Managing manufacturing by project
William A. Moylan, PMP, Principal,WA Moylan & Associates
All too often, manufacturing-based industries have ignored sound project management policies by not involving the actual manufacturing organization in the project planning and execution process. This paper addresses the use of modern project management in the planning, execution, and control of the manufacturing project. The proposed “managing manufacturing by project” theme is applicable to a variety of industries rooted in manufacturing, such as aerospace, automotive, energy, utilities, petroleum, chemical, and pharmaceutical. The paper references manufacturing projects involved with new product and process development, production upgrades and efficiency improvements.
The paper addresses the aspects; both generic and unique, of the manufacturing project found in industry. The two major populations of manufacturing projects, as covered in the paper, are (1) the engineer-to-order project, and (2) the capital project. Included is an expanded matrix describing the manufacturing project characteristics organized by their distinguishing categories of (a) manufacturing phase, (b) project duration, (c) complexity of employed technologies, (d) project team organization, and (e) project type. The goals of “Managing Manufacturing by Projects” include integrating manufacturing projects with the enterprise's life-cycle process, improving communications by fostering an extended knowledge network, advancing the management disciplines, and providing a greater understanding of modern project management.
Additional issues and discussion covered in the paper include the lessons learned form both successful and not so successful manufacturing projects described in recent studies on modern manufacturing. These references include Thinking Beyond Lean and The Technology Machine.
The conclusions made in the paper will address the value of applying the proposed “Managing Manufacturing by Project” theme by the manufacturing organization itself, its parent enterprise, and its industrial customer community. The paper cites other topics for future research that benefit the manufacturing project entity: The Theory of Constraints (TOC) and Enterprise Resources Planning (ERP).
What is a Manufacturing Project?
A manufacturing project means different things depending on the organization and product. Basically, it means doing a project within a manufacturing organization. This paper considers a manufacturing organization as an enterprise that primarily profits from manufacturing items, as opposed to primarily providing services or retail sales. By definition, a project is a temporary endeavor intended to create a unique product or service (PMBOK® Guide). A manufacturing project might be a new product introduction, a capital improvement, a quality system improvement, or implementation, developing a specialty product (such as custom new machine tool), a process implementation, or upgrade. A manufacturing project may also be the planning, development, and manufacturing of a unique product in fulfillment of a customer order (Engineer-to-Order [ETO]) (Day, 1999).
Manufacturing projects vary greatly depending on the type of organization, the type of items it manufactures, and the life-cycle phase. Exhibit 1 represents a simple categorizing of the typical characteristics of projects in organizations that focuses on manufacturing products for customers. The two populations of manufacturing projects are:
1. The ETO project, in which each new product requires a significant project to introduce it. The ETO occurs at a relatively high frequency and requires design and planning before the manufacturing release.
2. The Capital Project—which does not connect with a new product introduction. Rather, it is a facility infrastructure implementation involving changing manufacturing capabilities and capacity.
The ETO project tends to be more cross-functional and have more schedule risk; the Capital Project commonly uses a projectized organization approach with a separate, autonomous team. The external deliverable of an ETO project is often a major element of a customer capital project. For instance, a new machine tool is the product of a supplier ETO project, and part of the implementation of the customer; whereas, the Capital Project deals with a new constructed facility. The critical internal deliverables of an ETO project are the engineering documentation and tool designs required for manufacturing the end item(s). The Capital Project will have a series of major bid-packages produced for competitive “lump-sum” bidding process, and/or use a cost reimbursable design-build scenario. Moreover, both the ETO and Capital Project are both considered a disruption of the current smoothly running manufacturing processes, by the operations entity (Day, 1999).
The categories in Exhibit 1 are not all-inclusive. It shows that there are many types of projects in manufacturing organizations—some facility-based, others routed with the product. Moreover, some do not consider and likewise then treat these entries as projects. The common thread is that the manufacturing organization needs to complete all these projects successfully in a timely manner, with minimized disruptions and successfully integrated with ongoing production.
Exhibit 1. Examples of Manufacturing Project Characteristics and Categories
Moreover, manufacturing entities are tremendous consumers of information technology systems for the planning, execution, and control of their manufacturing processes and products. (This realm of manufacturing project management is being placed in the IT bin by the author. Although it is necessary to reference the IT projects in a paper on managing manufacturing projects, is not possible to sufficiently discuss such a broad topic as the supply chain quagmire is within the limits of this paper. The reader should refer to the section on a “Future Topics” for a discussion.)
Contrary Process Flow: Operations versus Project
In a typical manufacturing entity, the operation manages itself by its functions.That is, the work flows through the organizations functional departments of Research, Product Development, Purchasing, Marketing and Sales, Plant Operations, Facilities Maintenance, Finance and Accounting, etc. To begin the discussion of managing manufacturing by project,let us review the contrary process flow of manufacturing operations versus the manufacturing project.
Both operations and projects are:
• Performed by people
• Constrained by limited resources
• Described by processes and subprocesses
• Planned, executed, and controlled.
The major difference is that operations are ongoing and repetitive, and projects are temporary and unique. Extending these concepts to the management process, operations management is in business to perpetuate itself; project management is in business to go out of business.
A common characteristic of manufacturing organizations is their focus on maximizing value-added throughput and minimizing cycle-time. Conversely, one unique feature of many manufacturing projects is that they can and do take a lot of time to plan. The manufacturer often must implement its production line changes in very short times (12 to 24 hours are common for a line change and restart). In both cases, the enterprise must minimize any interruption of the manufacturing line. Manufacturing operations contend with extreme penalties for interruptions during each shift, whereas, the manufacturing project is viewed as a constant disruption during its project life (Cusumano & Nobeoka, 1998).
The “Management by Project“Approach
Management, in its most basic form, is making happen what you want to happen. Getting good results without any influence, intention, or effort is luck. Parsing this simple definition of management with projects as the focus, project management is the “application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project” (PMBOK® Guide). Meeting or exceeding stakeholder needs and expectations invariably involves balancing competing demands among the following:
• Scope, time, cost, and quality
• Stakeholders with differing needs and expectations
• Identified requirements (needs) and unidentified requirements (expectations).
In many manufacturing organizations, the term “project management” is sometimes used to describe the approach to the management of ongoing operations. This approach of management by projects treats many aspects of ongoing manufacturing operations as projects in order to apply project management to them.
The definition of Management by Project (MbP) is “a systematic process of setting objectives, planning, organizing, executing, controlling, and evaluating the work in a multiple project organization” (PMBOK® Guide). A flat, versus hierarchical, functional organization structure is used. All staff members are on one of the following: managing assigned projects or functioning as part of project teams formed on an as-needed basis. The value of using MbP in the manufacturing organization is employee empowerment, accountability, teamwork, performance management, and continuous improvement (Taspinar).
The goals of “managing manufacturing by projects” (MMbP) are to:
• Integrate manufacturing projects with all phases of the end-product change, the total development program, and the entire life-cycle process of the enterprise
• Improve communications amongst all manufacturing project teams by fostering an extended network of knowledge, expertise, and experiences
• Advance the management disciplines, methodologies, tools, and techniques in use on manufacturing projects
• Provide a greater understanding of modern project management and the role of project management professionalism within the world of manufacturing.
Several additional critical issues need addressing in regards to effective managing of manufacturing projects. These include project management skills, organizational commitment, management of global and multiple projects, developing appropriate processes and cultural change (Day, 1999). The following discusses each of these critical issues in detail herein.
1. Key project management skills of the project leader.
Manufacturing entities always put a high value on people who can get things done, often in spite of company policy and standard operating procedures. Managing manufacturing projects requires the leaders to be skilled in project management, including having the willingness to learn, willingness to change, and versatility. Recent discussions in learning circles suggest that soft skills are more important than technical education, especially on manufacturing projects (Wenger & Synder, 2000). These soft skills include both oral and written communications, risk identification and evaluation, communication, priority determination, and communication.
2. Organizational commitment to use the discipline of modern project management.
Manufacturing organizations that want their projects done right the first time must exhibit a commitment to effective project management. (There is always enough time and money to do it right the second time, correcting avoidable mistakes.) Executive management must seriously consider the realistic level of projects their organization can undertake at one time, and the number of projects a project manager can manage effectively. The organization must find and match the right people with the right experiences, considering the strengths and weaknesses of the project leaders and their team members (Hutt, et al., 2000).
3. Management of global programs.
The management of manufacturing projects that span the globe is especially appropriate for the proposed management by project approach. Large, multiple-site-manufacturing organizations need to coordinate installations or facility upgrades between multiple locations. This likely involves several contractors, widely dispersed teams with built-in cultural and geographic communication barriers. (A similar example is the selection and implementation of an enterprisewide software system.) Often, new product or facility start-ups require close coordination with marketing, distribution, and advertising (Stork & Hill, 2000).
4. Management of multiple projects (over 100 simultaneously).
With increasing frequency, manufacturing organizations are juggling many product and process improvements, at the same time the production line is being required to perform faster, cheaper, and with less “overhead” support. This is true for both low-rate manufacturing (such as job shops) and high-rate consumer products. Unfortunately tools for keeping your arms around multiple projects are not readily available or easy to use.
5. Developing a project process versus doing a project.
Before jumping into doinga project, the organization must develop a process for the project leader and team to follow. It takes time to create a process; one cannot improve something that is not in control.
6. The cultural change of introducing improvements to the manufacturing arena.
The future is not what it use to be (Gerry Garcia, The Grateful Dead). People have different comfort levels with communication tools and technology. This requires awareness that not all people may respond instantaneously to e-mail or even use personal computers. The need persists to document expectations and operational rules clearly. Moreover, the need continues to continuously to check for understanding when we think we have agreement regarding project expectations, issues, risks, and actions.
Getting the Bang for the Buck
The solutions to these critical issues of project management skills, organizational commitment, management of global and multiple projects, developing appropriate processes, and cultural change are all rooted to the managing manufacturing by project (MMbP) approach.
Skills Development Through MMbP’s on-the-Project Training
The development of professional management skills within a manufacturing organization is an ongoing project in itself. MMbP allows the various manufacturing professionals a variety of opportunities to apply the soft side/people skills, sometimes simultaneously with their technical side, on a variety of different situations (i.e., the projects). On-the-job training is a common and accepted approach within manufacturing circles—MMbP facilitates this. The people-side and communication skills of the project leader start at the beginning of the project—starting out right by clearly articulating the project objectives, ensuring that the stakeholders concur.
Organizational Commitment Cemented with MMbP’s Shadow Processing
Gaining and maintaining the organizational commitment to anything new is a formable challenge in manufacturing organizations. MMbP addresses this issue by allowing the manufacturing organization to develop an effective process and allowed it to evolve to the best possible level, without a total transformation of the existing organization, systems, and personnel. Instead of having dimwits create a system that takes a genius to work within, MMbP is the polite genius behind the system that anyone can be successful using (Wenger & Snyder).
Global Understanding Using the Universal Language of Project Management
The management of global and multiple manufacturing projects face the common critical issue of short supply of experienced resources to lead the charge. Having an experience project manager is one way to better plan and implement these coordinated efforts. Having a good planning process is even more valuable. MMbP helps remove the need to have that “genius, irreplaceable, overworked” project leader. It is becoming increasingly important to have people in organizations that understand and can deal in diverse teams. Communication and cultural differences can be major roadblocks, or significant advantages if appropriately dealt with (Stork & Hill).
Multi-Project Execution by MMbP’s Recycling of Process Improvements
Project managers are often a critical resource. Having a process in place with the standard approaches, formats, and tools will improve their utilization. MMbP allows the continual recycling of the good organization and project “habits” developed on previous projects. A part of all interim project reviews should include proposed improvements to the MMbP process. This review will help determine if you need a radical change, or a slight revamp, looking at the effectiveness and efficiency of communications (Corbett et al., 1999).
Continual Improvements Driven by MMbP’s Management of the Change Process
MMbP pays careful attention to change management and contingency planning to reduce risk. This has the added benefit of reducing the stress level of project team members. This relates to a fundamental project management need—determine in the initial stage what the critical success factors are for each project. MMbP helps identify the often one dominant factor—the risks associated with it—and then allows one to deal with this factor aggressively (Mitroff & Denton, 1999).
Two recent books on manufacturing describe the lessons learned from both the successful and not so successful manufacturing projects that used the proposed managing manufacturing by project approach. These books are: Thinking Beyond Lean by Michael Cusumano and Kentaro Nobeoka, and The Technology Machine by Patricia Moody and Richard Morley. (My biases will show but I consider MMbP an underlying theme to many of the noted authors’ solutions and premises.) The following discusses broad examples from both sources.
In Thinking Beyond Lean, Cusumano and Nobeoka take a “deep dive” look at how multi-project management is transforming product development at the world automakers including Toyota, Ford Motor Co., General Motors, Daimler Chrysler, Nissan, Honda, Mazda, Renault and Fiat. These automakers’ teams for product and the accompanying manufacturing process development share engineers and key components but retain separate designers to maintain distinctive product features. The result from using multi-project management and the accompanying MMbP approach [author's editorial comment] is huge savings in development and production costs (Cusumano & Nobeoka).
MMbP helps the development integration of common manufacturing processes for key components across multiple vehicle programs. This helps maintain continuity on the plant production floor, with variations on production line extensions—instead of wholesale new process developments—for new vehicle programs. Moreover, the plants can produce parts suitable for current production as well as new prototype vehicles normally costing astronomical figures due to the “one off”; handmade nature of prototype parts.
The Technology Machine postulates how manufacturing will work in the year 2020. This writer considers the MMbP approach a suitable solution to the three bad business habits the authors note that is at the root of manufacturing problems today—short sightedness, restrictive structures, and unbalanced improvement fads. Moody and Morley make an interesting premise (underlined in all project management circles) that manufacturing entities must plan to put themselves out of business in order to survive, as contract manufactures take the stage (Moody & Morley).
Moreover, MMbP will help with the integrating the “islands of excellence” Moody and Morley see as the organization of the future. The holistic approach of MMbP must become a core competency for makers of consumer electronics, personal products, and automobile parts, in order for them to survive.
My mother, a first generation Italian American, is a great cook and everyone loves her coffee. The secret ingredient to her coffee is coffee. As my mother says, “You can't make coffee without coffee.” Years ago, many years ago, I played football. The first and the last time I got to carry the ball, I fumbled. My coach admonished me for not following the golden rule of football—you cannot play football without a football. One summer during high school, I painted my family's house and garage. My father would regularly scold me for not putting enough paint on my brush. “You cannot paint without paint,” he would say. With this in mind, if you want to enjoy the values and benefits of the discipline of project management, you must take a disciplined approach in managing your projects. Managing is a discipline, manufacturing requires discipline, and managing manufacturing by project is a disciplined discipline.
If your manufacturing organizations have unlimited capacity and unlimited time (and where are these?), you will have much less project stress. MMbP is not necessary for you. However, if your manufacturing organization is stretched on capacity, and compressed on time, then consider MMbP. It is the competition for resources that increases the need for projects to have a good plan, careful coordination, and good communications within and between project teams. MMbP is for you. Manufacturing projects usually involve change. People resist change, so they need to be part of the solution. MMbP allows them to be involved in the planning, implementation, and evaluation. An old adage that effective leaders espouse states that maintaining the status quo is more risky than change. MMbP is your mantra for the change makers in the manufacturing arena.
Other Management Methods for Future Discernment on Managing Manufacturing Projects
In my research for this paper, two management methods surfaced that I consider need more detailed discernment—The Theory of Constraints and Enterprise Resource Planning.
The Theory of Constraints (TOC) has proven to be a successful approach in balancing the process needs of manufacturing projects. Led by the Goldratt Institute, the original use of TOC was in improving flow through a manufacturing facility. One major emphasis of TOC is to manage the bottlenecks. This approach is now in use outside the factory floor, particularly in the multi-project environment. A particular advantage of TOC is that manufacturing organizations are often familiar with the concepts and tools (Goldratt, 2000).
Often, manufacturing managers wish to use their production planning tools to manage projects. Project tasks should be associated with deliverable items—with non-product deliverables entered as “prior to shipment” requirements. The efforts or limited resources (i.e., people) will have labor estimates and lead-times making them items that belong in the enterprise master schedule. This has the clear benefits (if the system is used effectively) of documenting requirements in a centralized database, and creating discipline.
Enterprise Resource Planning (ERP) is not yet as enterprisewide or as integrated as many would like. Fortunately, there is more pressure to integrate project and manufacturing planning recognizing that they are both, after all, resource management tools. In early 2000, conventional wisdom stated that the difficult challenge of ERP would likely receive a high priority now that the vexing Y2K problems are behind the manufacturing organization and they continue to stretch their resources needs. However, this is not the case.
Dr. Eliyahu Goldratt notes three challenging mysteries in his latest book Necessary But Not Sufficient. The first mystery is the radical change in attitude by venture capitalists in ERP computer software firms, from the darling in 1998 to the invest dud in mid 1999. Mystery 2 is the technical marvel of ERP systems ability in collecting, transferring, and retrieving huge amounts of data, coupled with their equally dismal record in thrilling the customer that use the installation. Mystery 3 asks how industry—aware of changes in the market place and backed up with the availability of the suitable technology to solve these new challenges—has not made any recognizable changes in the way they are doing business.
The author suggests a more thorough review of TOC and ERP, which would make for an interesting discussion, in particular, within project management circles. This discernment will help answer why project management implementation has yet to yield dramatic financial savings for the manufacturing industry. In addition, the seamless integration of all eight project management knowledge areas (i.e., scope, time, cost, quality, human resources, communications, risk, and procurement) within manufacturing enterprise may become an actuality.
Corbett, C.J., J.D. Blackburn, and L.N. Van Wassenhove. 1999. “Partnerships to Improve Supply Chains.” Sloan Management Review (Summer).
Cusumano, Michael, and Kentaro Nobeoka. 1998. Thinking Beyond Lean. New York: The Free Press.
Day, Diana. 1999, October 12. “Trends in Managing Manufacturing Projects.” PMI ‘99, Philadelphia, Pa.
Eisenhardt, K.M., and D.C. Galomg. 2000. “Coevolving: At Last, A Way to Make Synergies Work.” Harvard Business Review (January-February).
Goldratt, Eliyahu M. 2000. Necessary But Not Sufficient. MA: North River Press.
Hutt, M.D., E.R. Stafford, B.A. Walker, and P.H. Reingen. 2000. “Defining the Social Network of a Strategic Alliance.” Sloan Management Review (Winter).
Mitroff I.I., and E.A. Denton. 1999. “A Study of Spirituality in the Workplace.” Sloan Management Review (Summer).
Moody, Patricia, and Richard Morley. 1999. The Technology Machine. New York: The Free Press.
Project Management Institute. 1996. A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Newtown Square, PA: Project Management Institute.
Stork, J., and P.A. Hill. 2000.“Knowledge Diffusion Through Strategic Communities.” Sloan Management Review (Winter).
Wenger, E.C., and W.M. Snyder. 2000.“Communities of Practice: The Organizational Frontier.” Harvard Business Review (January-February).
Proceedings of the Project Management Institute Annual Seminars & Symposium
November 1–10, 2001 • Nashville,Tenn.,USA
This guide will help you drive more successful outcomes and better strategic alignment in your organization. Digital version available for free download for a limited time.