I interviewed Tomasz Kowalski who discussed Supply Chain Project Management.
Dustin: Can you give a brief background of yourself?
Tomasz: Of course. Hey, Dustin, a pleasure to talk to you today. I’m Polish; I come from electronic industry. I used to work for Unilever, Flextronics, a couple of other companies; that said, either doing EMS and OEM manufacturing. I’ve gone through around ten years of procurement, supply chain, and project management, together with China, six years’ experience. I have 12 years’ experience within sales and marketing, purchasing, supply chain, and project management. That’s a pretty wide range of responsibilities that I went through during my professional career.
Dustin: Do you have a definition or can you talk about specifically what supply chain project management is?
Tomasz: Well, before I start that, maybe let’s talk for a moment on project management because, in reality, I believe that project management applies to almost every steer of everybody’s professional and private lives. Speaking of professional lives here in supply chain. Project management is the application of knowledge, tools, methodologies that one uses to achieve certain objectives that should be quantifiable. But to be able to achieve them, we have to first ask ourselves whether we know how to define them and whether we know what these goals are and where our team and resources that we’re using, whether they’re aware of it and whether they will be able to communicate about the progress.
Concerning supply chain, I believe that the main function of supply chain is to make sure that your organization is able to react properly to the world requirements and not as change, flexibility. Charles Darwin once said that it’s not actually the stronger species that survives—neither the strongest nor the most intelligent—but actually, the most responsive to change. Here is where I believe project management steps in to supply chain. The application of project management to supply chain allows supply chain to realize how properly react to the change, how implement the change, how plan the risks that are concerning, that are touching this change, because we all know that every change is important. I believe that this is the definition of supply chain project management; the application of project management into methodologies, into the world that’s supposed to be managed by supply chain managers.
Dustin: Why is it important?
Tomasz: Well, as I already mentioned, following Charles Darwin’s thoughts, to be able to adapt changes, one has to realize that we are, that adapting to those changes is one survived, right? To be able to do this, to be able to adapt to these changes, I believe that supply chain has to realize what the drivers of supply chain are, and here’s where the logic of project management comes in, asking the proper questions. Do we know what these drivers are? Do we know how to define them? Do we know how to control them? How to exit them? How to plan? How to plan for the risks that come out from those supply chain drivers?
That logic about thinking, reasoning, and objectives directly reflects the nature of project management. I mentioned the drivers. Those drivers are, for example, the extended products, a necessity for value adding; globalization; flexibility; process center management; collaboration; and also something which, in project management and supply chain methodologies, is called PESTEL, and it stands for political, economic, social, technological, environmental, and legislative reasoning. Why is it important? Without those drivers, without proper definition, without proper execution and understanding of those drivers, I believe that organizations that base their survival on the supply chain will not be able to survive. Let me give you a very explicit example about globalization. There was an American journalist—I’m not sure whether you know him—Bill Moyers. Have you ever heard of him?
Dustin: I’ve heard the name but I’m not too familiar with him.
Tomasz: Basically, he had profiled a village of one hundred people that mirrored the global community. Basically, from his research, he summarized it as 57 people would be from Asia; 21 from Europe; 14 from the Western hemisphere, which is basically U.S., North America and South America; and 8 people from Africa. Thirty people out of this one hundred will be Christians; 80, their lives will be substandard, live in substandard houses; 50 will suffer from malnutrition; 20 have never had a drink of clean water; 70 can’t read; 65 have never made a phone call; and so on and so forth. Without proper definition, who are we targeting? In which kind of world are we focusing our efforts on? What kind of goals does supply chain have to meet? Without this prime definition—let’s call it scoping of the supply chain design—every organization will fail. I believe this is why project management enrooted in supply chain is so, so important.
Dustin: Can you talk a little bit about how it’s done effectively and where you’ve seen some good results?
Tomasz: Of course I can talk about it, but in reality it’s pretty difficult to say how it’s done effectively because every market, every organization is different. Because of this, every organization has to make a proper definition of its own drivers. When those drivers are defined, then there are five tasks as I believe that they’re important for efficient project managing of the supply chain. This is designing supply chain for strategic advantage. This is understanding customers, basically, and sponsors and users.
Expectations, they’re placed, whether they’re located in the high or low end or cost-sensitive or not. Segments, scope is also very important to understand over here. What are we planning to achieve designing our supply chain? How you’re supposed to design it, what kind of deliverables have to be met to satisfy those customers? As the example I think here, actually, a very interesting project that I have seen 20 years ago to be established in my country, Poland, which is obviously developing slower than the U.S. because of our post-communist roots. That was the first car-rental company.
These guys, the people who came up with the idea, they actually failed because they didn’t realize that Polish people, they simply don’t have driving licenses, so they designed the infrastructure, supply chain for the cars’ transportation from one place to another, the cost, the after-sales services, and they failed to understand that only 10 percent of the whole Polish population would be able to drive. Having said that, they forgot about one important factor: Why wouldn’t they actually connect to a government agency and also allow people to learn how to drive in their cars? Which tends toward another thought: Okay, why don’t we start actually from the driving school instead of car rental since we have all these cars in place already and the infrastructure in place? Understanding customers’ expectations and their capabilities is important and the supply chain has to be designed for whatever is there in the market, for whatever market is.
The task number two that I believe is going to make one’s supply chain project management efficient is collaborative relationships. This mentioned company that I’ve just talked about, which failed to establish a car-rental business, they also didn’t answer themselves one question, the second question: Whether they actually want to be oriented on customer, on product, on process, or on their own organization. This kind of organization should be oriented on customer; this is the way that they will be more effective, understanding what customers’ capabilities are.
The third task that needs to be in place to have proper supply chain project management executive efficiency is, in my opinion, forging supply chain partnerships. If you start a business and design your supply chain, you have to realize whether you’re alone in the market or not, whether there’s anybody who can help you, help you to expand your infrastructure and help you to become bigger, even if you’re still small. I know that this expression “bigger but still small” doesn’t make any sense in the first moment, but in reality, it does, because in terms of forging supply chain partnerships, there are four types of established plan and controlled partnerships that many of the strategic objectives can be achieved with, and these are such kinds of partnerships like many to many, one to many, many to one, or one to one. Imagine if this company was a company—the car-rental company—was a company that was working only in one small setting with a population of 100,000 people, and I mentioned that only 10 percent of the people have driving licenses; it’s potentially 10,000 customers.
But what if they actually merged or partnered with three or four other companies and they’re the same brand name? They would have at the same token access to more customers, to more potential opinions to understand other customers’ objectives. They would be able to change.
The fourth point, I believe, is concerning managing supply chain information. Every single organization has got internal challenge of structuring their own processes and information flow. I believe that a couple of, in reality, three modes of information infrastructure have to be mentioned here, and those are: ERP and MRP, material and enterprise resource planning; APS, advanced planning scheduling; and something which, honestly, perhaps does not exist so much in the information management but something I participated in and is quite interesting, it’s workflow information management. Obviously, MRP and ERP and APS, they’re very common. Workflow is something that’s very interesting because it’s a system that is explicitly designed for a certain enterprise, for a certain organization, allowing to eliminate paperwork, allowing to have clear visibility of how processes flow and how many people are involved in these processes and what they do on a daily basis and how many days is required for them to complete their work.This is also something that project management, I would say, guards, is the information flow, the resources that are involved in this, and the time that is involved.
The fifth task that I believe may make every organization more efficient in supply chain project management is removing cost for supply chain. Obviously, this is something that every organization strives for, but to be able to do that efficiently, I believe that companies should focus on six points. Again, this is part of the scoping. If we need to focus on removing the cost, we need to know what we have to focus on and why.
When your organization doesn’t ask those questions to themselves, this is the moment when they fail because they strive to achieve something which is not commonly understood, which is not designed for success, which is not quantifiable. The first point I would like to mention here in terms of identifying root causes is lack of clarity. If there’s lack of clarity between organization, supply chain project management should facilitate the removing of gray areas because, in reality, you cannot hit the target if you cannot see it. As a consequence of lack of clarity, we also have in many organizations variability of processes, which are just confusing. Expensive product design may be the next point worth mentioning because, in reality, 70 percent of the cost is fixed during this design stage, and it’s supply chain’s prime function to facilitate the knowledge flow so that this knowledge will be injected into product-development processes to mitigate the risk of actually putting the 70 percent of high cost within the * (17:50—unclear).
Fourth point: information carrying shortfalls. It is commonly known in the market that the cost is pretty low if the integration of the organization is high. Weak links of the organization and weak links between resources; obviously that refers to a communication organization, IT, infrastructure. There’s also an additional point, which is the sixth, and it’s unintended consequence of, for example, punishment or reward, which is resources management. It’s not only referring to that; it’s widely understood unintended consequences that are not planned, that are not mitigated because there’s no risk plan, because there’s no proper debate. The fourth consequence can change or process establishment or lack of understanding of the goal path. I believe that these four tasks that I just mentioned, they directly refer to organization efficiency in terms of supply chain project management.