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2013

One of the big mistakes made by folks buying technologies is thinking that the vendor or the VAR (value-added reseller) can provide the project manager for their implementation project.

 

They cannot, if you really mean a project “manager.”

 

And they cannot for a very good reason—a reason with which even you, as an executive or manager in your own firm, probably agree. But the reason probably don’t agree with what I’ve said so far is because you have never really thought the matter through completely.

 

What is a project manager?

 

The IT industry is shot-through with wrong usage or incorrect application of the term “project manager.”

 

You see, the term “manager” implies direct authority.

 

Yet, project managers almost never have any direct authority over the resources provided by the client to direct these resource to change their priorities (e.g. give priority to project efforts over their day-to-day activities at the firm), to assign new or different client resources to the project when some project task falls behind schedule or fails to come up to expectations in some other way, or to take other actions that may directly affect client-supplied project resources.

 

A real and effective “project manager” must have direct authority over the resources assigned to the project. Otherwise, his or her role is not a “manager.” He may be fulfilling some other role. He might be a project “watchdog,” reporting progress or lack thereof to senior management. She might be a project “coordinator,” doing her best to coordinate the resources assigned to the project. But, in the absence of authority to take direct action to effectively deliver the project’s desired outcomes, the so-called “project manager” cannot truly be a “project manager.”

 

 

How I see the consultant’s role on most IT projects

 

FIG Coach Role in Synergy.jpg

 

When a VAR or vendor provides leadership to an IT project, the most suitable role for the leadership from the VAR or vendor is a coaching role. Generally, consultants working in this capacity have a clear overview of the project—even in the absence of manifest authority to direct the internal resources of the client.

 

The consultant functioning in this role also brings with him or her advantages that many internal project managers may not have including:

  • Domain expertise with the technologies involved in the project
  • Years of comprehensive experience with similar IT projects
  • Knowledge of best practices garnered from experience with similar clients in the same or closely related industries
  • Skills as a business analyst to help connect the IT language with the business language in order to help bring about the best business result from the technologies being applied
  • A clear view of both the business aspects and the technology aspects across multiple silos of interest in the enterprise
  • Experience and abilities to assist in managing change and communicating the need for adaptation of business processes to the new technologies
  • Wisdom to help the client achieve the lowest total cost of ownership (TCO) and rapid ROI (return on investment) through the proper blend of adoption, adaptation, extension and (minimal) modification of the technologies

The importance of the executive sponsor

 

Acknowledging all of this about the need for having an internal project manager brings up some other important points. First, that both parties—clients and VARs/vendors—should cease to pretend that the VAR or vendor is providing “project management,” or, worse, blaming the VAR’s or vendor’s “project manager” when things go awry.

 

Also, it highlights the absolute need for every significant project to have an executive willing to take a proactive role in assuring the project’s success. The firm’s internal (real) project manager will need executive support when project demands conflict with the demands coming from line managers requiring the services of the same resources.

 

Equally as important, however, is the need for the actively involved executive to put weight behind the guidance provided by the consultant (or consulting team) functioning as “coach” to the project. After all, the firm is paying for access to these specialized resources. To let their guidance fall to the ground because there is no executive support for it seems to be a waste.

 

Worse can also happen.

 

When executives remain at arms’ length from the project and believe that the project is safe in the hands of a “project manager” (falsely so-called) provided by the VAR or vendor, it is not uncommon for the executive to not be given a truly accurate picture of the causes of project failure or “scope creep” when things do not go as expected or cost overruns surprise the CFO.

 

Summary

 

I am firmly convinced that clients, along with IT VARs and vendors, would be better off if all involved would distinguish real project managers from “project managers” in name only. I also believe that there would be fewer project failures if executives and managers—at both the clients’ offices and the offices of the VARs and vendors—would recognize where project authority exists and when and where it does not,

 

Consultants from VARs and resellers make great project “coaches” and can provide a tremendous amount of value when properly engaged in projects and provided with appropriate levels of executive involvement. However, when the clients or the vendors pretend they have a project manager involved in the project when no actual project authority exists, then they are opening the door for the all too common IT project failure.

 


 

We would like to hear what you have to say on this subject. Please leave a comment here, or contact us directly.

We are continuing our discussion of Gene Tyndall’s white paper for Tompkins InternationalDemand-Driven Supply Chains: Getting It Right For True Value” [Tyndall, Gene. Demand-Driven Supply Chains: Getting It Right for True Value. White Paper. Raleigh, NC: Tompkins International, 2012. Print.].

 

In his white paper, Tyndall mentions CEO Jim Tompkins’ book entitled No Boundaries: Moving Beyond Supply Chain Management, originally published in 2000. For its time, it was certainly a visionary work.

 

 

 

 

According to Tyndall, the book describes six levels in the evolution of “supply chain excellence.” There is still much truth to these more than a decade after Tompkins laid them out for us. Here they are as described in No Boundaries:

Level 1: Business as Usual. At this level, a company works hard to maximize its individual functions. Organizational effectiveness is not the focus. Instead, each organizational element attempts to function well on its own. Each division/department applies its own strategy for applications used.

Level 2: Link Excellence. Now, the link eliminates and blurs any boundaries between departments and facilities, and begins a never-ending journey of continuous improvement. Its individual link must evolve to make it the most efficient, effective, responsive and holistic that it can possibly be.

Level 3: Visibility. Links work better when they share information. Visibility establishes the groundwork for information sharing. It minimizes supply chain surprises because it provides the information links need to understand ongoing supply chain processes.

Level 4: Collaboration. Collaboration is achieved through the proper application of technology and true partnerships. Through collaboration, the supply chain can determine how best to meet the demands of the marketplace. The supply chain works as a whole to maximize customer satisfaction while minimizing inventory.

Level 5: Synthesis. Synthesis is a continuous improvement process that integrates and unifies a supply chain. Synthesis harnesses the energy of change to address a turbulent marketplace and ensure customer satisfaction. It is from synthesis that true Supply Chain Excellence is achieved because it enables a supply chain to reach unparalleled levels of performance.

Level 6: Velocity. The goal becomes accelerating the organization or supply chain to a higher velocity. Velocity creates shorter time frames, and this begets demand-driven.

 

Tyndall adds to these six levels of supply chain evolution an apparent seventh, taking us into the world of truly demand-driven supply chains (DDSC), when he says:

Demand-driven takes customer purchase information at the point of sale (POS) and provides it in real-time to all trading partners throughout the end-to-end supply chain. This means the entire supply chain sees one set of sales numbers and responds to those numbers in real-time. The key success factor of demand-driven is the timeliness of the data reflecting real transactions.

I have previously depicted what Tyndall describes. See “The Extended Collaborative Supply Chain” illustration below.

 

SCM Extended Collaborative SupplyChain.jpg

 

Thus far, Tyndall and I are very much in agreement. However, he throws the proverbial “monkey wrench” into my train of agreement with him when he opines on “the importance of sales and operations planning (S&OP) in demand-driven” supply chain operations.

 


Wait a minute! Did not this same author tell us (see my previous post “On Demand-Driven Supply Chains”), “Companies are facing new and unprecedented business challenges and trying to solve them with outdated tools and practices, which worked well (for some) in the past, but are not equipped to deal with the degrees of volatility, uncertainty, and complexity of today’s world.” [Emphasis added.]

 

Now, a few paragraphs later, this same author is trying to tell us that “[a]t the heart of the new demand-driven operations strategy is the sales and operations planning (S&OP) process,” which he admits was originally created “some 20 years ago… to obtain collaboration around sales forecasts.”

 

Are these the same forecasts against which he had just levied this accurate charge?

Most forecasting models are based on assumptions that do not cooperate with complex current conditions, such as: (1) that behavioral observations are truly independent, and (2) that it is very likely that we extrapolate average responses. Neither is true in today’s complex markets; no degree of past business intelligence is adequate for predictive purposes.

 

Now I am anxious to discover what has led to this attack of schizophrenic thinking by Mr. Tyndall, and it does not take long to uncover where, I believe, he misses the mark.

 

In one sentence, Tyndall offers up the very cogent truth that plagues so many good-hearted supply chain managers and executives:

Collaboration is easier to discuss than to execute, products have proliferated, and volatility and uncertainty have predominated.

Attempts to balance demand and supply

 

Unfortunately, Tyndall comes to the same wrong conclusion that so many have come to in seeking a demand-driven supply chain. Tyndall (at least on page seven of his paper) is still advocating attempts to balance “demand and supply” and finding that “profitability” elusive in doing so.

 

This will always be the case. Profits will falter in attempts to balance supply with demand for two elemental reasons:

  1. Demand volatility
  2. The inevitability of the attacks of “Murphy
  3. Attempts to balance supply with demand almost always lead to minimizing or eliminating what supply chain managers and executives see as “excess capacity” when, in fact, most of what is being eliminated is not “excess capacity,” but “reserve capacity.”


Excess capacity is capacity that is never needed by the system under present operational circumstances. Reserve capacity, however, is something entirely different. Reserve capacity is the capacity every system needs in order to recover from the occasional—but, nevertheless, inevitable—attacks of “Murphy.”

 

When reserve capacity is reduced, supply chain agility is reduced, as well. As a result, supply chain risk grows. Supply chains without reserve capacity will suffer reduced profitability from both sides:

  1. Too much inventory—leading to excess carrying costs, liquidations and obsolescence
  2. Too little inventory—leading to lost sales, lost customers and increased marketing costs as efforts are made to retain existing customers and attract new ones

The Right Answer: Balance the Flow with demand

 

The proper answer to Tyndall’s well-stated dilemma is the truly demand-driven supply chain—a supply chain where the flow (not the supply) is balanced with demand. Balancing the flow is achieved using the same principles we have so frequently discussed before:

  1. Reduce batch sizes – work toward the reduction of both the production batch sizes and the transfer (shipment) batch sizes
  2. Increase replenishment frequency – start by trying to cut your replenishment frequency by one-third or one-half
  3. Provide near real-time feedback – work toward the ideal of end-to-end real-time feedback on actual consumer demand all across the supply chain
  4. Build collaboration on Throughputit is much easier to build durable supply chain collaboration on increasing everyone’s profits and profitability than it is on cost-cutting

 

When supply chain executives and managers recognize the need to balance flow with demand and quit trying to balance supply with demand, they will begin to find greater success and improved profitability. Pursuing these four simple principles (above) will move every supply chain in the right direction while simultaneously reducing the levels of risk in the supply chain for all participants.

 


 

Please let us hear your thoughts on this topic. Feel free to leave your comments here, or you may contact us directly.

 

I have to confess that I was somewhat disappointed in reading Gene Tyndall’s white paper for Tompkins InternationalDemand-Driven Supply Chains: Getting It Right For True Value[Tyndall, Gene. Demand-Driven Supply Chains: Getting It Right for True Value. White Paper. Raleigh, NC: Tompkins International, 2012. Print.].

 

supply chain metaphor.jpg

 

Of course, Tyndall is correct when he says, “Developing a ‘demand-driven business’ is an emerging goal of business leaders. Knowing what customers bought yesterday and what they want to buy today is not enough…. [T]he common views about supply and demand are no longer adequate.”

 

Tyndall gets off on the wrong foot, in my opinion, in the very next paragraph where he opines: “While it is more important than ever to have near real-time information, even this is insufficient for today’s business leaders. Instead, companies must find ways to differentiate based on latent demand, unmet demand, and even emerging demand. Why customers buy is more important than who they are or what they buy.”

 

Don’t get me wrong!

 

Please don’t get me wrong. I surely believe that it is important for participants in the supply chain consider carefully matters affecting demand and demand variation. We all need to understand as much as possible about “why customers buy.” Unlocking “tribal knowledge” within our own organizations and across the supply chain can certainly help us create “irrefusable offers” (sometimes called “Mafia offers”) that are built upon what we know, what may be safely discerned, and what we can learn about the real drivers behind our customers’ willingness to buy. Such knowledge can help lead us to effective market segmentation and dramatic increases in Throughput.

 

What I am opposed to is calling speculation about quantities—the number of units to be sold in “unmet demand,” “latent demand” and “emerging demand”—“demand-driven.” This is not “demand-driven” operations. It is “speculation-driven” supply chain management. More (always wrong) forecasts are not enhanced by more speculation about demand; nor is the supply chain made more “demand-driven” by adding more layers of speculation.

 

 

Mistaking simply not understanding “the system” for “complexity”

 

In the white paper, Tyndall hits the nail on the head once again with regard to the concerns of supply chain managers and executives. He states:

Chief Supply Chain Officers (CSCOs) and other senior executives across all industries must now react to volatility and unpredictable events more than ever before. Many relate that their operating plans are impacted even before they reach a steady state, that capacities are either over or under-utilized, that product inventories are either excessive or out of stock, and that flexibility is elusive no matter what they do to prepare for it. Global supply chains, especially, are at high risk, although domestic issues are just as prevalent.
CSCOs also report that they are especially concerned about supply chain innovations in the short term [and] about SKU complexity.

 

He even recognizes the bane of the existence of executives and managers of almost every ilk:

“In complex operations… the same starting conditions can produce different outcomes. Unintended and surprising consequences can arise from seemingly simple actions.”

 

What Tyndall fails to point out—and what is missed by so many executives and managers—is the “unintended consequences” do not point to complexity. Rather, they point to the fact that “the system”—the actual cause-and-effect relationships at work—is not properly understood by those pulling and pushing the levers of change.

 

After all, even in a simple system (a system with only two or three moving parts), if cause-and-effect is not properly understood, actions taken to affect the system will lead to unanticipated outcomes.

 

Tyndall employs the following example:

For example, when actual demand for a product category is less than the sales forecast, the natural action is to slow down its production and work through available inventories. But, this could change dramatically the next month and create product outages because ramping up production may require several weeks or even months in today’s complex world.

 

Sadly, there are already solutions available to the supply chain to dramatically reduce the problems described in this example. The examples have been expounded in many places, in many ways and been proven time and again in practice. The solutions offer a path toward the virtual elimination of reliance upon sales forecasts. Here are a few of the solutions that have been offered and proven:

  1. Smaller batch sizes for production and transfer
  2. Increase supply chain agility and reduce risk by buffering with capacity rather than inventory
  3. Reduce the replenishment cycle (lead times), making each replenishment cycle in the supply chain as short as possible
  4. Provide near real-time feedback of actual demand across the whole supply chain in order to dramatically reduce the damaging “bullwhip” effect

 

If supply chain executives and managers have not moved in directions indicated by the four concepts stated above, then it is clear that they do not yet recognize the true cause-and-effect driving outcomes in their supply chains. I cannot think of any other reason for not making some significant move toward these DDSC principles.

 

Restating the obvious about forecasts

 

Tyndall states what is already well-recognized by most in the supply chain management world:

Demand forecasting is particularly affected by increasing complexity. Most forecasting models are based on assumptions that do not cooperate with complex current conditions, such as: (1) that behavioral observations are truly independent, and (2) that it is very likely that we extrapolate average responses. Neither is true in today’s complex markets; no degree of past business intelligence is adequate for predictive purposes.

 

Please allow me to restate this in simpler terms: Forecasts are wrong, and we all know lots of reasons for their being wrong.

 

Now we are getting somewhere. Tyndall states flatly—and accurately:

Companies are facing new and unprecedented business challenges and trying to solve them with outdated tools and practices, which worked well (for some) in the past, but are not equipped to deal with the degrees of volatility, uncertainty, and complexity of today’s world.

 

In our next post, we will continue our study of what the Tompkins Group’s Tyndall has to say about demand-driven supply chain solutions.

 

[To be continued]

 


 

Please let us hear what you have to say. Leave a comment here, or feel free to contact us directly.