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STRATEGIC PLANNING
Student’s Name
11/7/2015
Table of Contents:
ContentsImplementation of Inventory Management System...................................................................4
Project Management Principles..................................................................................................5
Project Planning.........................................................................................................................6
Initial analysis (The viability of the project and developing success/failure criteria of the project)....................................................................................................................................7
Cost Estimate:.........................................................................................................................7
Organization (Project plans and establishing the project organization).................................9
Scheduling (Project scheduling, estimating and cost control techniques to the project).....11
Analysis of project ( The methods used to measure project performance)..........................13
Project change control procedures:......................................................................................15
Project termination:..............................................................................................................16
Project Human Resources........................................................................................................17
Project Management
Organizational Structure.......................................................................................................17
Control and co-ordination.....................................................................................................18
Assessment of leadership quality for the project..................................................................18
Human Resource Requirement for the project.....................................................................19
Project Evaluation....................................................................................................................20
Abstract:
In this project we have taken a case which talks about a Retailer tring to implement a system
for the management of inventory. This is not a real project so some of the assumption mat not
be practical. Throughout the process of this project management we discuss each and every
aspect o process be it selecting the right comtracter or making the team. In the end we discuss
the outcome of the project.
Implementation Of Inventory Management System
T HALL is a United States based retailer. The company has been in operation from
last 25 years. The organization size is around 5200 employees. The primary channel of
operation for the company is Retail Stores. They have been using the traditional way of
managing the inventory, but with the advent of technology they adopted new ways of
managing the inventory by the use of computer based applications. In this world of cut throat
competition, they don’t want to limit themselves just to one channel. They want to go online
and start selling their products there as well, so that they can appeal to a larger number of
people.
Since the organization is already in operation for several years and has a large sized
operation, they want their local inventory management system to be linked to that of the
online stores. Modifying the current system to suit the new requirements was costing them a
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lot with some compromises so, they are now thinking of implementing a whole new system
along with their own website.
To complete this project they contacted some firms and finally selected one. Throughout this
report we will consider various factors about this project and how the implementation takes
place.
(Duncan, 1996)
Section 1:
Project Management Principles(Adedeji B. Badiru, 1995)
Since, in this project we are dealing with the implementation of a software system we need to
be very careful with the principles of project management as anything if went wrong can
cause a lot of problem for future operations. We will first discuss the principles in context of
this project.
Vision
Vision statement is primarily associated with a company but it is very helpful in
deciding the long term output from the project. The vision statement for this project
is:
“Everything centralized and simplified”
Mission
“To implement a system which can be used by all and at all places and also is
compatible with upcoming tecnology.”
Standards of engagement
We very well know that the process of developing and implementing the system is a
delicate one. We cannot just ask the company to develop the software and install it
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once done; it will not be good for anyone as the probability of meeting the
requirements is very low. In order to solve this problem we need to have a system, as
when and how the meeting will take place, how the information will be exchanged,
who are the people involved in the process, and how the necessary arrangements be
made in case of any special requirement such as company visit etc.
Intervention and Execution strategy
While developing the system the developing company will select method in which
the project will be done. They may choose different models among the waterfall
model or iteration model etc. but that System Development Life Cycle will not be
just according to them. The organizations system must support and in case any
problem arises they should be ready.
Measurement and Accountability
Last but not the least, measurement and accountability. We have decided almost
everything now while the project is going on there must be a system to measure the
performance of the project as, how the deadlines are being met, whether the project is
leading as expected and who is responsible if anything goes wrong. In our project the
accountable person is the Project Manager itself.
One problem that we will have to deal with later in the project is the management of
human resources. As the people working in T HALL currently are used to the old system.
They can be replaced but that will not be an ethical step to take. So, they need to be trained
according to the new system but then again it will cost a lot as the no. of people that needs to
be trained is quite high. And we don’t even know how the people are going to respond to this
system. These are the issues associated with the Human resource of the project and are one of
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the most important cases to be taken care of, not just in this case but in all project
management cases.
Section 2
Project Planning(Dov Dvir, 2003)
This is basically the core of our report. In this section we will discuss the estimated cost
of the project, the schedule of the project, the planning of the project, implementation of the
project, the controlling structure of the project and other things. We will take one at a time.
Initial analysis (The viability of the project and developing success/failure criteria of the project)
Since it is an IT project and most of the work is being outsourced to a company, T HALL has
very little to do. The primary concerns of T HALL should be:
The company understands the requirements of T HALL
The communication between the companies should be professional and clear
The team assigned for the job should understand the working of an IT company and
should also have complete knowledge of the working of the current inventory
management system
A nice idea about the costing of the things in the market so that the company can
avoid being cheated
The testing of the system should be carried out constantly so that any unidentified
requirement can be taken care of
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Cost Estimate:We will take a rough idea of the projects cost:
Fixed Cost:
1. Server hardware $15,000
2. Windows Server OS License $100
3. Website development $10,000
4. Offline system development $12,000
5. Installment Charges $1000
6. Other accessories $3,000
Variable Cost:
1. Installment Charges $200 per day
2. Training Charges $300 per day
The project is not meant to generate profit, but to ease the process. So, we cannot
quantify the profitability of the project. What we can do is we can measure the cost incurred
if T HALL had to hire a professional to the whole process manually. This will cause a lot of
problems as.
The net project cost will be around
Fixed cost = $41,000
Variable cost = 2*200 + 3*300 = $1,400
Total = $42,400
The above calculations are done asking conservative measures. We are not using any
technique such as, discounted cash flow or net present value, because all the transactions are
happening in a very small interval. They won’t make much of a difference.
Compromises if the system is not modified and how they are taken care of:
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Salary of the staff
At least one person per store just to monitor the transaction happening at his/her
location and upload it to the existing inventory system and also record the
transaction in case any modification and cancellations. This is not a problem if the
system is implemented as the system will be centralized and the transaction will
be automatically recorded
The requirement will only increase as the online transactions will be done during
the night also so some persons need to take care of that also. If the system is
implemented everything will be automated
In case of hiring new employee the training will take up a lot of time
Basically what we are trying to say is, that implementing the system inevitable. We
will have to do it, be it now or later. Not just the inventory management, but also
other systems will be required to atomize sooner or later.
Organization (Project plans and establishing the project organization)
No need to assign the task to employees of T HALL.
The project team will constitute of the following members:
Project head:
This position is responsible for the whole project. The person will be held
responsible if anything goes wrong. All the other people in the team will
report to the head and the head will report to the senior executives of the
company.
Operations manager:
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The inventory is managed by the operations manager. It will be nothing
but obvious to include the operations manager in the team as he
understands the whole system. Along with the manager, he will also
include some persons who are included in the operations team.
IT manager:
IT manager is very much familiar with the processing of the current
computer system being used in the company. He, along with some of the
acquaintances will help making the new system more compatible with the
existing one.
o Finance Controller:
He will be responsible with the flow of money throughout the project.
They won’t have much to do with the development of the system, but they will be helping the
company in understanding the requirement and in case they want to check any progress.
The flow of the system will be as follows. There will be a team in the software company also:
Team Structure at T HULL:
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Team structure of IT Firm
Scheduling (Project scheduling, estimating and cost control techniques to the project)We will first try to identify the processed included in the project and then will
allocate time to those processes and finally will create a schedule for the project.
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The typical set of steps required in this project is as follows:
o Requirement Analysis:
Analysis of the requirement of the project will be done by the team.
And according to that requirement a statement will be made as what
exactly is required out of the project.
o Selecting and explaining the requirements:
Once the requirements are ready what we need to do is selecting an
appropriate firm which is able to satisfy the requirements. Once
selected all the requirements are explained to them.
o Designing:
Designing of the software is done in close collaboration with T HALL. It
will include the processing and outputs of the software.
o Cost Estimation:
Once explained and a rough design is made what needs to be done is the
cost estimation of the project.
o Creating and Implementing:
This process will require the development of deliverable and the
implementation of the same. This is a pretty long process as it will be
done with both the teams working together and this being the most
important step. It may take up a lot of time as some requirements may
change or new requirements come into picture.
o Testing:
It involves the testing of the product.
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o Monitor and modify
o Training:
Staff will be trained as how to use the system.
The time taken by the different processed is as follows:
Estimated Time (Days)
Start(Day
)
End(Day
)
Requirement
Analysis 7 0 7
Hiring 10 8 18
Designing 5 19 24
Cost estimation 2 25 27
Creating 30 28 58
Implementing 2 59 61
Testing 10 62 72
Modification 7 73 80
Training 4 81 85
The Schedule will look like:
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Requirement Analysis
Hiring
Designing
Cost estimation
Creating
Implementing
Testing
Modifiction
Training
0 10 20 30 40 50 60 70 80 90
Analysis of project ( The methods used to measure project performance)
(Parthasarathy, 2015)As discussed before the project is not the one in which we are expecting any sort of
profit. It is a project which has a nature of avoiding future costs.
So, in order to analyze the performance of the project we will try to predict the cost
which would have happened over a period of 5 years ( as we may need to adopt a
new system after the period).
Following are the potential costs if the system is not adopted:
o A salary of at least 5 employees = $50,000
o Expected error cost = $1,500
Now the costs if the system is implemented
o Project cost = $42,400
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o Electricity = $1,000
o Maintenance = $1,000
o Salary = $20,000
The above mentioned costs are for just 1st year so total costs for the first year are as
follows:
Without system = $51,500
With system = $64,400
But if we analyse the cost for next 5 years:
1 2 3 4 5
Without System 51500 56650 62315
68546.
5
75401.1
5
With System 64400 24200 26620 29282 32210.2
Total cost:
Without system = $314,412
With system = $176712
While analyzing the cost we have assumed that the variable cost such as salary will
increase at 10% for both cases but the project cost is one time.
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Project change control procedures:Change control is a process in which the project is designed in such a way that in
case any problem occurs or requirement of any change arises it can be tackled. For
change management there are a set of procedures followed to ensure the desired
outcome is achieved.
For this project following change management methods is used:
o The alternative for each and every job is already in place. This is done to take
manage the project in case any employee leaves the project midway. Doing
this ensures that someone will be there whenever any problem arises.
o The entire job is properly documented so that in any case, any problem occurs
all the things that are required to be done are with someone. For example, if
someone is missing for a day due to some unavoidable circumstances, His/her
job will be done by the other guy just by analyzing the present
documentation.
o Responsibility is given to the project head. This responsibility is given to a
reliable person as the project should have one person who knows everything
about the subject and is solely responsible. This is because a project is never
complete until and unless there is a sense of ownership given to someone.
This person is the one who doesn’t think of the project as any responsibility
or anyjob, but will think of it as something he/she owns.
o The conveyance of message is another thing which can, if not understood
properly, cause unexpected outcome. For example, one may be asking that
this particular thing I don’t want in the software but if not articulated properly
can cause that thing mandatory. This may not be a severe problem as this can
be taken care of but it certainly will cause wastage of time.
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o In this project we must be prepared for any unexpected event to happen as the
whole thing is an intangible product. For example, loss of data, data theft, etc.
so, to take care of that an extra budget is allocated just to secure the data.
Project termination:
This is a type of project which can never really be terminated as future problem will
keep on rising and the company will stay in touch with the software provider for
maintenance and modification purposes. So we will define the project termination
stage, according to the following criteria:
o The desired system is produced and implemented and the output being
generated is satisfying the initial as well as the intermediate demands.
o The installed system has gone through all the testing and has performed well.
o All the employees who are supposed to operate the system are trained and
have successfully handled the system for quite a while and are satisfied.
o A manual has been created regarding how to use the system. This will help
others in the future and also decrease the dependency on the person who
understands the system currently.
Section 3
Project Human Resources(Belout, 1998)
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Organizational StructureWe have discussed the position of responsibilities of the project. It is the same as that
the only difference being that in this section we will be discussing the structure not
the persons.
The one position which is basically the responsibility of the project is given to one
person who is also given a pretty large incentive so that he feels a sense of
belongingness. This is because of the need of a person who looks at the success of the
project as something of his own.
The other positions depend on the different operations that are done in the
organization. First of all the persons involved in all the associated activities such as
operations, supply chain management, information technology and financial services.
The above mentioned persons will be for the sake of diversity in the team so that at
least one person knows about anything required.
Post that a similar team needs to be built in the software company also. This is to
ensure that everything goes in an organized manner and the communication is perfect
within the firm.
Control and co-ordinationAs we have discussed earlier that all of the process has been documented properly and
contingency measures have been taken and all this is being done under the
surveillance of project head. Following are the steps taken in order to control the
coordination of the whole project.
o All the reporting will be done to the project head at regular interval and the
project head will in turn report to the higher authorities.
o In case there is any delay found in the reporting, appropriate measures will be
taken and responsibility management team will find the appropriate joy. This
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person’s job will be to get the process back on track with minimum loss of
time.
o The appraisal process will be based on whether a given employee is adhering
Assessment of leadership quality for the projectThe leader of the project will be the team leader. He is not the only leader; along with
him the departmental managers will also be given leadership positions. Overall the
company is looking for the following leadership skills in a person with leadership
quality:
o A person should have impeccable communication skills
o A person should have held a managerial position for more than 5 years
o There should be some projects leaded by the person in the past and the
satisfaction rate of the project should be very high
o The person should be trust worthy and should have always delivered good
results
Human Resource Requirement for the projectWe will set the requirement of human resources according to the profiles we have
mentioned earlier
o Project head
Should have experience of at least 5 years in the same company and
has worked for at least 2 departments in a leading position
A good track record as project head. Have shown good leadership
skills in the past
Implacable communication skills
Excellent business analysis skills
o Operations manager
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Should hold a senior position in the inventory management profile
Have worked for at least 3 different companies for the same profile so
that a diverse view is achieved
o IT manager
Senior IT manager at the organization or have experience of at least 5
years at any other information technology organization
Should have an understanding of all the tools used in the development
of the system
o Finance manager
A good understanding of project management and financial concepts is
required
Should be well versed with the firms operations and accounting norms
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Section 4
Project Evaluation(Dov Dvir, 2003)
At the end of the project we will evaluate whether the project was a success or a failure on
the basis of the following:
Cost
o The cost objective has been achieved as the cash flow turns positive within a
few years
o The cost of the project in 2 years is lower than that of the cost without the
package in 2 years. The implementation year is the only costly year
Time
o The objective of reducing the time in the process of manual entry has been
achieved
o The new system is way too much faster than that of the old one
Efficiency
o The new system is comparatively very efficient and has reduced the errors by
high margin
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o The system is compatible with the new technology and can be used with other
resources
Compatibility
o The new system is compatible with the new operations the company wants to
get into
New opportunities
o With the automation system the company can now expand its operations to
other sources and can earn more profit
Human resources
o The ability to use the system created a lot of trouble at the start, but
eventually became easy to understand and operate
o The cost of hiring trained professionals has been reduced
Overall, we can say that the whole process was successful and has achieved the final
objective. Even though the project was not meant to generate profit, but still has
worked as an asset by reducing the future expense.
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Conclusion:
In concluding statement we would like to say that the project was a success. The whole
process went as planned and the outcone was achieved. The efficieny as well as the operating
of the whole company was increased.
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References
Adedeji B. Badiru, P. S. (1995). Comprehensive project management: integrating optimization models, management principles, and computers. Prentice-Hall.
Belout, A. (1998). Effects of human resource management on project effectiveness and success: Toward a new conceptual framework. 21-26.
Dov Dvir, T. R. (2003). An empirical analysis of the relationship between project planning and project success. International Journal of Project Management, 89-95.
Duncan, W. R. (1996). A guide to the project management body of knowledge.
Parthasarathy, S. (2015). Efficiency analysis of ERP projects. Computer Standards & Interfaces.