborate it stating, supply-chain management revolves around planning and managing all the activities like – procurement, logistics, conversion, and sourcing management, synchronization between supply and demand as well as measurement of global performance. Moreover, supply-chain management is an inclusive or collaboration and coordination between the channel partners. These partners could include anyone- suppliers, third party service providers, customers, as well as intermediaries.
The frame of an organizational view of an SCM (Supply-Chain Management) depends on its people, its industry, its history, and its products. Every organization have its own definition of SCM that fits its needs, thus there is no absolute or right view to determine its – scope, goal, implementation, participation, and plan. Supply-chain management provides business and competitive advantage to many enterprises, although SCM, in today’s landscape is filled with distinct challenges.
Considering supply-chain as a fertile ground ready for new, improved software, thus an integrated supply-chain project must define the requirements that match the totality of the individual or group solutions to improve market penetration of an existing product. So, initiating, monitoring, controlling, and planning, which are the four-project management process improvement phases, can meet new requirements or improve the old ones in supply-chain. Project Management isn’t just a standalone discipline, but the need for it arises with multiple disciplines to work together.
To improve the designs and organize supply chain projects and the process will require performing the best practices procured by project management.
Project Management Nine Knowledge areas for supply-chain improvement
Analysist, academics, and senior managers debate over the relative value of strategy & tactics which sometimes go unimplemented, due to unguided strategy applied for projects. They also believe that project management has the competence to improvise the supply-chain. Many companies were analyzed and found out that they have difficulty in implementing initiatives because of – lack of planning, money, skills, focus, as well as patience. Thus, to move ahead of the competition with the supply chain change all is needed is benefiting from the capability of project management.
Thus, there are nine knowledge areas and requirements related to implementing for supply-chain improvements:
1) Project Integration Management
Follows a strategy that fits with other projects & programs including individual tasks, tools, & methodology for the completion of the project. PIM also controls the detail of the cost, staff required, mitigation measures, responses, process tracking and the methods of communication between the stakeholders. Besides this, PIM also focuses on the Work breakdown structure (WBS), risk, constraints, issues faced or changes requiring decisions or contingencies to deliver the quality project within the scheduled time & milestones.
2) Project Scope Management –
Works parallel to market demand, technology advancement, environmental compliance, or social needs. Where there is a demand for a new product on a customer’s request a business is required to meet the needs, which are new and upgraded according to the latest technology. Thus, PSM manages all the legal requirements, civil infrastructure or fund-raising necessary to increase the business revenues & profits or improve productivity.
3) Project Time Management –
Although Project Management has introduced best practices & techniques to enrich the knowledge areas of SCM, thus time management holds its unique position. For the supply-chain projects, time must be added into the account –coordination across company boundaries – as projects can sink out of poor estimation. Also, PTM follows a pattern for SCM projects and any other types of projects –
- Define Activities.
- Sequence Activities.
- Estimate Activity Resources.
- Estimate Activity Duration.
- Develop Schedule.
- Control Schedule.
4) Project Cost Management –
This management system work in a non-traditional way for cost management in a supply-chain project by providing a long-term contracting, commitment to suppliers or customer, activity-based cost tracking, fixed prices for certain products, and balancing up-front partner capital investments with future profit splits. Moreover, PCM exercises a method for handling new product development or services contribution, joint investment in information exchange system (IES) to run supply chain, incentives for the exceeding plans, and penalties for departing from the practices that add costs.
5) Project Quality Management –
The outputs of the supply chain are mostly service and result based, not physical products. Thus, the quality management of SCM projects is not necessarily easy. Plan quality incorporates standards and plans that are relevant to the project for applying. Planning decisions for forecast and inventory control must be demand-driven rather than forecast-driven to measure the progress towards the potential. Performance quality assurance measures the quality levels of the execution process, to check the adequacy of the plan and the performance quality control the project management outcomes, such as cost and schedule performance.
6) Project Human Resources Management –
With increasing new technologies, teams work at a distance which is a supply chain project that tends to spread around the world. Multi-company supply chain efforts require shared resources and their respective team. The major challenge occurs when there is a need to integrate different mindsets into an effective team with their respective roles and responsibility. Thus, a supply chain project approach uses Responsible, Accountable, Consulted, and Informed categories. Training is another tool used for team building, similarly, there are various tools cited for 360-degree evaluation of the project at all levels, from the creation of issue logs to team’s agenda, and facilitation to address teams’ conflicts.
7) Project Procurement Management –
Supply chain efforts would need a partnership with multi-company to have new ways of thinking for financial stability. Procurement responsibility in supply chain projects resides on a single party or may be shared which require collaboration and joint decision making for long term business. Thus, procurement in supply-chain is a two-step process, one is strategic sourcing – for becoming a partner and second is procurement – a selection of day-to-day purchasing of goods and services from the suppliers. Further, Plan procurement works when have to decide what, why, and when to make purchases of a product or service for the project. Contract Procurement is a process that develops the document and evaluation criteria, whereas administer procurement administers the ongoing project contracts and changes to it, close procurement is the formal closure of all the procurements.
8) Project Communications Management
multiple company participation has become the fundamental reason for an expertise team, as they come from trading partner organizations. Risks from transferring proprietary information can be a risk factor. Plan communication transforms the communication requirement into the communication management plan to analyze the stakeholder’s information that is further addressed in terms of content, the method of delivery, frequency, and support systems. Also, many organizations working in this environment utilizes workflow tools to collaborate and forward information to the stakeholders automatically. Report performance describes the current status and the forecast of future performance based on project records, presentations, feedback, the changes made in the plans, issues resolved, and the stakeholder’s notification.
9) Project Risk Management
PRM puts considerable attention to the risk associated with the project. In supply-chain project management, risks are of two types – one is to the project itself and second is supply-chain design. There are various reasons behind the curtains including communication and increased efficiency. Sometimes, being flexible becomes a risk mitigator thus, better communication and use of resources may reduce the risk in the supply-chain projects. Risk management describes strategies to maximize the probability and consequences of positive events. Plan risk management process focuses on the risk tolerance of the management as supply-chain projects highly depend on the qualitative and quantitative analysis. Plan risk responses deal with the risk events after identifying them and monitor & control, review the known and the new ones. Thus, measures like – avoidance change the project plan, transference involves shifting risk consequences, mitigation reduces the probability of suffering, and acceptance means no prevention action required.
Why should you look at the IT Projects?
The scope of knowledge and practices are very, very broad in Project management and SCM discipline, which is not just limited to logistics. Other disciplines related to SCM are – industrial engineering, financial planning, accounting, finance, competitive analysis, mechanical & process re-engineering. There might a doubt that IT enables supply-chain improvements but, those with an IT project will be able to present broader lessons for supply chain project management.
In addition, IT industry has proactively created a list of standards that perform the best practices and the knowledge required to execute projects more successfully – Information Technology infrastructure library, Skills for the information age, Business Analysis Body of Knowledge. Shortfalls in IT projects that in supply-chain technology could be due to two reasons – first, identifying the types of project failure. Second, findings of the project failure would work as a guideline to those setting up their own project. Thus, knowing the root cause can lever the risks and collapse of the supply-chain management, the five sections that can be addressed as the root causes are –
- Rigidity, Insufficient flexibility.
- Organization Roadblocks.
- Top Management Abrogation.
- Inadequate Technical Capability.
- Misunderstood Technology.
Information Technology Project Management Best Practice
However, the IT industry has implemented the best practicing tools to eliminate these root causes which can be attained by – better-skilled workers, higher levels of teamwork, redesigned processes, and new decision rights. An example of it shows how electric motors impacts on factories. Early factories, which were located near rivers and streams had the support of water wheels that power drive shafts. The role of the drive shafts was to serve machine throughout the factory. Later, with the advancement, drive shafts were displaced with single electric motors, further, small & cheap motors were attached to each machine that demanded four organizational companions. Thus, this gave rise to the better workers who were skilled at operating and maintaining machines, making decisions to keep the on-going process flow seamlessly. This gave rise to new factories on just a single floor which was far more flexible as compared to the old eliminating the process of linking them with one drive shaft.
Many project shortcomings can address moving the organizations to the next level but, this requires the level of awareness that’s absent in many organizations. A reasonable maturity is required to avoid the rigidity for an informal process which is flexible enough for the variety of projects. Thus, structuring the project phases will enhance the agility in a dynamic business environment.
1) Enterprise Analysis – Establishes the scope of a project, defines business issues, referred to as investigative, feasibility, business architecture, as well as conducting an initial risk analysis.
2) Requirements Planning and Management – Plans the requirements and gathers the processes. It also notifies that plans must coordinate with other activities, track the availability of resources, and monitor the progress of the effort.
3) Requirements Elicitation – Describes the methods to gather requirements along with the business system that consists of the processes that go with the technology thus, the tools covered are – brainstorming, document analysis, focus groups, interface analysis, interviews, observation, prototyping, workshops, reverse engineering the code in an existing system, and surveys.
4) Requirement Communication – The most important factor is communication throughout the elicitation and enterprise analysis process, so the business analyst must keep the audience in mind & select the communication methods appropriately according to the situation.
5) Requirement Analysis and Documentation – The most structured area like – the set of tasks which require experts in process improvement methods. The task may vary, like –
- Structure requirements packages, so that the solutions match the identified issues.
- Analysis of the user requirement, individual or group user, functional requirements, quality of service requires to make the solutions effective describing the solutions.
- Determination of the assumptions, constraints, requirement attributes that can affect or limiting the solution.
- Documentation, validation, and verifications of the requirements in order to meet the needs of the stakeholders.
6) Solution Assessment and Validation – Focuses on the structure of the path from design to implementation of the solution to review and assessment post-implementation. Since the product is the description of the systems and the process that help refine estimates of the resources necessary to implement for a solution. Thus, a user pursuing supply chain improvement might employ project management discipline, as it carries great potential for proliferating terminology from one organization to another.
Collaborating relationships for improving supply-chain process and system
Success in project implementation depends on the people tasked to do the job — their availability, numbers, skills, and motivation as well as collaborative relationships. Thus, it is necessary for the employees to view their company as a project-delivering organization instead of plugging along with a routine work environment. Thus, to obtain the full potential of the supply-chain project, the upstream and the downstream partner’s involvement is necessary. To, plan the multi-company effort these processes must be included –
- Process Communication to elicit participation from partners.
- Implement Supplier base plan.
- Implement Customer base plan.
- Install Multi-company Organization.
- Plan Risk Sharing.
- Acquire Multi-company staff Resources.
- Verify Partner Scope.
Considering the product in its life-cycle and whether the product is innovative, requiring a responsive or cost-effective supply-chain, or functional. Improving the existing processes and establishing new ones, addressing demand-driven supply-chain that labels the safe goal & synchronized or lean supply-chain for the designers, determining the gap of the current operation and then systematically closing it. Encouraging the demand-driven supply-chain are the links among the partners along the chain. These links involve the passing of the data, so are they necessary for handling information. Thus, plan the supply-chain process, map them describing how the process should operate through activity-based costing, constraint analysis, cost improvement categories, flow charts, product structures, surveys and benchmarking supplier’s analysis, speed analysis, and reduced material cost.