implement and bring to completion.
In this article, we briefly explain each of the
Supply Chain Project Lifecycle’s phases. We then
provide a real-life example of how this process
helped one customer cut order-to-delivery cycle
times and save nearly $2 million annually. Finally,
we offer a quick list of six signs that a supply chain
project is in trouble.
DIAGNOSTIC OUTPUT
The diagnostic output is the starting point of any
supply chain project. According to the
Merriam-Webster Dictionary, a diagnosis is the “
identification of the disease, illness, or problem” requiring
a solution. We call the first stage of our methodology a “diagnostic output” because it involves the
identification of a quantifiable problem that can
be measured. This could be as simple as the chief
executive officer (CEO) saying, “We need to reduce
shipping costs,” or it could be the result of a lengthy
data-analysis process showing that express freight
costs are rising 15 percent year over year.
In either case, a problem has been identified;
whether it actually requires a solution will be decid-
ed in subsequent steps. The key to successful com-
pletion of this phase is to come up with quantifiable
ideas that can improve supply chain performance:
Are manufacturing lead times too long? Are fre-
quent express shipments driving freight costs up? Is
excessive inventory tying up much needed working
capital? In all three instances, the diagnostic output
is a problem that can be measured against goals or
norms.
PROJECT HYPOTHESIS
The goal here is to transform the “idea” created
in the previous step into a project hypothesis.
Merriam-Webster defines a hypothesis as “an idea
or theory that is not proven but that leads to further
study or discussion.” In other words, it is an idea
that requires validation to prove (or disprove) its
worth. Our CEO’s diagnostic output—“we need to
reduce shipping costs”—converts to the hypothesis
“shipping costs can be reduced by 15 percent by
reducing the use of express air freight.” This statement identifies the desired future state, quantifies
expected benefits, and gives the project focus by
identifying where the project will look for savings.
Limiting scope in this way is important, as it prevents the project from attempting to do too much
in one effort.
The idea to be proved or disproved must be stated
clearly from the start. Moreover, the idea will need
to be vetted before resources are committed to
its pursuit. This is a good time, therefore, to get a
preliminary idea of the availability of resources for
