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

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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.