The Greatest Supply Chain Disasters of All Time - Case Study Example

Business Case Study: The Greatest Supply Chain Disasters of All Time 2009 Common Mistakes There are several common mistakes that companies described in the case study have committed. One common mistake is making assumptions about the outcomes of the big projects, and working on a future plan with the assumed outcomes. This is a major risk to company operations. Foxmeyer made an assumption that its new system would be highly effective, hence estimated benefits from such efficiency. It started bidding future contracts based on a system that was notyet operational. This can only be considered poor management, which entails poor planning, poor project management, and poor change management. Poor planning is because the company managers did not include certain risks that may have affected the project. This then means there was poor project management. The company’s project manager, in his or her plan, should include risk assessment, which should have the risk of the project not going according to plan. Execution risk should also include the risk of the current company system not integrating smoothly with the new system, and the risk that some required activities may not be recognized in time. This mistake is seen in other companies such as; Boeing, GM, WebVan, Adidas, Denver Airport, Toys RUs.com, Mattel, Hershey Foods, Cisco, Nike, Apple, Loblaws, Ford, GM, Aris Isotoner, and Chrysler. In Boeing, there is also poor change and stakeholder management. A new system is implemented in the company which requires the cooperation of suppliers. These suppliers are not informed in time, are not informed of the company’s expectations, and the challenges that may come with such speedy and change in the production system. In the end, the suppliers cannot supply the products in time. They may have even produced poor quality products which may have caused the company more loses. An assessment was not done to find out the capability of the company, and the suppliers, to steer the project to completion in time. No consideration was given to the supplier, an important stakeholder in the success of the project. Lack of thorough assessment of a project’s feasibility is also a common problem in almost all the companies in the case study. Most of the companies go ahead with the projects, without a thorough assessment of the project’s feasibility and compatibility with the current systems. Almost all the companies ignore the risks that are ahead of them. They only assume that such big projects have to bring profit. There are risks associated with new systems, and these are all ignored. The companies work on expected benefits. In all the companies, big projects failed to meet the expectations. Most of the new projects were IT and system overhaul projects. It only means that any new projects that have no verified results of implementation should not be implemented and managed under traditional methods of steering a project to its completion. Traditional methods of management do not focus on the outcome. They focus on assigning duties to specific skills and departments, and expecting outcomes as described in project expectations. After implementation, that is when a manager realizes that the system was not compatible with the company’s operations, the system needed other sub projects, the system needed more time, and so on. New information Technology systems mean; new operational systems, and new roles and so new skills. All these should be accompanied by effective change management, since they will be accompanied by challenges in change management. The Case of “Denver Airport Cannot Manage the Luggage” This international airport implemented “a hugely automated baggage handling system”. This did not work as planned. This was an Underground Railroad network, driven by computers. The system was expected to speed up the delivery of bags to customers, and make the process of baggage handling efficient. It came with problems such as derailed cars, mis-delivered luggage, and jammed tracks. These problems may have resulted from lack of coordination, assumptions of the project’s success, and lack compatibility of the build system and the automation system. It is indicated that the conveyance system had already built underground tunnels, before the chief contractor was given the job. The design and the level of automation, therefore, did not match. There was also no effective communication system: it is indicated that miscommunication between airport officials, the contractors, and others was a source of so many problems. They could not detect the impact of change on the whole system, and inter-related problems. Denver Airport later returned to traditional handling methods. This organization should have: Planned well considering the design of the railroad Assessed the compatibility of the project Conducted a thorough risk assessment that should have included expected effects of the new system (anticipated problems and how to deal with them) Assessed the new project, and implemented a compatible change management strategy Tested the system to find out more about it and its effects There are technical and organizational problems. Technical problems are those that concern the design and compatibility of the system. Organizational problems are those of management such as provision of an effective communication system and change management. For any new project implementation, these have to be assessed and mitigation strategies and solutions put in place. It is very important for the organization to develop a test automation system before implementation in the whole organization. This would have helped in identification of problems that would have occurred. An example of an appropriate design should have been implemented in one section of baggage handling. This would then be tested with various anticipated circumstances, for example, when there is too much luggage, how the system would react, and so on. This would then be documented, and appropriate changes made to the new system. Unpreventable risks can only be dealt with once they occur. In such cases, the company should have enough resources set aside for such risks. It is indicated that in IT projects, there is greater risk in larger projects than smaller projects. This goes to an extent of threatening the company’s existence; this is even evident in some of the stories in the case study. Poor design, changing or confusing requirements, poor management, inadequate resources, inadequate skills, and inappropriate use of new technology, are some of the causes of failure. Managers use budgets, project plans, and timelines to reduce execution risk, but they assume certain risks. These are; the risk that the disparate activities will not come together in the end (integration risk), and the risk that some activities will not be identified in advance (McDonald, 232). The companies in the case study had assumptions about their projects without thorough risk assessment. Integration risk, and the risk that some activities may not be identified in advance were not identified, and mitigation strategies developed. This led to failure. Other factors are; relying on unverified estimates, assuming outcomes, poor planning, poor management, lack of assessment of the system’s capabilities, poor coordination, and not using up to standard manufacturing processes. Works Cited Macdonald, Dave. Practical Industrial Safety, Risk Assessment and Shutdown Systems. Burlington, MA: Newnes, 2003. Print. Read More