A Strong Project Management Strategy and Increasing the Efficiency of the Company System - Research Paper Example

INTRODUCTION The UK hotel industry has been growing rapidly and appropriately fuelled by the economic growth of the region. The driving forces of tourism and economy have rested great potential for the hotel industry in UK which can be cashed in by the Chennai group of hotels and resorts. With the help of an efficient supply chain and logistic facilities, Chennai can offer better upgraded services to its client. These developments will definitely tend to create a positive environment for the growth of the Chennai group. The existing assets that are included within the supply chain are not performing in line and therefore can be easily targeted to new reforms that can meet the demands for development and management, (Perf 2003, pg. 23). With the help of a SCM and Logistic improvement plan, the company management has estimated that the business of the group will grow by an approximate of 35% and the introduction of better facilities and effective management of the system will bring about a reduction of 10% in the costs each year. The main outcome of these activities will be in the form of direct paybacks, increased business, customer satisfaction, less client inventories and operational efficiency. The basic aims and activities that need to be effectively encompassed within the Chennai’s supply chain are resource collection, procurement, warehousing, transport management activities, co-ordination with partners, suppliers and most importantly – the customers. To apply standard supply chain techniques and programs across the company’s network of restaurants involving its suppliers, and distribution centers. Enlarging the supply chain management system and its execution to make sure superior responsibility of supplier performance. Adopting specific performance goals and metrics to evaluate the performance of specific suppliers over time. Practicing greater transparency in reporting performance results.  1. BUSINESS CASE The company – Chennai Hotels and Resorts is an international organization that manages 150 hotels and 15 restaurants across UK. It is one of the leading hotel organizations serving over 9 million people annually. It is one of the valuable brands and holds a primary share within the UK market providing services at average to high rates to its customers. With time, Chennai hotels and resorts have won acclaim for its quality service and superiority in dining, interiors, business services and other client oriented facilities. Chennai Hotels and Resorts have witnessed a fast development of its assets over the past 5 years. The strengths of the organization mainly depend upon its rising popularity as one of the most economic and high class facility hotel group. Moreover, the diversity that exists within the group products and services offers the customers a broad range of services and experiences. Further, the existing nature of the UK hotel industry which is facing a new boost by the government and the tourism sector has also been a witness to the growth of the company. The company aims to provide a lot of credibility in hotel management, protection of the legal rights of the customers; modernization of the hotel facilities in line with the international standards to the clients. With ample resources, development and managerial experience the Group is poised to become a new global as well as domestic appeal.   2.1 Present Problem Scenario The present market scenario had poised a lot of complex activities before the supply chain and logistic managers of Chennai Hotels. With the growth of the company and its increasing presence, the typical supply chain had taken up the form of a sequence of disconnected activities, both within and outside of the organization. To cure these circumstances, the management decided to implement a detailed project management plan under the able guidance of an expert Project manager who can assess the actual problems of the system and recommend suitable methods. Looking at the fragmented supply chain order within the company, the Project manager decided that it is essential that the business and its suppliers, manufacturers, patrons, and other third-party providers must engage in plan which could combine tactical forecast and operational implementation with an observation to minimize the expenditure and capitalize on cost across the entire supply chain of the company’s network. The ever increasing needs of the market have weakened the original link between the Hotel Supply chain and the vendor. There is a wide network of information exchange at all levels starting from procurement of raw material to its finally reaching the Hotel. There has been a slack in the activities related to optimization of delivery, order fulfillment, production flexibility, returns costs, inventory and asset management and various other factors that have overall effected the performance of the Chennai Group and its profits.    This study aims to study how a successful project management plan can effectively manage the implementation of accurate information and proper data distribution strategy within the hotel’s supply chain. This project report also in a way marks out the present’s challenges that supply chain management professionals face within the hotel business. The study clearly indicates that there is much space for significant improvements for other similar hotels in order to get connected with their clients in a more meaningful way along with higher effectiveness and better rate of returns.  2.2 Problems faced by Chennai Supply Chain The first problem that was faced by the Project manager were the concerns related to increasing demands and flexibility of the system to meet those demands on time. They were invariably in a state of confusion on “How to?” and “At What cost?” do they need to fulfil the demands. At times, when the immediate need was to fulfil the demands of the client, the profit and cost factor became secondary issues for these managers. This led to the occasional out-of-pocket losses due to material sales which in turned caused more losses in the long run which were not foreseen by the company’s managers. Similarly, in some more instances, it became useless to end up spending more money or resources in an activity which could have required lesser amount if completed within time. This could have been avoided if the supply chain managers were able to take fast decisions related to demand risks, costs structure, availability of materials, expediting cost, and a number of other factors. The lack of real time information necessitated the optimizing of Production and Operational Capacities for Chennai. Since there is comparatively less scope for any kind of expansion of capacity (infrastructural expansion), it is the responsibility of the Project manager to intelligently introduce new techniques to face the challenges. Initially, in order to meet the rising demands, the management tried to employ the full capacity of production on a regular basis, which led to frequent surplus accumulation, wastage of resources and manpower. This occurred due to demand variation, and when the excess stocks stored in the Chennai Store department, over-run the “Best Before…” deadlines, they are required to be destroyed leading to loss of capital, time and resources for the company. Similarly, many times, the demand was less as compared to the supply, the stock had to be abandoned. Moreover, many times, there were issues with the visiting customers of the Chennai restaurant, regarding quality issues, which were actually found to be threatening to the company reputation and were posing a substantial threat to the sales and profitability of the Chennai Group, and perhaps even the Brand Value of the Company.   The various challenges before the Project manager were to substantially improve productivity and save money by utilization of specific applications involved within the operations of the company which the receiving, production tracking, quality control, production, and transport operations, (Turner, 1992, pg. 67). In order to fight these challenges, the Project Manager was required to initiate a project management plan which would assist the manager to efficiently implement the change management.  2.3 Fish Bone Analysis The fishbone diagram has been utilized to offer a systematic methof to identify the effects and the causes that are the rasons behind the problem occuring within the Company’s supply chain. This cause and effect diagram further helped the management to cleany categorize the various problems in a more orderly manner and then suggest recommendations for the same. Here is a Fish Bone analysis for the project which states the various problems that lead to the cause of incompetent supply chains and declining business results for Chennai hotels and resorts. 2.4 Recommendations for Performance Improvement This section studies the various recommendations given by the Project manager to enhance the supply chain and logistics performance of the company. Quick response systems (QR) – Within a Quick response system, there exists a strong relationship amongst all parts of the supply chain which ultimately reduces process times, (Kok and Graves, 2002, pg 45). The base of the strong relationship is due to the fact that in a QR system, the production is based on real time demands for which effective communication relationship between supplier and buyer is necessary. Fast Concept – This concept applied by the Project manager relates to increasing efficiency within the retail supply and demand chain. This concept encourages the hotel managers to motivate their customers to visit their hotel and restaurant more often by offering them best quality at affordable prices. Besides, the managers have maintained their focus on effective response management to consumer demand in lower volumes, and no replenishment with the aim of offering new assortments more frequently to its clients. This has helped the company to achieve smaller lead times within its supply chain.   Lean supply chain -- Leanness is defined as the improvement of a supply chain or a value stream to reduce waste production, time, offer fast replenishment rate and improve product delivery schedules. In case of Chennai Restaurant requirements, it was important to meet the time boundations and product accuracy as per client demands.  A lean supply chain was developed, to eliminate all the waste activities, synchronize activities, and perform better communication and downstream flow of both product and information, (Kok and Graves, 2002, pg 45). This helped to increase the end value for the customer and the company. Sales Records - A Goods supply data cube helped the company to identify the main products / services that were in high demand by analyzing the past trends of the tele-callers and the sales graph. The sales data is recorded and converted in the form of an OLAP cube and then changed into textual form which can used for decision making by the management upon which products to re-in force by studying their popularity chart. E-Logistics – Application of E-logistics has improved the efficiency of the transport operations of Chennai. The Internet has created new means to reach the market. It has compressed time and moved the emphasis from supply-based to demand-based. The basic e-logistics model remains customer-focused, giving the purchaser (whether business or individual) the ability to electronically place and pay for orders; track orders from source to delivery and select appropriate delivery time. Demand Prediction - The long term visibility of customer demand within each period needs to be predicted with highest possible accuracy by setting up a demand-driven supply chain which looks out for real time client orders. This information related to the demand by the customer, helps to queue shipments to the company. This way an enhanced inventory positioning helps to lower costs and better forecasting of demands. Order Batching – The company managers need to realize that there can be variation in the order pattern. If order batching process is followed, then this reduces order costs, and offers more transportation economics, reducing costs and increasing sales benefits. (Lambert and Stock, 2002, pg. 342) Batches and Cycle time - If the production batch sizes are small, the procurement process can also be optimized by reducing batch size but increasing the frequency (if it makes economic sense), thereby reducing inventory in the entire supply chain. Therefore, reduced batch size and low cycle time helped the management to obtain higher service deliveries, and supply chain response times. 2.5 Benefits of the Project to the Company An effective integration of Logistics management, IT, Demand management, Batching, Quick response Planning, lean management etc., within the existing supply chain of Chennai will help the company to integrate and optimize all actions throughout the supply chain process, which has can prove to be the key to competitive business advantage for the company. This section studies some of the positive effects of implementing these solutions on the overall performance of the company. The main drivers behind embracing of these techniques by Chennai are as follows - Direct paybacks – the above mentioned techniques and processes if effectively managed can lead to the reduction of manual tasks as a result will also reduce the total cost of business and other trading activities for the company. The normal average cost per transaction required for purchase order management and business activities which was accounted as high earlier can be easily reduced with the introduction of more value-added activities. Operational benefits – Use of IT integrated logistics techniques within the supply chain will also improve the estimation process by a great extent. This process can be used to reduce the interruptions that generally occurred in the production schedule and distribution processes. This further adds to real time visibility of the demands and more components of manufacturing were easily outsourced, thereby reducing costs. Reductions in interruptions will lead to less usage of machine and labor resources thereby reducing warehousing costs for the company. Technical profits – the use of IT and customary internet modus operandi for messaging of trading / business dealing information within the team, will make the company’s production and logistics chain system the most cost effective of all than other cross business technologies. The flow of inputs from raw materials to the assembled good or service needs to be effectively coordinated with the help of logistics and IT integrated activities. The integration of technology with logistics management helped the management to forecast product distribution, warehousing, manufacturing needs, and transportation, apart from optimizing the sales circulation by evaluating the key inventory measures. 3.0 TOOLS & TECHNIQUES 3.1 Earned Value Management EVM is another form of project management technique in which a methodical, multi-disciplined advancement is created in order to maximize the value of money being spent for the project. Recommendations given during a project may usually occur when there are some major decisions to be taken up, related to design, process, structural value, and other architectural ideas. EVM has been utilized by the project manager to show the Budgeted Cost of Work Scheduled (BCWS). Graphs with the parameters of cost, time and performnace schedule has been identified to depict the actaul project performance of the projct. The actual cost performance at regular intervals of the project has been evaluated with the help of EVM. (Due to the time boundations, length limitation and hypothetical project availability, the data that has been selected for employing project management techniques is imaginary. The following schedules, Gantt chart and EVM analyses are based on hypothetical data for cost, duration and start date of activities. The purpose of these assumptions is purely to explain the basic fundamentals of Project management. The actual Project schedule, Gantt chart, EVM analysis and other reports shall be different than shown below) Chart 1 - This chart depicts the performance of the project in terms of budget. It shows the planned budget, actual and earned budget value for the project within the time duration of 10 months Chart 2 - This chart shows the performance of the project in terms of efficiency achieved within the time period of 10 months. It also compares the scheduled performnce with the actual cost performance of the project Chart 3 – This chart shows the three parameters of cost, schedule and performance variance in the project time period of 10 months. This chart depicts the hypothetical variation of these three paraemeters Chart 4 - This chart shows the budget estimate at the beginning and actual budget spending at the completion of the project 3.2 Gantt Chart This Chart is basically a schedule chart for the activities recommended by the project management plan at Chennai. This chart shows the schedule of the various activities (basically recommendations) that are suggested to improve the supply chain management of the company. The chart has been prepared in MS Excel and a snap shot of the page has been obtained to fit into the size of the document. Chart 5 – Activity Scheduling 3.3 Cost Benefit Analysis The following Cost Benefit analysis is an estimate of the quantifiable additional benefits to the Chennai Hotel and Resorts profit and business that will be due to the wider economic effects of supply chain enhancements to produce an appraisal of the total quantifiable costs and benefits. Expenditure £m Income £m Surplus/deficit £m Cash-flow including risk (initial cost benefit conditions before project) 790 1000 210 Additional income due to enhancements within the company operational chain (cost benefit conditions after the project) 103 540 437 Other quantified benefits 0 69 73 Total cashflow including benefits 893 1609 720 Chart 6 - The Cost benefit analysis (hypothetical data) clearly shows the difference between the two conditions, before and after the project implementation 4. MONITORING & CONTROL 4.1 Project Control The Project manager takes the control of maintaining the standards of procedure, which are usually linked to the issues of project management. The Project manager needs to channelize his efforts in order to standardize and implement economies of repetition in the execution of projects. In the case of Chennai, the Project needs to control the – Time, cost, quality and business requirements of the stake holders. In financial terms, the success of this project will denote a positive Return on Investment done by the Chennai management, and this return will be in the form of increased clientage and business, as a result of which the gains from the product surpass the cost of the project. In case of Project Failure, a negative ROI, rising cost of production, a number of quality issues that cannot be solved even after attempting extension, a meager design which cannot stand any extra developmental issues and no deliverance of the desired results / benefits all will signify the failure of the project. (Güven, 1993, pg. 141). The following strategy has been developed by the project manager to take control of the project and simultaneously organize and maintain performance based activities. Chart 7- Project Control Strategy 4.2 Monitoring Strategy of the Project The main strategy of the project is to create a strategic plan for Chennai Hotels and Resorts which could assist in increasing the potential of the intended activities and reduce the costs that are a result of the various business drivers by increasing the operational efficiency. This can be done by removing the glitches within the Chennai supply chain, and propose a successful and real time information plan to manage products, customers and order procurement which forms the backbone of a successful Supply chain management system. Not surprisingly enough, the reliability of accurate data and its timely distribution, provides excellent results but nevertheless, the usefulness of Information technology in the present era will provide the ultimate competitive advantage in all respects if coupled with supply chain management theories. The Project Manager, needs to realize the connection between IT and supply chain and apply more quicker decision times, more transparency in the supply chain, and better connectivity with the customers for higher growth prospects, (Sustar, & Sustar, 2005, pg. 302). 4.3 Resource Monitoring and Control For effective resource planning of the entire supply chain, it is necessary that the Project manager plans the procurement and delivery of resources in an efficient manner. Also the work force employed within the Chennai supply chain requires competent labor force which can manage the new technologies and possess the will to learn new applications. For these purpose,s the project manager has devised a Planning Program. This planning program is in conjunction with the management requirements of business objectives and is regularly reported to the senior level of management on a consistent basis, (Güven, 1993, pg.141-154). Also, the Project manager utilized a management information system (MIS) to collect and report every data from all possible levels of the supply chain and subsequently maintain and share this data with the management. The Resource planning comprised of the following: The project manager undertook a study about the current capibilities of the workforce and then gace suggestions to improve the skill set of the supply chain work force by giving them suitable training and employing new talent. This is significant as this effects the quality levels of the desried results within the supply chain. (PMBOK, 2000). Also, the project manager made an appropriate plan which made sure that the suppliers who were given contracts by the company follow the timelines, milestones regarding the timely delivery of the resources. Also, the resource plan included the forecasting procedure which could assist the floor managers to predict shortage and surplus of resources before time and subsequently apply change control techniques. In unison with the expertise and human resource management, the project manager is also required to look after the overall improvement and implementation of the project. 4.4 Project Scope This section defines the various aspects which lie within the working and management scope of the Project manager and those issues on which the Project manager has no fundamental control. In scope Application of proper interfaces to integrate the new technologies with the current system Successful network relations with the suppliers Effective labor management and analysis about their skills, expertise and shortcomings Providing training classes to employees to make them knowledgeable about the new systems. Out of scope Procurement hardware and technology from technology vendors. Impact of market conditions, client changing preferences and unexpected market competition 5. RISK MITIGATION 5.1 Project Risk Management The main risk areas that are required to be identified and where action are required to be implemented: Low level of control and deliverance, no effective synchronization between the suppliers involved in the Supply chain of Chennai. Cost of delivering quality may at times exceed the budget that will be alloted for a particular activity. No efficient procurement procedures, risk management techniques, progress supervision methods exist. Lack of sophisticated, distributed systems based on new technologies which should is a significant investment in hardware, software, staffing, and training and thus there is a need for a cost-effective solution. Absence of flexible solutions to easily adapt a system to meet changing business conditions. Lack of Interoperability, for example, the order-management application of a business partner was not interoperating with the inventory applications of its suppliers. Interoperation between businesses reduces costs and improves performance. It enables the implementation of more dynamic value chains. Lack of effective communication between the team members and the management. 5.2 Identification of Risks This section studies some of the risks that can be faced by the management in this case. These include: Effective control and deliverance to synchronize the assortment of various companies and organizational groups involved in the Chennai SCM Project. Skilled Expertise and continuity of team leaders is the key to success. Delivering quality and adherence to the budget allotted within the deadline. The prerequisite for the Project budget to be evidently determined and efficiently administered. Application of efficient procurement procedures for the successful completion of the project. Application of efficient progress supervising and risk management techniques. 5.3 Risk Impact and Assessment In the previous section, the various risks have been identified and numbered from 1 to 6. These risks are then plotted in the chart shown below. 3 5 1 2 HIGH RISK LOW RISK 4 6 7 LOW HIGH 5.4 Recommended Risk Management Plan Since there has been a lot of study about Risk Management, a proposed plan, has been suggested in this study. The proposed research plan is as follows: Agenda sketch – This part of the proposed plan sketches an overview about the philosophy and capacity of the plan. This also defines the basic objectives of the risk management plan. The committee who has been given the responsibility of sketching out the should ensure that all the factors have been well studied and carefully examined. program as well as the program’s basic goals and objectives. Organizational Structure – This part of the proposed plan or strategy is built upon the organizational structure that is described by the staffing issues, committee, and relationships between different departments. Program Components – This section includes the copies of the most relevant documents that contain the ongoing strategy and other risk management functions like data reporting, identification of risk methods, educational programs about risk management, risk financing, claim, financé issues etc. Waste management, safety checks, and accidents are all best described by program components part of the plan. Resource planning and resource allocation is also a detailed part of the report. 6.0 DISCUSSION The major advantages that are available with the application of Maturity model to the Chennai Project management include availing the information regarding the level of facilities and capabilities available for the project to be completed on time, classifying development areas, educating and refining up the professionals involved in the project towards better project management understanding, and most significantly, bringing in new improvements that assist the Project to advance its close strategies through the entire period. With the use of the maturity model, the project managing committee will be able to widen consistency among the premeditated goals set for the business and the innumerable project activities, by directing the team towards the improvement of the facilities essential to proceed forward with their strategies, and the ability required to deliver the project effectively, consistently, and predictably. The maturity model if applied to the project management, will definitely aim to benefit the team irrespective of its size, scalability, and customizability. Further, the applied technique of Risk management helps to find the reasons for the existing gaps between the SCM management methods and their practical execution by the managers. Risk Management is one of the most decisive project management techniques to render successful completion of the project. There have been many cases where the Chennai management was lacking in activity with a complete frame of mind, which results in an ineffective and un-focused risk management plan. The purpose of Risk management is to manage these pressures that are posing challenges before the project. Risk Management activity was mainly concerned with identification of the prospective threats to the system, occurrence of the ill effects and finally taking suitable actions to prevent any such cases within the system. 7.0 CONCLUSION The role of these recommendations is to satisfy the requisite function at the lowest total cost which includes the capital, operational and maintenance costs, over the entire period of the project which at the same time should be in line with the obligations of performance, quality, safety, and standards. In this case, EVM has been applied to determine the performance of the project with respect to the cost, time and quality. Here are some points that clearly show that the selected project management techniques proved to be good enough for the business case study. 1. Use of EVM helped the manager to plan effective planning cycles and influence strategy to maintain production schedules with time and quality, (PMBOK, 2000). 2. Putting in place the various risk monitoring procedures helped with the delivery, procurement and utilization of resources on time. 3. Moreover, the recommendations offered and their efficient implementation of supply chain strategies helped to facilitate the capacity and sustainability of the system so as to enhance contribution to the delivery of the objectives. Definitely a strong Project management strategy helped the company to increase the efficiency of the system and also make higher profit margins. This will also assist the management with a tool to prepare a viable plan which emphasizes on elements to increase the supply chain productivity and market share for the company in future as well. A well defined solution of project management strategies will further help the management to place the resources at the accurate constructs. Offering competitive service to the suply chain and implementation of better project management will increase the profits for the business. 8.0 REFERENCES Turner, J. Rodney, Handbook of Project management, New York, McGraw Hill 1992 M. Güven, Decision Support System for R&D Project Selection and Resource Allocation Under Uncertainty. Project Management Journal 24, no. 4, 1993 A Guide To The Project Management Body Of Knowledge, Project Management Institute, Pennsylvania, 2000. Sustar, B. & Sustar. R. (2005). Managing marketing standardization in a global context. Journal of American Academy of Business: Cambridge, 7(1), 302. Retrieved October 10, 2005, from ProQuest database. Perf 2003, “Supply Chain Performance Score Card Data Table for Electronic Equipement”, Performance Measurement Group, 1050 Winter Street, Waltham, MA 02451, http://www.pmgbenchmarking.com/ A.G. de Kok and S.C. Graves (Editors): Supply Chain Management: Design, Coordination and Operation, Cambridge University Press, Cambridge, England, 2002, pp. 45-78. D.M. Lambert and J.R. Stock: Strategic Logistics Management J.J Coyle, E.J. Bardi and C.J. Langley: The Management of Business Logistics. Indiana University Press, 2002, p. 342 Read More