Blueprint for Your Supply Chain Initiatives

OK, here is the situation: You have the chance to become the newly anointed program manager for the supply chain initiative of a midsize electronics manufacturing company. Your task is to execute a supply chain integration project in 100 days.

Sounds like a no-win situation, right? Well, for many managers today, this is the reality they face. Short-term return on investment (ROI) and “quick win” projects are prevalent themes for companies looking to improve the efficiency of their supply chains. With the curb in information technology (IT) budgets, the difficulty in tackling supply chain issues has increased several orders of magnitude.

Here are three practical rules to keep in mind as you attempt to simplify your approach to supply chain management projects.

Rule 1: Avoid the Big Bang

The tendency of many program managers is to outline the definitive supply chain blueprint — one that integrates multiple business units, partners, or systems in a seamless manner. Avoid this tendency at all costs and stay pragmatic. Here are the reasons:

• Integration overload. Big-bang projects involve too many business processes, systems, and requirements that are in constant flux. Integration needs that span multiple business units are complex and open to subjective design by one party. The probability of successful project execution decreases with the number of integration points involved.
• Data integrity. Translation of supply chain information across multiple systems or trading partners is not a trivial task. Quite often, integration projects stall simply because partners fail to agree on data standards or semantics.
• Lack of time. Big-bang projects are notoriously arduous. In addition, project requirements will always change during the course of an implementation. It is impossible to predict business requirements accurately outside of a 1012-month window.
• Law of diminishing returns. The broad scope of the big-bang initiative tends to lower the impact and value of individual business requirements. Moreover, it is very difficult to execute against multiple layers of requirements.

Rule 2: Iterative Steps Work

I recommend that to counter big-bang initiatives, program managers tackle smaller, yet practical, projects with well-defined process objectives that produce measurable financial impact. Limiting scope in terms of time and budget has the following benefits:

• Tactical goals are attainable.
• Shorter time frames stabilize requirements and assumptions.
• Single-budget-period projects force completion before allocating new funds.
• Tight scopes improve training and change management for all involved.
• Iterative cycles mitigate project risk by providing a clear exit point.

Rule 3: Beware of Long-Term Commitments

Software vendors and service companies are guilty of fostering large-scale implementations. By understanding a few basic principles, you can manage your vendor relationships responsibly:

• Large-scale deals only favor software vendors. This may sound obvious, but many companies commit to entire solution suites even though there is a limited scope of functionality a company can absorb within a 12-month time frame.
• Long-term implementations only favor service vendors. Beware of service companies that deliver project plans extending beyond 12 months. Long-term project engagements are very risky to manage and do not provide the proper incentives for timely project completion.
• Bigger is not always better. Attempt to overcome the deceptive attraction of managing expensive, large-scale projects. Much of this has to do with attitude and philosophy. Throwing money at a challenge is often the least effective means of solving the problem.

Keys to Success

So your 100-day challenge as the supply chain program manager is not impossible. The legacy of complex enterprise resource planning (ERP) or customer relationship management (CRM) system implementations should not deter you from tackling new opportunities related to supply chain management. Here are some last points to consider:

• Individual projects will build momentum for future success.
• Work with vendors that are willing to close smaller deals that are part of a well-defined road map.
• Provide the incentives for service firms to complete program iterations in a timely manner.

If you would like to talk about your program management experiences, I would like to hear your stories.