Defining project scope is crucial for optimizing supply chain implementation, balancing cost reduction and quality, and measuring progress. Linking implementation to business objectives and using KPIs and ROI can help identify gaps and track costs. Including specialists in decision-making is important for medium to large projects.
The most important aspect of optimizing your supply chain implementation is project scope definition. This will help determine a timeline for implementation. For example, a simple process change may take as little as a day to implement, however, a complete supply chain strategy overhaul may take a year or more to fully implement.
Scope definition will help optimize the balance of cost reduction and quality in the shortest amount of time. It can also help measure implementation progress over time. Management buy-in is needed to optimize implementation speed and ensure the best resources for the implementation team. The best way to do this is to link the implementation of supply chain initiatives to business objectives. This will ensure executive leadership sponsorship for implementation which can help accelerate implementation efforts.
Senior executives are typically concerned about product life cycles, new product development, market differentiation, and cost containment. Key performance indicators (KPIs) are one-way supply chain managers that link supply chain implementation goals to larger business initiatives. Examples of KPIs are lines per hour, cost per employee, or book value of inventory. KPIs help identify gaps in implementation. Implementation gaps are defined as process steps that are not beneficial to the overall business goal.
Another commonly used metric that helps optimize supply chain implementation efforts is return on investment (ROI). ROI helps implementation project managers track costs along the supply chain implementation cycle. ROI also helps you find break-even points that can be used as milestones along the timeline.
The most common way to calculate ROI is to divide the net income realized from an investment by the cost of the investment. For example, if you invest $10 US Dollars (USD) and earn $2 USD from the investment, ROI is calculated by dividing 2 by 10. The answer is 20 percent. If the costs associated with supply chain implementation outweigh the anticipated benefits, implementation efforts should be abandoned.
A common mistake that supply chain implementation teams make is not including and implementing specialist in supply chain solution decision making or creating new KPIs. Implementation is a key consideration for medium to large projects. Thus, implementation team members can bring considerable value in maximizing supply chain implementation efforts.
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