Managing Projects, Operations and Information Systems

End of Seminar Project

The time optimization of the storage activity in United Biscuit logistics department [Coordinator’s name]

Project management plan

Stakeholder analysis

Project manager

Project team

Team contract

Project deliverables

Reference materials

Project organization

Organizational structure

Work breakdown structure and schedule

Work Breakdown Structure

Dependencies

Resource requirements

Budget requirements

Schedule

Managerial process

Assumptions, Dependencies, and Constraints

Monitoring and Controlling Mechanisms

Operations management plan

Operations Strategy

Process Improvement Plan

Operational Efficiency/Operational Effectiveness Improvement

Technical Process/Information Management Plan

Information System Objectives

Hardware/Software Requirements

Conclusion

Executive summary

An important challenge for United Biscuits’ logistics department is the optimization of the storage activity, including here the supply with raw materials that serves as an input to production and the distribution of finished goods products to retailers or distributors. The goal is to reduce by 30% the storage costs related to items being stocked for more than 10 days in the company’s facilities within the next 9 months.

The team consists of a project manager, 2 Area Managers (one for raw material supply and one for finished goods storage and distribution), 1 Operations Manager, 1 General Transportation Manager, 2 logistics trainees, 1 electronics engineer (in charge with the RFID implementation), 1 assistant for the electronics engineers with it background and 2 data analysts to monitor progress.

The work breakdown structure includes: analyzing sources of delay in logistics activities involved in the warehousing process; identifying constraints; improving processes; and the project completion phase.

The improvement will translate into an RFID implementation that will require an initial investment of $100,000. The costs related to this technology will also include a variable component, each product having to be tagged. One tag is in average $0.1. The company’s suppliers will also have to comply to RFID technology requirements.

It will be assumed that all team members will perform their tasks within the time frame established for each task and without errors. The performance of each team member depends on the performance of all others, this being a team project. The operations strategy in this case is to optimize the resource deployment involved in the project to increase long-term efficiency.

Introduction

United Biscuits (UB) is one of the world’s pre-eminent branded snacks businesses. The company’s portfolio of sweet and savoury snacks includes brands, such as McVitie’s, Jacob’s, Carr’s, McCoy’s, Hula Hoops, McVitie’s Jaffa Cakes, KP, Mini Cheddars, go ahead!, Verkade, Sultana, BN, and Delacre, the products ranging from crackers to cakes (UB corporate website, 2009).

An important challenge for the logistics department is the optimization of the storage activity, including here the supply with raw materials that serves as an input to production and the distribution of finished goods products to retailers or distributors. An optimal inflow of raw materials implies that every item is replaced in the storage when it is about to finish in order to avoid overstocking costs with these items or a stock rupture that could potentially delay production. An optimal outflow of finished goods implies that items are distributed soon after the production process is finished to reduce storage time and implicitly storage costs.

Project management plan

I. Project overview

Project goal. The project’s goal is to reduce by 30% the storage costs related to items being stocked for more than 10 days in the company’s facilities within the next 9 months.

The market needs to generate products faster then their life cycles end, in order to maintain its growth rates. To reach these objectives, according to Cooper & Lambert (2000), product development and commercialization managers should: Coordinate with CRM (Customer Relationship Management) to identify the customers’ articulate and unarticulated needs; the materials and suppliers’ selection should be made in correlation with the procurement function; Work to develop production technology in the manufacturing flow in order to manufacture and integrate the supply chain flow that is best fit for a given market/product. Logistics studies suggest that the adoption of logistics technologies, such as Enterprise Resource Management, Customer Relationship Management and Supply Chain Management would facilitate the cooperation of different companies along the value chain (i.e. suppliers with retailers) (Johnson and Wood, 1996; Keah & Handfield, 1998).

Stakeholder analysis. Stakeholders include manufacturing staff, raw material suppliers, transportation staff/intermediaries, warehousing staff, logistics coordinating team and distributors. Additionally, global stakeholders include the final customer and the authorities in charge of food regulations.

Improved efficiency in the logistics department has a direct impact on almost all the stakeholders as it translates into lower costs along the value chain, which imply lower prices, discounts, a better distribution and the opportunity to focus more on customer needs and wants.

Project manager. John McBiscuit

Project team. The team will be made of 2 Area Managers (one for raw material supply and one for finished goods storage and distribution), 1 Operations Manager, 1 General Transportation Manager, 2 logistics trainees, 1 electronics engineer (in charge with the RFID implementation), 1 assistant for the electronics engineers with it background and 2 data analysts to monitor progress.

Team contract. The team members and project manager reached a mutual agreement compelling all involved in the project to keep an open communication environment, contribute with ideas, participate in all meetings and discussions, and commit to pre-established deadlines.

Project deliverables. The team needs to deliver on the project’s goal, which is to reduce by 30% the storage costs related to items being stocked for more than 10 days in the company’s facilities within the next 9 months. Additionally, the team needs to meet weekly milestones and produce a weekly report of the project’s progress.

Reference materials: (1) Johnson, J. C. And Wood, D. F 1996. Contemporary Logistics, N.J.: Prentice Hall Upper Saddle Creek; (2) Shepard, S. 2005. RFID — Radio Frequency Identification, McGraw Hill: New York; (3) University of Wisconsin Milwakee, EDI notes, website accessed July 2007, http://www.uwm.edu

II. Project organization

Organizational structure.

III. Work breakdown structure and schedule

Work Breakdown Structure.

1. Analyze sources of delay in logistics activities involved in the warehousing process.

1.1. Research industry logistics trends and best practices

1.2. Analyze logistics logs for reception of raw materials and match this against the necessity to re-fill the stock (e.g. what is the quantity of raw material on stock that triggers a new order to the supplier).

1.3. Analyze logistics logs for the delivery of finished goods to distributors and identify reasons for delayed delivery.

2. Identify constraints

2.1. Analyze logistic center/warehousing processes.

2.2. Analyze the synchronization with the production and the distribution.

2.3. Analyze the capabilities/skills/deficiencies of the logistic center/warehouse’s personnel.

2.4. Analyze the logistic center/warehouse’s it endowment (e.g. equipments, it skills).

2.5. Analyze financial resources required to fill the technological gap between current it endowment and the needed one to meet the final objectives.

3. Improve processes

3.1. Implement RFID technology

3.2. Make improvements to logistics constraints identified in phase 2

3.3. Test and measure the new technology

3.4. Request additional equipments/man power if necessary

3.5. Train the personnel

4. Project completion phase

4.1. Perform before and after analysis

4.2. Put together final presentation of the project

Dependencies. There is a clear sequence for the main four phases. However, within each phase there is no dependency and the team members can perform their tasks independently from each other.

Resource requirements. The engineer’s expertise will be required throughout the entire process. Additionally, the data analysts will have to report the project’s progress every step of the way.

Budget requirements. The RFID implementation will require an initial investment of $100,000. The costs related to this technology will also include a variable component, each product having to be tagged. One tag is in average $0.1. The company’s suppliers will also have to comply to RFID technology requirements. This translates into supplier costs, “the average consumer-goods company spending about $662,000 on simple slap-on-a-tag-and-ship deployments” (Sullivan, 2005).

Schedule.

Task

Target completion

1. Analyze sources of delay in logistics activities involved in the warehousing process.

Research industry logistics trends and best practices

January 15th

Analyze logistics logs for reception of raw materials and match this against the necessity to re-fill the stock

February 1st

Analyze logistics logs for the delivery of finished goods to distributors and identify reasons for delayed delivery.

February 15th

2. Identify constraints

Analyze logistic center/warehousing processes

March 30th

Analyze the synchronization with the production and the distribution

May 15th

Analyze the capabilities/skills/deficiencies of the logistic center/warehouse’s personnel.

May 30th

Analyze the logistic center/warehouse’s it endowment (e.g. equipments, it skills).

June 7th

Analyze financial resources required to fill the technological gap between current it endowment and the needed one to meet the final objectives.

June 30th

3. Improve processes

Implement RFID technology

July 30th

Make improvements to logistics constraints identified in phase 2

August 15th

Test and measure the new technology

August 22nd

Request additional equipments/man power if necessary

August 29th

Train the personnel

September 7th

4. Project completion phase

Perform before and after analysis

September 21st

Put together final presentation of the project

September 28th

IV. Managerial process

Assumptions, Dependencies, and Constraints. It will be assumed that all team members will perform their tasks within the time frame established for each task and without errors. The performance of each team member depends on the performance of all others, this being a team project. Constraints include time and financial resources; as such improvement requires permanent improvement effort.

Risk Management. No risk has been identified related to the project’s completion.

Monitoring and Controlling Mechanisms. The data analysts will develop a metric system to measure each member’s performance on a weekly basis. This weekly performance will be submitted to the project manager for potential adjustments.

V. Operations management plan

Operations Strategy. An easy way to understand the meaning of operations strategy is to break the word into the two separate words: operations and strategy – these words being the opposite of each other (Slack & Lewis, 2002). ‘Operations’ is about the functions and procedures regarding the day-to-day processes, while ‘strategy’ is about the direction and scope of an organisation over a long period of time. The operations strategy in this case is to optimize the resource deployment involved in the project to increase long-term efficiency.

Process Improvement Plan. The ‘just-in-time’ stock optimization method will be adopted through the entire project. JIT manufacturing being a philosophy by which organizations seek to continually improve their products and processes by eliminating waste, will help the logistics and production systems run smoothly without any picks or valley that translate into costs for the organization (Swanson & Lankford, 1998).

Operational Efficiency/Operational Effectiveness Improvement. Due to the improvement generated by the project, the company should expect lower logistics cost and a potential production increase.

VI. Technical Process/Information Management Plan

Information System Objectives. A study made by Aberdeen research (2008) revealed that more and more projects nowadays are focused on the desire to improve customer service, expense management and sales operations performance. Therefore, a sound measurement of KPIs is essential to maintain a high efficiency level. Informatics systems with a high degree of complexity are believed to generate the desired impact in this case. SQL-based data mining tools and statistical software will be added to the daily analysis activity.

Hardware/Software Requirements. The implementation of RFID requires both a software part and a hardware one. Each product that enters the company’s storage has to be tagged. The tag will allow the tag reader to collect information about the entry time, duration in the storage room and exit. The information is transferred to the storage database, from where it can be analysed. In addition to this system, the logistics team will require data mining and statistical tools to improve reporting on logistics activities.

Conclusion

RFID implementation is meant to optimize supply chain-related activities in United Biscuits organization. This project will show how important the logistics systems are for a company with complex manufacturing and distribution activities. The procurement has to be coordinated at global level, which increases the complexity of this function. The company has to be joined by its suppliers in its technological upgrade. Thus, the company may have to replace those suppliers that won’t adopt RFID; however, it is believed to pay off in the long run. The product development management can now synchronize with the global procurement. Inventory, distribution and customer service are expected to improve in terms of duration and costs with the synchronization between production output, storage and delivery to the consumer.

References:

Aberdeen Group. 2008. Operational KPIs and Performance Management — Are Your Daily Decisions Based on Fact?, http://www.aberdeen.com/

Cooper, M. & Lambert D. 2000. Issues in Supply Chain Management. Industrial Marketing Management, vol. 29: pp. 65-83.

Johnson, J. C. And Wood, D.F. 1996. Contemporary Logistics, N.J.: Prentice Hall Upper Saddle Creek.

Keah C.R.K. And Handfield, R.B. 1998 .Supply Chain Management: Supplier Performance and Firm Performance. International Journal of Purchasing and Materials Management: pp.2-9.

Shepard, S. 2005. RFID — Radio Frequency Identification, McGraw Hill: New York.

Slack, N. And Lewis, M. 2002. Operations Strategy, Financial Times and Prentice-Hall: Harlow.

Sullivan, L. 2005. RFID Implementation Challenges Persist, All This Time Later. Information Week, Accessed October 2009:

http://www.informationweek.com/news/mobility/RFID/showArticle.jhtml?articleID=171203904

Swanson, C.A. And Lankford, W.A. 1998. Just-in-time manufacturing, Business Process Management Journal, vol. 4(4), pp: 333 — 341.

UB — United Biscuits corporate website: Strategy section. Accessed October 2009:

http://www.unitedbiscuits.com/about-ub.php

University of Wisconsin Milwakee, EDI notes, website accessed July 2007, http://www.uwm.edu

Project Manager: John McBiscuit

Area Managers: Supply and Storage & Distribution

Operations Manager

Transportation Manager

Electronics Engineer

Electronics Engineer’s assistant

Logistics trainees

Data analysts