Project Management Institute

Enabling the optimization and execution of a business critical strategic process

Tony Scrima
Senior Project Manager, Integrated Project Management Company, Inc.


In order to secure a competitive edge in their respective industries, organizations are seeking ways to increase efficiency and guarantee successful execution of critical business processes. In today's global business environment, the importance of first-to-market, customer service, cost-competitiveness, and quality are key factors in determining an organization's success, or undesirable failure. The purpose of this paper is to demonstrate how one organization was able to achieve sustainable and effective process improvement by combining project management best practices with certain Six Sigma methodologies. These combined methodologies provided the structure and discipline required to identify process improvement opportunities, develop sustainable solutions, and lead the organization through the strategic change process.


A leading retail chain was faced with eroding sales and market share, while striving to position itself to best contend with its competitors. To combat these challenges and to reinforce its commitment to its 4,000 plus retail locations, the company restructured a critical strategic merchandising process to review and optimize its entire product assortment within its core categories. The objectives for this Product Line Review Program initiative included reducing wholesale prices, and creating a compelling product assortment that would ultimately result in margin and volume increases. Additionally, the initiative sought to generate a positive consumer shopping experience by rationalizing and procuring the product assortments needed to complete home improvement projects.

This case study will provide attendees with a detailed overview of a one year, real-life experience combining sound project management principles to ensure the success of a strategic business process management initiative. It details how a project management consulting firm (IPM) employed a concurrent, two-pronged strategy to address existing line review inefficiencies, while providing project management discipline to on-going product line reviews. Additionally, it describes how an optimal and streamlined business process and supporting tools were developed in a cross-functional, collaborative manner.

Analysis of the Current Situation

Based on preliminary discussions, the assembled program management team understood that the organization had embarked on a major, company-wide strategic initiative to rigorously review each of its product lines. The goal of these reviews is to ensure the organization's customers are provided access to an optimal mix of quality products at highly competitive prices. This will allow the customer to better challenge their local competition, will be a foundation for increased sales volumes, and will provide additional enticement for new business opportunities. Simply put, line reviews are a combination of traditional category and supply chain management. It includes rigorous analysis and planning to ensure better, more intriguing products at competitive prices, as well as the discipline to optimally procure, warehouse, transport, communicate and implement those assortments. These goals were stated in the company's Annual Report,

“In 2004, we are focusing our attention on the one remaining piece of our turnaround: stopping the erosion of sales. As we continue to implement our 2003 – 2005 strategic initiatives, we are committed to additional wholesale price reductions aggregating $18.0 million this year, more exciting assortments, higher and more consistent fill rates and improved processes to make our co-op easier to do business with – all so that customers will find it in their best interests to pull the volume lever.” (Client prefers anonymity)

This complex and far-reaching initiative is so central to the organization's current business and future competitive advantage that anything less than absolute, assured success could be devastating. Negative impacts to customer service levels, member satisfaction, and ultimately customer retention levels could not be tolerated.

To support this initiative, the organization assembled an internal group consisting of several key new merchandising executives. This team had conducted reviews of approximately 16 lines to date, with 16 more planned for year 1 and 50 planned for years 2, and 3, respectively. Each line review could involve several to many vendors (e.g., 2 to 10) and consist of few to numerous Stock Keeping Units (SKUs) (e.g., 50 to 500).

As the initial wave of line reviews began, the executive leadership team quickly gained a greater appreciation of the significant downstream impacts, the large number of stakeholders involved, the lack of a documented and understood process, and the high level of coordination required. Specifically, each of the 16 ongoing line reviews was experiencing slippage in schedule that was impacting execution delivery dates. Week after week, milestones were being missed and the internal group responsible for managing the line reviews began to develop a culture of blame. While line reviews had historically been an important part of the organization's business, the rigor and magnitude of this initiative was unprecedented. Additionally, the likelihood of vendor and SKU change was perhaps far greater, which significantly impacted every operation down to the store shelf. The potential that this wave of activity would “back-up” the entire system was very real, and must be avoided at all costs.

The organization determined that a focal point was required for this initiative to plan and orchestrate the numerous processes, activities, personnel, and components constituting this complex program. Based on discussions with the organization, the following sub-processes were critical cogs in the overall line review program:

  • Member Relations and Communications
  • Line Review Planning, Prioritization, and Scheduling
  • SKU Rationalization
  • Line Review Execution/Vendor Negotiations
  • Pricing (Co-op, Member, Regional, etc.)
  • Transportation
  • Inventory Transition/Lift
  • Marketing
  • IT System Updates/Upgrades
  • Store-Level Updates (plan-o-gram, labeling, systems, etc.)
  • Inventory Liquidation (at the distribution center and store levels)
  • Internal Communications

Approach to Ensure Sustainable Line Review Execution

Setting up The Appropriate Program Structure

Business process optimization initiatives depend on the competitive environment an organization faces within their industry. For example, customer service value chain processes are very important in the financial services and government sectors where interaction with the customer is a main concern. Customer friendly applications to enable the access to information, manage finances and buy financial products are important features for financial service providers such as banks, insurance companies, and brokerage houses. Conversely, the top priorities facing many manufacturing companies focus toward supply chain programs and customer demand for self-service and access to information.

Regardless of the industry, a company's process optimization project must identify ways to make their business processes manageable, with formalized, actionable information about how, and how well, the process is executing. Not unlike any other project, a business process optimization project must define the scope of the process to eliminate confusion and set the project boundaries. It will identify the process improvement goals such as cycle-time reduction, customer service improvement, and/or cost reduction, etc. It will identify the deliverables such as process maps, time studies, systemic enhancement opportunities, to name a few. Additionally, it will allocate the required resources including subject matter experts to define existing process strengths, weaknesses, opportunities, and threats. And, it will set a timetable for the development and execution of process optimization enhancements.

During preliminary discussions with the organization, senior management stressed three major requirements to the program management team:

  • Effectively manage and assess the status and effectiveness of the current line review assortments. Report the status to senior management.
  • Formally define an optimized and streamlined line review process complete with tools, policies, and procedures
  • Implement the formalized line review process without impact to on-going business operations

To immediately integrate into the team and begin to orchestrate program activities, IPM recommended the following concurrent approach (Exhibit One).

Exhibit 1

Exhibit 1

Concurrently, IPM recommended conducting a systematic Discovery and Characterization effort to understand and document all of the program details and intricacies. This involved reviewing and compiling existing line review information and interviewing key program stakeholders and team members. Upon completion, IPM developed a detailed program plan. The plan addressed scope, schedule, quality requirements, resources and responsibilities, communication plans, risk assessments, change management plans, interdependencies, metrics, etc. Specifically, the recommendation was made to form the following five sub-teams to document, optimize, and implement the formal line review process to move products from the line review negotiations to store shelves:

Line Review Sub-Teams led by IPM's Process Documentation & Optimization Project Manager:

  • Assortment & SKU Planning
  • Merchandise Communications
  • Inbound Freight
  • Product Disposition
  • Store Reset

While the Process Documentation & Optimization sub-teams defined the Line Review process, tools, and policies, IPM employed a General Program Manager to oversee the day to day execution of current, ongoing Line Reviews already in the process pipeline. The General Program Manager was responsible for facilitating collaborative Line Review planning and execution sessions across functional areas to ensure issues were identified and mitigated in a timely manner. Additionally, the General Program Manager communicated the status of ongoing Line Reviews to the executive team to ensure they had an awareness of critical issues.

IPM noted at the time, however, the level of detail initially represented by this plan would be impacted by the lack of a detailed and documented process for the line reviews. Therefore, a module to address the documentation and optimization of this process was included. Based on the results of this process definition, the detailed plan would be updated accordingly. The final module addressed the transition of this initiative from a one-time event to a sustainable process that the organization could then follow as it regularly revisits each product line.

Optimizing and Streamlining a Critical Business Process

One of the single, most critical activities to ensure the success of a project, whether it be in the development of a software application, drug compound, or optimizing a key business process, is the clear and concise definition of project objectives, goals and milestones in the project's planning phase. The purpose of the project must support the organization's vision and mission statements and require the support and commitment of top management. Business process optimization projects should contain a section in the charter that defines the specific business process to improve. This formal definition of the process optimization scope eliminates any confusion and formally defines the subject boundaries. Additionally, it assists in the identification of the final product deliverable. For example, a fulfillment organization receives customer complaints on low order fill rates. The customer places an order for a quantity of 100 for a particular item, and receives only a quantity of 90. The project objective, in the example, would be “to optimize the warehouse picking process to ensure an increase in the fill rate on customer orders from 90% to 98% by 4th Quarter 200X”. The process scope has been narrowed specifically to the picking process and provides the basis for the process goal.

Once decisions to proceed are made, these Business Process Optimization projects focus an organization to identify and examine opportunities to reduce costs, cycle times, all while increasing service or product quality. Unfortunately, the organization in this case study operated in silos, where core business process activities such as the line review process must traverse the traditional functional view and had neither an owner assigned nor measures of process execution success. The project team was faced with having to formalize a business process management structure where primary and supporting business processes are well-defined, assigned an owner, measured for execution success, and scrutinized for efficiency, agility, and quality (Exhibit Two).

Process Management

Exhibit Two – Process Management

For many consumers, the quality of a product or service is as important, if not more important than the cost of the product or service. While the focus of many business process optimization projects is centered on optimizing efficiencies, and reducing cycle times, businesses must continue to ensure that business process optimization does not compromise the quality of the product or service the process delivers. IPM utilized the frame work of the Six-Sigma methodology in the Line Review project to ensure there would eventually be a high quality of process execution. Process execution quality defined as ensuring the Line Review process was consistently meeting key milestones, and minimizing internal process risks. The Six-Sigma DMAIC methodology (Six Sigma Academy, 2002) IPM employed in the Line Review project includes the following activities:

  • Define – a discreet phase whereby the customer needs are stated and the processes and products to be improved are identified.
  • Measure – determine the baseline and target performance of the process, defines input and output variables of process steps, and validates the measurement systems.
  • Analyze – analysis of data to identify critical factors needed for process execution.
  • Improve – identification of improvements (process, procedural, systemic, etc.) to optimize the outputs and eliminate and or reduce defects and variation. Statistically validates the new process operating conditions.
  • Control – establishes the development of documents, monitors, and assigns overall responsibility for sustaining gains made by the implementation of process improvements.

To initiate the Line Review Project, the Process Documentation and Optimization Project Leader facilitated sub-team workshops to define the high level Line Review process to provide the organization and project sub-teams with visualization of high-level and detailed core and supporting Line Review processes. Maps and supporting detail documents formally illustrated how the line review process would interact across functions, what each process step delivered, and how it produced its deliverables. An effective mapping tool IPM utilized as a starting point was the SIPOC High Level Process Mapping tool. The acronym SIPOC stands for Suppliers, Inputs, Process, Outputs, Customer. It is a simple, yet effective tool to align the project team and all stakeholders as to the core process within the scope of the project. The following is an example of a SIPOC High Level Process Map (Three):


Exhibit Three- SIPOC

The general approach to use SIPOC process identification included the following steps:

  • Start with a simple definition of the in-scope process
  • Identify key steps of the process (expand these at the bottom of the SIPOC diagram)
  • Have the team identify the major inputs and outputs of the process
  • Have the team identify key suppliers of the inputs, and customer for each output

IPM used the SIPOC High Level Process Map to ensure all Line Review Process stakeholders were represented on the core project team.

According to Six Sigma, process optimization projects start by formally identifying the process problem, not with the identification of a process solution. So, while the Line Review sub-project teams were busily documenting the formal line review process, the program management team focused their efforts to identify measurements to determine the most common missed milestones of the current line reviews as well as determining the causes for the most common missed milestones. Developing process measures are critical for a process optimization project to ensure the defects are identified and mitigated effectively. The program management team took the following steps to measure the performance of the current business process:

  1. Develop a data collection plan for the process
  2. Identify process efficiency data collection sources
  3. Identify process effectiveness data collection sources (primarily customers of the service or product)
  4. Collect efficiency and effectiveness data to determine process performance baseline measurements.

The result was the following Pareto (Frequency) Chart (Exhibit Four) that determined the most common missed milestone in the Line Review Process was the development of a base-lined transition plan from old product SKUs (Stock Keeping Units) to the new product SKUs.

Pareto Analysis

Exhibit Four – Pareto Analysis

Additionally, IPM delved deeper by analyzing the main causes for missing the SKU Transition Plan milestone. What IPM uncovered is illustrated in the following additional Pareto Chart (Exhibit Five):

Causal Analysis

Exhibit Five – Causal Analysis

The project management team found that 80% of the causes for missing the SKU Transition Planning Milestone were related to two specific activities; first, they found the product merchants were not diligent in completing an Assortment SKU Cross-reference spreadsheet. The cross-reference sheet was used primarily as a tool to compare old product SKUs to new product SKUs in terms of product description, material make-up, cost, suggested retail price, margin, etc. Secondly, the process to manually enter old or “discontinued” SKUs to a Discontinued List resulted in many entry errors. Therefore, SKUs that were to be pulled off store shelves and cease being ordered by the warehouses, were not. These findings were shared with the Process Documentation and Optimization Project Leader to ensure the issues were either resolved or mitigated during the process optimization workshops.

IPM then employed the development of Process Diagrams as an effective tool to define and illustrate discreet Line Review process steps, and their specific metrics for process efficiency. The Process Documentation and Optimization Project Leader facilitated multiple sub-team workshops to develop additional detail around the Line Review SIPOC. Most process definition initiatives start out as a high level (Macro) illustration of the key process steps (Exhibit Six) and in its advanced format, depicts supplier and customer relationships. Additional level of process details are captured in the Mini level and further process break out in the Micro diagram. Additionally, the added benefits of the process diagram include its use to promote an understanding of the key business process across the supporting functional areas, use as a tool for training purposes, and may be used later in the project as the basis for identifying process improvements. A high level process map may include the overall process cycle time, days to completion metrics for each process step, and performance indicators such as cycle/throughput time, resource utilization, rework/reprocess, defect rates, waste, Work in Process (WIP) queues, and customer satisfaction.

Process Diagram

Exhibit Six- Process Diagram

The next step employed by the IPM Process Documentation and Optimization Project Manager involved further identification of those critical factors that enable or hinder Line Review process execution success. Six-Sigma defines this as the Analyze phase whereby the project team seeks to understand the process and its root causes for process inhibitors. One tool that assisted the project sub-teams to analyze the current Line Review process was the use of a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. During this exercise the teams used the mapped current process, identified process strengths, and weaknesses. Process strengths were defined as those attributes of the process that enable the process to meet its determined objective. Process weaknesses were defined as those process attributes that have a negative effect or hinder the successful execution. While strengths and weaknesses focus on internal factors that impact a process; opportunities and threats identify external factors that impact upon the process. Exhibit Seven below provides examples of process strengths, weaknesses, opportunities, and threats.

Process Diagram

Exhibit Seven- Process Diagram

After the project team identified Line Review process inefficiencies and causes of failure, the focus of the team effort shifted to the identification, development and implementation planning of the most viable solutions. The team mapped a desired state Line Review process that allowed the team and organization to visualize the optimized process and ensure all process weaknesses and threats were amply mitigated while sustaining process strengths, and implementing process opportunities. The project team optimized the process in several different areas including the identification of systemic enhancements such as various software applications to automate the updating and approval of the SKU Cross-reference spreadsheet, reports or email reminders that enabled improved Line Review communications and a direct impact on milestone achievement. Additionally, simple review and reallocation of a few process roles and responsibilities eliminated the need for rework or process redundancies. IPM captured these systemic, procedural, and responsibility changes directly on the desired state Line Review process map.

Implementing Process Improvement

Following the development and testing of systemic, procedural, or responsibility enhancements, the BPO project team efforts focused on ensuring the process optimization solutions were implemented and measured for their effectiveness. The team identified key performance measures to be tracked after the desired state process was deployed. This activity included the identification of a Line Review Process owner who would be responsible for shepherding line reviews through the process, collecting and analyzing process data, and reporting process efficiencies and effectiveness to the entire organization in the form of process dashboards or status reports. Six-Sigma projects typically employ Statistical Process Control charts that track the stability and variation of a particular process. A typical Statistical Process Control chart tracks the performance of a process over time and shows control limits which the results will lie between if the process is “in-control”. Use of any Statistical Process Control chart requires regular updating and review to ensure their relevance. This ensures that process performance doesn't decline again.

At the transition from an optimization project to an implemented process, IPM summarized continuous improvement activities to ensure the Line Review process remained evergreen. Those activities are illustrated in the following Ishakawa or Fishbone Diagram (Exhibit Eight):

Fishbone Diagram

Exhibit Eight – Fishbone Diagram

Summary – Project Results

The initiative was completed on time and within budget and achieved the following qualitative and qualitative results that positioned the company on a path to effective Line Review execution, increased profitability, and the reclamation of market share:

  • Successful execution of 90 individual product categories since 2005. Missed milestones were significantly reduced or mitigated altogether which averted customer satisfaction issues.
  • Defined and optimized a streamlined Line Review process and developed supporting tools and policies which resulted in a significant reduction of cycle-time (8 months to 4 months).
  • Enhanced cross-functional collaboration and communications; departmental silos broken down
  • Provides customers the latest, and competitively priced products in the industry
  • Ability to update product assortments consistently, every two years or as needed
  • Execution of the Line Review process has resulted in improved profitability, generated cash and cost reductions in excess of $50 million


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© 2007, Larry Meyer & Tony Scrima
Originally published as a part of 2007 PMI Global Congress Proceedings – Atlanta Georgia



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