Another Link In The Chain: Using Project Management to Drive the Supply Chain

At Kinaxis, I help our customers develop solutions to supply chain and project management challenges using RapidResponse. You may remember in my last blog entitled, “Another Link in the Chain: Connecting Project Management to the Supply Chain”, I discussed how changes in material, supply, demand, and resources can significantly impact project schedules. In this blog I want to continue that conversation. Before integrated project management (IPM) came along, direct links between the supply chain and project management didn’t exist.  Such relationships led to project management features where supply and demand can directly link to and impact project tasks.In one of our first IPM implementations a question was raised resulting in another “link” in the supply chain.  In this situation, the construction industry was our focus. The client managed most elements of the project from project management software. The ability to directly link the supply chain and project tasks was a great step forward.  However, after adding such links, independent demand still had to be manually updated and re-linked to tasks when a related project schedule or material requirement changed.  This naturally led to brainstorming on how such linking could be simpler.

The brainstorming raised an interesting question, “If we automatically link independent demand to a project task, why not also use automation to utilize project task data to generate, modify or delete independent demand?” Ultimately, the result of the brainstorming killed two birds with one stone through the use of RapidResponse.  Now, two previously manual tasks (entering, maintaining independent demand and linking independent demand to the project) are automated.

Project Management Currently

With RapidResponse's integrated project management (IPM), individual project tasks can be directly linked to supply chain independent demand or orders.  When material availability doesn't support a project task, the discrepancy is immediately flagged.  Standard configuration options allows one to automatically re-schedule tasks based on the availability of independent demand and the orders they are linked to.  In either case, RapidResponse IPM provides visibility into the supply chain’s impact on a project, in order to identify and respond to conflicts.

Another Project Management Approach

When setting up IPM for use at a site, one could also use RapidResponse as the primary source to create project specific forecasts or actual independent demand.  The opportunity exists to populate independent demand orders and forecasts based on material requirements entered into a RapidResponse project plan using RapidResponse.  The quantity and timing of these independent demands would be defined and automatically adjusted based on the project tasks they are linked to.

When

When would it be most advantageous to drive forecasted and actual customer requirements directly from the project management tool? Such a strategy is excellent for large, long projects that take months or years to complete and have one of a kind deliverables.  Examples of such projects exist in:

• Construction
• Ship building
• High-tech projects for one-of-a-kind machines
• Design and development phases of high-tech products before shifting to repetitive manufacturing

Often, in such projects, the key is to have the material on site at the time needed (i.e. build the foundation, clear land, prepare dry dock, utilize specialized materials in design experiments etc).  Managing the materials required for such projects can be managed within an ERP system, but this is often not the optimal tool, given that it was built primarily with repetitive manufacturing in mind.  Even more important, the ERP system is not linked into a project management tool.

Advantages

Organizations can consolidate project supply planning into a single source of record.  By generating independent demand from the project plan, there is no longer any need for the project management tool to operate in parallel with (as opposed to being integrated with) the entry of forecasted and actual independent demand entered in the ERP system.  This reduces/eliminates effort to manage, maintain, and audit forecasted and actual independent demand in the ERP System vs. the project management tool. Teams can reduce or eliminate the need to build, manage, maintain special part numbers, BoM's and routing to drive project material needs.  Without the existence of these specialized parts in an ERP system, a significant amount of cross-department coordination and management of the Engineering and Manufacturing groups who often own part, BoM and routing data could disappear.  This could be especially important if project demands on these departments are minor (and often 2nd priority) relative to the standard production work that may be their primary priority to support.

How

Convert IPM material requirements into independent demand by building commands in RapidResponse, IPM can become the data entry and maintenance point to enter material forecasts or orders required to support a project. Such a strategy is facilitated by creating RapidResponse command(s) to:

• Translate IPM task material requirements into independent demand orders or forecast orders
• Link the newly generated independent demand order's to the appropriate tasks

An important design consideration for any company taking such an approach is to determine if project based independent demand created in RapidResponse will be translated into independent demand in the host ERP system. Depending on customer needs it may not even be necessary to use independent demand in the host ERP system.  In such a case, independent demand satisfaction can be modeled in RapidResponse based on material receipt and consumption logic.   If, on the other hand, project independent demand is created/maintained within the host ERP system AND RapidResponse, a strategy must be developed defining how it will be they be maintained to be in sync across both systems. Organizations can use tasks in a project with material requirements as one would a production order, Routing/BoM in a traditional ERP configuration to drive quantity/timing of independent demand. Just as re-scheduling a production order or planned order can result in shifts in the timing of the material that is needed so do shifts in the timing of a Project Plan's tasks.  In repetitive production environments scheduling of operations needed to build product is facilitated through a production order, routing and BoM.  In a RapidResponse project based environment, these variables are analogs to a project, task, and task material requirement (for those tasks with assigned material requirements).

Repetitive Mfg.	RapidResponse IPM
Production Order	Project
Routing	Project Tasks
BoM Lines	Task Material Requirements

A production order has a routing where each operation represents certain production operations that can either have specific material requirements linked to it.  In a RapidResponse, the project is analogous to a production order.  Individual tasks, within the project, serve a similar purpose of operations in a routing, albeit with a much broader variety of activities which must occur.  In RapidResponse, material requirements are linked with specific tasks in a project plan just as material requirements from a BoM for a production order can be linked to any step in a routing (though often in many industries all material in a production order are linked and kitted in step 1 due to the relatively short life cycle of a production order). Implementation considerations

• Volatility in a project plan could lead to fluctuating material requirement schedules that could be difficult and frustrating to react to by purchasing and within the production MES system.  This could be mitigated by a number of strategies.  One possibility would be to selectively deciding if/when particular tasks will result in forecasted or actual demands.  The commands to create independent demand could be conditionally based on such things as the timing of the resulting independent demand or the status of the task.
• New business processes/responsibilities may need to be defined since the trigger to buy/build material for a project shifts to data entry made directly into the project plan.
• Others are dependent on the unique requirements of the adopter.

In conclusion, integrating project management to the supply chain can reduce the number of manual project management and supply chain steps required for maintaining and meeting project timelines and budgets. As I mentioned in my last blog, if you are interested in reading more about this topic, we published a white paper on this 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.