Projects Surviving with Inventory by Demand

When will my order ship? What is going on? No stock available? Delivery times are when? Prices changed before I ordered? Why do I need to change how I manage projects just because the economy is slow? I thought I was helping out by having this project?

By Jim Fuller

When will my order ship? What is going on? No stock available? Delivery times are when? Prices changed before I ordered? Why do I need to change how I manage projects just because the economy is slow? I thought I was helping out by having this project?

If these questions are continually being asked then this article could offer steps that may lead to smoother operations for your projects.

When the going gets tough.... The tough get going! We all have heard this tag line before and it is never more true than today. As we continue to experience difficult economic times our business segments generally go back to basic ABC's: Operational Cost, Inventory, and Accounts Receivables.

All manufacturers and distributors focus on operating as lean as possible and as anyone that has dealt with inventory knows, storing it, counting it, finding it, and picking it becomes much harder and investments are greater. Each company may take different approaches with regard to inventory but all are doing everything possible to improve cash positions. Many companies make strategic decisions on what levels to stock, based on predictable customer demand, while other larger companies may invest in inventory management systems that provide longer range forecasting tools. No matter what type of company, many assume it is a necessary evil and implement an inventory reduction program whenever cash gets tight. Or better stated.... Inventory investments above known customer demands is an investment that could be applied somewhere else in their business. No matter which way they go, every company is attempting to continually improve their bottom line while maintaining customer satisfaction.

So how do projects operate on time and within budgets in a world driven by lean inventory and limited staff? Listed below are steps that may provide information on how to improve the chances for success with a project.

Analyze the Current Situation

Step One - This step is important in any economic time -- Analyze the environment surrounding a planned business segment prior to launching a project. Acquire as much detail about what condition your needed supply chain partners are in and evaluate each as to their capabilities to meet your needs and expectations. This external review should provide a quick look at what conditions exist that may alter expectations for a project. In lean conditions, reaction times are extended due to every link in the supply chain operating under similar conditions. These leaner operations create extended lead times from raw goods, manufacturing, shipping, and local suppliers. In most cases, shortages in supply are the direct result of supply being out of sync with demand. Unpredictable or unscheduled demand in lean operation times is a project profit killer for all.

Characterize Supply, Inventory Requirements

Step Two - Characterize needs into one of three categories:

1.) Time

2.) Cost

3.) Completion

Complexity of projects may vary and any of these three elements could have multiple levels but when a project manager has greater knowledge about local market conditions and has a true view on demand for timelines and material requirements, all projects will go a lot smoother. Many times sporadic emotion based decisions are more likely the cause of high levels of excitement and create unnecessary tension on projects than most companies are willing to admit.

Plan your work and work your plan is another trade tested philosophy but a good rule to follow. Once you have your final plan in place, attack this problem by giving accurate and effective tools and information to project manufacturers and local suppliers. They need to understand the impact of their decisions. They need the right tools to balance the freight costs, volume price breaks and the implications of inventory carrying costs.

Following a strong methodology to understand the cost drives the right kind of decision making when everyone is attempting to meet project expectations, while remaining profitable.

Streamline Communications

Step Three - Understand how to play the game because missing one critical step may cause a chain reaction that causes unsatisfactory results for the project. A primary step is improved communications so there is order and process controls in place to sustain normal operations. In today's world of email, text, mobile to mobile, and the old land line, there are limited reasons not to improve communications. Generally, this element is not as easy to get done as one would think and is trapped into a daily management issue and falls into the assume category.....Do not let this happen! Do whatever is needed to overcome these lapses and communicate. It takes follow- up, follow-up, and follow-up because with so many links in the supply chain, without one cohesive force, the norm is a link gets dropped and the supply chain is broken. Yes, everyone else should take on some responsibility but that does not always seem to happen. You know what happens when you assume? If a project's success is on the line.... Follow-up!

Establish Goals, Measure Performance

Step Four - Create goals for each category. This can be done by a macro assessment but should indicate exactly what needs to be done in order to meet project demands. These are known as "Critical Success Factors" or "CSF". These CSF's are elements that if not met, done, or completed within expectations, catastrophic results may occur. Keep these on the highest of levels; otherwise, you may be measuring too far down. Each one should be quickly viewed and understood by all. Additionally, each CSF should be linked throughout the project for meeting goals and assisting all supply partners to understand the opportunities available and communicate to management service level expectations.

Track & Analyze

Step Five - Now it's time for the real fun! Nothing goes as planned. Get ready to drill into these issues. When high deviations occur, a root cause analysis will assist in discovering the business policy misalignments, performance issues, and malfunctioning processes. This is all about improving project operations.

Refine Goals, Adjust Processes

Step Six - Issues generally fall into three categories:

1.) The things that can be fixed now

2.) The things that can't be fixed until later

3.) The unexplainable

Refine your goals to only include the processes that you plan on fixing. These processes should be related to inventory/supply issues that fall into categories one and two. Isolate category three issues, the unexplainable, into a special disposition category. Work on category three but don't focus on it; it will become too discouraging. Rather, focus on categories one and two where efforts will generally lead to success. Use this process to identify issues and refine your operations.

Conclusion

The six steps to effective project management are not something one does only once; rather, it is a journey in process refinement. One can start very simply and then drive toward excellence by reiterating this process. With time and practice you can expect the right service levels, meet expectations of the project, and provide value to all companies linked in the supply chain.


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About the Author: Jim Fuller, of the Coburn Supply Co., is Chair of the WASDA Marketing Committee.

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