programme managing the supply chain portfolio article - june 2010 (pmworld today)(1)

7/25/2019 Programme Managing the Supply Chain Portfolio Article - June 2010 (PMWorld Today)(1)

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PM World Today June 2010 (Vol XII, Issue VI)

PM World Todayis a free monthly eJournal - Subscriptions available at http://www.pmworldtoday.net Page 1

PM WORLD TODAY FEATURED PAPER JUNE 2010

Programme Managing the Supply Chain Portfolio

Professor Dr Pieter SteynCranefield College of Project and Programme Management

South Africa

Abst rac t:

Effective and efficient management of the Supply Chain Portfolio is widely regarded asthe key to optimal organisational performance. How to achieve this has remained acomplex challenge to executives. This article proposes programme managing theproject driven and non-project driven components of the Supply Chain Portfolio as a

sustainable solution to the problem.

Introduction

Stock and Lambert (2001) describe Supply Chain management as a highly interactive,complex systems approach that requires simultaneous consideration of many trade-offs.Supply Chain management integrates key business processes from suppliers to endusers and provides products, services and information that add value for customers andother stakeholders. According to Steyn (2003, 2009) the Supply Chain Portfolioconsists of seven key cross-functional business processes:

1. Customer relationship management (CRM).2. Customer service management (CSM).3. Order fulfilment.

The abovementioned cross-functional business processes focus on serving externalcustomers. Moreover, in addition to managing service delivery aspects the CustomerService Management business process also attends to product returns from dissatisfiedcustomers.

4. Product development and commercialisation.5. Procurement.

6. Demand management and capacity planning.7. Operations (manufacturing) flow management.

These four cross-functional business processes focus on serving internal customers;hence they play a major role in supporting the three cross-functional businessprocesses that serve external customers.


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Stock and Lambert (2001) identify the structural dimensions of the Supply ChainPortfolio as the participating members, the cross-functional processes of the SupplyChain, and the different types of process links across the Supply Chain. They identifyexecutive support, leadership excellence, commitment to change, and empowerment as

key requirements for successful Supply Chain management, and regard information asa key enabler of Supply Chain Portfolio integration. However, they do not propose anintegrative model to achieve the abovementioned. They assert that, due to the dynamicnature of modern organisations, leadership and management should regularly monitorand evaluate the performance of the Supply Chain. They regard it as imperative thatperformance goals are met, and failing so, that Supply Chain alternatives are evaluatedand change implemented.

According to Steyn (2009) the latter is virtually impossible in bureaucratic organisationsand the challenge is for organisations to transform to learning organisation paradigmsand structures. Professor DA Garvin (1993) from Harvard Business School provides the

following definition of a learning organisation: A learning organisation is an organisationskilled at creating, acquiring and transferring knowledge and at modifying its behaviourto reflect new knowledge and insights. He asserts that to stay competitive in the neweconomy, organisations must strive to move away from bureaucratic practices towardsbecoming learning organisations that are far more agile and flexible. This requires thatorganisations restructure themselves accordingly.

Steyn (2001, 2009) proposes that organisations shape their cross-functional portfoliosinto various programme structures, some processes serving internal customers andothers external customers. In addition to the project related programme structures ofthe Strategic Transformation Portfolio, Continuous Improvement Portfolio, Capital

Expenditure Portfolio, and Virtual Network of Partners Portfolio (Semolic, 2009), theyshould also shape the Supply Chain Portfolios cross-functional processes into aprogramme structure, or structures depending on the business model adopted.

As shown in Figure 1 the Supply Chain Portfolio is an integral part of the cross-functional programme structures of learning organisations. The programmeconfigurations are not mutually exclusive. They support each other in an integrated wayand the strategic picture is linked to the operational activities (Partington, 2000) (Thiryand Murray-Webster, 2000). The major organisational benefits of strategic importancedelivered by the individual programme configurations vary from effectiveness, efficiency,and both effectiveness and efficiency. Moreover, benefits of strategic importance of the

process deliverables are measured by utilising appropriate key performance indicators(KPIs) that are linked to critical success factors (CSFs) in a balanced scorecard. This isgenerally followed by a system of appraisal and review performed by the executiveleadership to determine whether organisational benefits of strategic importance accrueto a satisfactory degree. According to Steyn (2009) the portfolios, including the SupplyChain Portfolio, are arranged into different programme structures each with its ownportfolio manager and support staff as illustrated in figure 2.


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BS-PM LEARNING ORGANISATION VALUE CHAIN SCHEMATIC

CORPORATESTRATEGY

PORTFOLIO:STRATEGIC

TRANSFORMATIONPROJECTS

PORTFOLIO:CONTINUOUS

IMPROVEMENTPROJECTS

PORTFOLIO:CAPITAL

EXPENDITUREPROJECTS

S

UPPLIERS

C

USTOMERS

MAJOR BENEFITS:ORGANISATIONAL

EFFECTIVENESS

MANUFFIN SALES & M PURCH

P G Steyn

2010


EFFICIENCY

MAJOR BENEFITS:

ORGANISATIONAL

EFFECTIVENESS &EFFICIENCY

F INANC IA L

BALANCED SCORECARD

(BS)

CUSTOMER

IN TERNAL

LEARN ING

&

GROWTH

P e r f o rm an c e

M ea s u r em en t

o n KP I s

FEEDBACK

MAJOR

BENEFITS:

Custo

merService

EffectivenessandEfficiency

HUMAN TALENT, INFORMATION ARCHITECTURE, INFORMATION VISIBILITY

PROJECT MANAGEMENT PROCESSES SERVING EXT CUSTOMERS

ORDER FULFILMENT (EXT CUSTOMERS)

CUSTOMER RELATIONSHIP MANAGEMENT (EXT CUSTOMERS)

CUSTOMER SERVICE MANAGEMENT (EXT CUSTOMERS)

PRODUCT DEV & COMMERCIALISATION PROJECTS (INT CUSTOMERS)PROCUREMENT (INT CUSTOMERS)

DEMAND MANAGEMENT & CAPACITY PLANNING (INT CUSTOMERS)

MANUFACTURING FLOW MANAGEMENT (INT CUSTOMERS)

LOG HR

SUPPLYCHAIN

PORTFOLIO

:NON-

PROJ

DR

IVEN

COMPNT

PORTFOLIO:VIRTUAL

NETWORK

OF PARTNERSPROJECTS


EFFECTIVENESS

(INNOVATION)

SUPPLYCHAIN

PORTFOLIO:

PROJ

DRIVEN

COMPNT

Figure 1: Balance scorecard - programme management (BS-PM) learning organisation valuechain schematic proposed by Steyn (2001, 2003, and 2009).

PROGR AMME S TRUCT URE S

CPO COO

CEO

CFO

Portfolio Manager:

Supply Chain Project

Driven Component

Portfolio Manager:

Supply Chain Non-Proj

Driven Component

Portfolio Manager:

Innovative Continuous

Improvement Projects

Portfolio Manager:

Virtual Network of

Partners Projects

Portfolio Manager:

Capital Expenditure

Projects

Portfolio Manager:

Strategic Trans-

formation Projects

MAJOR BENEFITS

MAJOR BENEFITSEFFECTIVENESS & EFFICIENCY

Permanent supply

chain programme

structures that

enhance customer

service

effectiveness and

efficiency (serve

predominantly

external customers)

MAJOR BENEFITS

MAJOR BENEFITS

MAJOR BENEFITS

EFFECTIVENESS & EFFICIENCY

EFFECTIVENESS (INNOVATION)

EFFICIENCY

EFFECTIVENESSMAJOR BENEFITS

Permanent

programme

structures that

enhance value chain

effectiveness /

efficiency (serve

internal customers)

Non-permanent

programme

structure that

enhances value

chain effectiveness

and efficiency

(serves internal

customers)

EFFECTIVENESS & EFFICIENCY

Figure 2: Programme structures for the portfolio groupings.


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Non-Project Driven-, Project Driven-, and Hybrid Structures.

Programme structures for non-project driven organisations

The organisational value chain schematic in Figure 1 illustrates the Supply ChainPortfolio programme structures for project driven and non-project driven components ofthe organisation. The non-project driven component includes the three businessprocesses, i.e., Customer Relationship Management (CRM), Customer ServiceManagement (CSM), and Order Fulfilment that serve external customers. Theremaining four business processes constituting the non-project driven component areProduct Development and Commercialisation, Procurement, Demand Management andCapacity Planning, and Operations (manufacturing) Flow Management that serveinternal customers and support the three cross-functional business processes that serveexternal customers.

Depending on its business model organisations can be structured as project driven,non-project driven, or hybrid. The latter means that the organisation has both a projectdriven as well as a non-project driven component in its Supply Chain. Non-projectdriven organisations generate income (revenue) by selling products and services toexternal customers. In non-project driven organisations the cross functional projectmanagement process serving external customers does not exist. Non-project drivenorganisations are not in the business of doing projects.

121

NON-PROJ ECT DRIVEN LEARNING ORGANISATION VA LUE CHAIN SCHEMATIC

CORPORATESTRATEGY

PORTFOLIO:

STRATEGICTRANSFORMATION

PROJECTS

PORTFOLIO:

CONTINUOUSIMPROVEMENT

PROJECTS

PORTFOLIO:

CAPITALEXPENDITURE

PROJECTS

SUPPLIERS

CUSTOMERS

MAJOR BENEFITS:

ORGANISATIONAL

EFFECTIVENESS


P G Steyn

2009

MAJOR BENEFITS:

ORGANISATIONALEFFICIENCY

MAJOR BENEFITS:

ORGANISATIONAL

EFFECTIVENESS &EFFICIENCY

F INA NCIAL

BALANCED SCORECARD

(BS)

CUSTOMER

INTERNA L

L E ARN ING

&

GROWTH

Pe r f o rma n ce

M easu remen t

o n KP I s

FEEDBACK

MAJORB

ENEFITS:

Custome

rService

Effectiveness

andEfficiency

HUMAN TALENT, INFORMATION ARCHITECTURE, FORMATION VISIBILITY

ORDER FULFILMENT (EXT CUSTOMERS)



PRODUCT DEV & COMMERCIALISATION SERVING INT CUSTOMERS

PROCUREMENT (INT CUSTOMERS)



LOG HR

SUPPLY

CHAIN

PORTFO

LIO:

NON-PROJEC

TDRIVEN

COMPON

ENT

PORTFOLIO:

VIRTUALNETWORK

OF PARTNERSPROJECTS


EFFECTIVENESS(INNOVATION)

Figure 3: Non-project driven component of the Supply Chain Portfolio.


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All seven cross functional business processes are present in the non-project drivencomponent. Of the seven only Product Development and Commercialisation is aproject-based business process. The programme management value chain architecturefor the non-project driven component of the Supply Chain Portfolio is shown in Figures 3

and 4.

122122

PROG M

EXTERNALCUSTOMERS

PORTFOLIO

MANAGER :

SUPPLY CHAIN

ORDER-FULFPROCESS

MANAGER

Functional

Managers

Functional

Employees

SUPPLY CHAIN PROCESS TEAMS

Project-

Portfolio

Manager

PROG M

INTERNAL

CUSTOMERS

CRMPROCESS

MANAGER

CSMPROCESS

MANAGER

STRUCTURE FOR THE FOUR CROSS-FUNCTIONAL PROCESSES SERVING

INTERNAL CUSTOMERS: PRODUCT DEVELOPMENT, PROCUREMENT,

MANUFACTURING FLOW MANAGEMENT AND DEMAND MANAGEMENTARE SIMILAR TO THE AB OVE ARRANGEMENT

Figure 4: The non-project driven components programme management structure.

Programme Structures for Project Driven Organisation

Project driven organisations are unique. To win orders they tender on RFPs (requestsfor proposals) received from the external customers. When successful in their bids theygenerate income (revenue) by doing the projects for those external customers. Foreffective and efficient customer service they create and utilise cross-functional projectmanagement processes that constitute the project driven component of the SupplyChain Portfolio. Order fulfilment and product development become part of the cross-functional project management process activities and are performed by the project teammembers during the project lifecycles.

The cross-functional project management processes that constitute the project drivencomponent of the Supply Chain Portfolio are still supported by the five remaining cross-functional business processes of the non-project driven component of the Supply ChainPortfolio. These are CRM and CSM, Procurement, Operation (manufacturing) Flow


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Management, and Demand Management and Capacity Planning. This uniqueprogramme management value chain architecture for the project driven component ofthe Supply Chain Portfolio is shown in Figures 5, 6 and 7.

PROJECT DRIVEN LEARNI NG ORGANISATION VALUE CHAIN SCHEMATIC

CORPORATESTRATEGY

PORTFOLIO:

STRATEGICTRANSFORMATION

PROJECTS

PORTFOLIO:

CONTINUOUSIMPROVEMENT

PROJECTS

PORTFOLIO:

CAPITALEXPENDITURE

PROJECTS

MAJOR BENEFITS:

ORGANISATIONALEFFECTIVENESS


P G Steyn2010

MAJOR BENEFITS:

ORGANISATIONALEFFICIENCY

MAJOR BENEFITS:

ORGANISATIONALEFFECTIVENESS &

EFFICIENCY

F INANC IAL

BALAN CED SCORECARD

(BS )

CUSTOMER

INTERNAL

L EARN I NG

&

GROWTH

Pe r f o rmanc e

Measu r emen t

on KP I s

FEEDBACK

HUMAN TALENT, INFORMATION ARCHITECTURE, INFORMATION VISIBIL ITY

PROJECT MANAGEMENT PROCESSES SERVING EXT CUSTOMERS



PROCUREMENT (INT CUSTOMERS)



LOG HR

SUPPLY

CHAIN

PORTFOLIO:NON-

PROJ

DRIVEN

COMPNT

PORTFOLIO:VIRTUAL

NETWORK

OF PARTNERS

PROJECTS

MAJOR BENEFITS:ORGANISATIONALEFFECTIVENESS

(INNOVATION)

SUPPLYCHAIN

PORTFOLIO:

PROJ

DRIVEN

COMPNT

Figure 5: Project driven component of the Supply Chain Portfolio and the five supportingprocesses as discussed in the text.


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115115

115

EXECUTIVE

PORTFOLIO

MANAGER:

EXTERNAL

CUSTOMER

PROJECTS

PROJ-TYPE A

PROG M

PROJ-TYPE B

PROG M

PROJ-TYPE CPROG M

Prof PG Steyn (2009)

EX

TERNALCUSTOMERS

MARKETING

FUNCTIONAL

MANAGER

A N OTHER

FUNCTIONAL

MANAGER

INF0-TECH

FUNCTIONAL

MANAGER

Figure 6: The project driven components programme management structure illustrating the

cross-functional project management processes of the Supply Chain Portfolio serving externalcustomers.

116116

PROG M

EXTERNAL

CUSTOMERS

PORTFOLIOMANAGER :

SUPPLY CHAIN FunctionalManagers

Functional

Employees

SUPPLY CHAIN PROCESS TEAMS

Project-

Portfolio

Manager

PROG MINTERNAL

CUSTOMERS

CRMPROCESS

MANAGER

CSMPROCESS

MANAGER

STRUCTURE FOR THE THREE CROSS-FUNCTIONAL PROCESSES SERVINGINTERNAL CUSTOMERS: PROCUREMENT, MANUFACTURING FLOW

MANAGEMENT, AND DEMAND MANAGEMENTARE SIMILAR TO THE ABOVE ARRANGEMENT

Figure 7: The project driven components five supporting cross-functional business processes of

the non-project driven component of the Supply Chain Portfolio.


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Programme Structures for Hybrid Organisations

Hybrid organisations are plentiful and have both project driven and non-project driven

components in its Supply Chain Portfolio as described above. Steyn (2009) asserts thatto enhance value chain effectiveness and efficiency project driven, non-project driven,and hybrid organisations need to adopt Continuous Improvement-, Capital Expenditure-,and Virtual Network of Partners Portfolios as programme structures. Moreover, whenthe need arises they must establish a Strategic Transformation Portfolio programmestructure to analyse, develop and implement emergent strategy.

The latter is required, firstly, when the organisation has to undergo radicaltransformation and change. Under these conditions the programme office is staffedfrom outside to overcome the constraining paradigm deficiencies in the organisation. Itis common knowledge that a contaminated organisational culture cannot cleanse itself.

Secondly, the programme structure for the Strategic Transformation Portfolio can alsobe established when innovative transformation and change of a minor degree isrequired. Under these conditions the programme office is staffed from internalresources. In both cases the programme office is a temporary structure (Steyn, 2009).

Conclusion

For optimal organisational performance it is imperative that the programme structures ofthe different portfolios operate in synergy, irrespective of the business model adoptedby an organisation. Coordinating and integrating the activities of the Supply ChainPortfolio with that of other cross-functional portfolios is a key factor for success. Sound

structuring, leading and managing of the programme architecture in a learning paradigmare the important linkages alluded to, but not defined, by Stock and Lambert (2001).Structuring and programme managing the Supply Chain Portfolio in accordance with theprinciples proposed in this article is the sustainable solution.


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Bibliography

Garvin, D A, Building a Learning Organization, Harvard Business Review, July-Aug,

1993.

Murray-Webster R and Thiry M, Gower Handbook of Project Management, 3rd Edition,Chapter 3, "Managing Programmes of Projects", Gower publishing, England, 2000, Ed.Rodney Turner.

Partington, David, Gower Handbook of Project Management, 3rd Edition, Chapter 2,"Implementing strategy through programmes of projects", Gower Publishing, England,2000, Ed. Rodney Turner.

Semolic, Brane, Virtual Networks of Partners, Proceedings of the IPMA Research ExpertSeminar, Cape Town, South Africa, March, 2010.

Steyn, Pieter G, Managing Organisations through Projects and Programmes:The Modern General Management Approach, Management Today, Vol 17,No 3, April, 2001.

Steyn, Pieter G, The Balanced Scorecard Programme Management System,Proceedings of the 17th IPMA Global Congress on Project Management, Berlin, Germany,2003.

Steyn, Pieter G, The Emergent Role of Chief Programme Officer (CPO), Featured Paper,PM World Today, Volume XI, Issue XI, November, 2009.

Stock, J R and Lambert, D M, Strategic Logistics Management, 4th Edition, Chapter 2,McGraw-Hill International Edition, 2001.


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About the Author:

P r o f P ie t e r St e y n

Author

Dr Pieter Steyn is Founder and Principal of CranefieldCollege of Project and Programme Management, a South

African Council on Higher Education / Dept of Educationaccredited and registered Private Higher Education

Institution offering an Advanced Diploma, Postgraduate Diploma and MastersDegree in project and programme-based leadership and management.Professor Steyn holds an engineering degree (BSc Eng), MBA and Doctorate inbusiness management and is a registered Professional Engineer. Dr Steynfounded consulting engineering firm Steyn & Van Rensburg (SVR) in 1970. Hewas appointed professor in the Department of Management, University of SouthAfrica (1976), was Founder Chairperson (1977) of the Production ManagementInstitute of South Africa, and helped pioneer Project Management as a universitysubject at the post-graduate level in 1979 at the University of South Africa. Hewas professor of Project and Operations Management at the TUKS GraduateSchool of Management, University of Pretoria from 1990 until retiring in 1998.Pieter was Chairperson of the Commission of Enquiry into the Swaziland CivilService in 1993; Project Leader of the Strategic Management Team for theGauteng Governments Welfare Department and Corporate Core, 1994 to 1996.He founded the Cranefield College of Project and Programme Management in1998. Pieter is a co-author of the International Handbook of Production andOperations Management, (Cassell, London, 1989, ed. Ray Wild) and author ofmany articles and papers on leadership and management. He is Founder Fellowof the Production Management Institute of South Africa, and a member of theAssociation of Business Leadership, Industrial Engineering Institute, EngineeringAssociation of South Africa and Project Management South Africa (PMSA).

Moreover, he is past President of the Association of Project Management, SouthAfrica (APMSA) and South Africas former representative on the Council ofDelegates of the International Project Management Association (IPMA), 2000-2005. He is currently a member of IPMAs Research Management Board. Pietercan be contacted at [email protected].

programme managing the supply chain portfolio article - june 2010 (pmworld today)(1)

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