For many companies, it remains a significant challenge to bring projects in on time, on budget, and delivering expected results. This is particularly true for organizations that manage large, materially-intensive projects. Many software tools and solutions are available that support Project Management but very few fully model the interdependence between projects and material supply, a key project resource. Businesses that do have the ability to link project schedules to the supply chain can actively manage the impact material availability can have on project schedules.
Problem – Changes in material supply, product orders, customer forecasts, or staffing resources can have a significant impact on project schedules in terms of having to accelerate or delay project delivery. Often, these supply and demand changes take too long to show up in project management schedules, resulting in missed milestones, “throw away” work, penalties, and cost overruns.
Need – Enterprises need a single management system that breaks down the silos between human resource management, supply chain management, demand planning, cash management, and project management to ensure that physical and human resource utilization is maximized."
In fact, we've just published a white paper on this very subject. The paper describes an integrated approach to project management which enables an organization to model all their projects and their entire supply chain together in one environment. I recommend checking it out to understand the business case for linking project management to the supply chain and to understand the specific capabilities that should be included.
With the question of why integrate project management with the supply chain answered, I offer some further insight into the how . In this, and upcoming posts, I'll walk through the various considerations for establishing the link.
Implementing the New Link between Project Management and the Supply Chain.
Implementing Project Management tools linked to the Supply Chain is similar to the move from stand-alone MRP tools to integrated ERP solutions. In a MRP to ERP transition, a major challenge is bringing finance and supply chain/operations departments together to understand each other's data and functional needs, then configure both software and business processes to meet the new requirements.Adding project management to the mix and linking this function to the supply chain/operations and finance groups (who are hopefully already running flawlessly together in their connected ERP environment) presents similar challenges.
Implementation Success Factors
Successfully integrating project management capabilities with supply chain data includes;
1. Identifying variable(s) linking project management to the supply chain.
2. Knowing/Managing the data that impacts the linking variables.
3. Defining linking strategies.
Identifying key variable(s) should be the first focus. A 'key' variable is one that if it's changed by one department, the change impacts decisions and metrics used by another.
For example, when shifting from MRP to ERP systems, a key variable is the goods movement transaction. Once linked, goods movement transactions result in real time shifts of assets in financial summaries. In a RapidResponse example, the Constraint Management Resource was added in a recent release; key variables linking the Constraint Management Resource to Planning Resources were constraint capacity variables. If constraint management is utilized, real time changes in Planning Resource data occurs as constraints are changed.
With the introduction of the RapidResponse Project Management Resources, the key variable linking it to RapidResponse Supply Chain Resources is the linked order 'Material Availability' date (the date an order is expected to be available given other supply chain dependencies. This often varies from an order due date). Changes in material availability can be configured as a hard link to immediately automatically shift project management tasks in or out, or a soft link to allow for warnings when out of sync that must be manually acted upon.
In all of these examples, configuration settings and business processes for the existing software/RapidResponse Resources were defined before the new linked software/Resources were adopted. They weren't initially set-up to meet needs of linked software/RapidResponse Resources/departments. In the pre-implementation phase it's time to re-evaluate, and as needed, re-design business processes and software configurations to ensure the key linking variables meet goals of all parties to minimize "discovering" them in the course of normal daily work.
In this latest integration effort, one doesn't want to link project management tasks to orders without first communicating with the supply chain group to understand how material availability changes over time. In some cases, shifts in order material availability may be the 'exception' that project management should be aware of immediately. However, in other cases, material availability may have significant swings on daily/weekly basis. Are both situations acceptable to directly impact a project management schedule with a hard link? Should a soft link be used where only warnings appear to be manually reacted upon in the Project Management Resource? What is the root cause of the variance and should/can it be eliminated? All are good questions for...
- Do you know your data?
- To Link or not to link. That is the question.
Originally posted by Dan Nowicki at http://blog.kinaxis.com/2012/09/another-link-in-the-chain-connecting-project-management-to-the-supply-chain/