The Role of Project Management in Logistics and Supply Chain
Logistics and supply chain management is a growing challenge due to the increased demand for goods and services. Every organization has a supply chain process, and there is an increasing need for logistics project managers to ensure the smooth flow of this coordinated process.
Project management for logistics and supply chains is a growing and essential discipline. Supply chain managers require critical thinking, teamwork, communication, and many of the same skills as full-time project managers in other industries.
However, supply chain projects have elements unique to this field and therefore have specific requirements for success.
This blog examines how project management improves procurement and supply chains and summarizes a project manager’s role in the logistics management process.
Solving Logistics Complexity with Project Management
Progress in logistics management has been driven by technology, globalization, and the growing sophistication of customers. These three factors have combined to make supply chains more complex and less predictable.
The exponential development of electronic commerce is one way supply chains have become more complex. Logistics projects now include systems for buying, storing, delivering, and managing large volumes of goods and services.
Besides, storage and shipping costs should also be factored into the equation. Unless you’re selling on Amazon’s platform and have sent your inventory to one of Amazon’s warehouses, you’ll need a safe, dry place to store items. Consider partnering with a fulfillment center like Ship Network to handle your order logistics.
In this context, project management is a powerful tool for making supply chains more efficient. This is because project management helps to:
- Predict and control risks
- Drive and support continuous improvement
- Facilitate communication between all involved stakeholders
- Reduce operational costs
- Improve customer service
For example, contract negotiations between a carrier and a retail client are complicated. The shipping company has various criteria for shipping, but the client’s requirements may change as they sell inventory. This can result in a contract with variables, risks, and conditions.
Additional complexities arise when different parties enter into agreements and sign off on the delivery of goods. In this regard, the Harvard Business Review notes that for every $100 of sales, a conventional distribution system wastes $17.00 worth of goods and related costs.
Agile project management, however, can reduce these inefficiencies. It can help trucking businesses predict, communicate, and control risks from a supply chain perspective, reducing operational costs and improving service levels to their clients.
The Importance of Project Logistics Management
As mentioned above, logistics and supply chain companies can benefit significantly from project planning practices. Organizations that embrace agile project management improve their competitiveness.
Let’s discuss the following elements to show you how project logistics management can work for a company’s supply chain and procurement.
1. Identifying Supply Chain Projects
Projects are unique to logistics and supply chain management. However, as noted, every organization has a framework for making transactions. The challenge is to connect these frameworks, so they work together.
For example, a customer may want to order a hundred cases of a product from one supplier and resell them to another customer. These two companies have different supply chains for making and delivering the product.
Project management can help link them and provide the necessary data to make decisions. If all the stakeholders have a shared understanding of the project’s inputs, outputs, and outcomes, they can take steps to optimize their supply chains. Thus, a common project management language assures that all parties have the same objective and work toward the same goal.
2. Managing Communication
As mentioned earlier, procurement companies have complex transactions with multiple parties. Therefore, success demands that all parties understand the project’s requirements and deliverables. This can be difficult because different parties may use other words to describe the same result.
Project management helps articulate the project’s goals and objectives, resulting in a clear execution plan. In this case, the word “clear” is essential. There are many types of projects: from simple exchanges of goods and services to complex distribution, warehousing, and inventory management systems.
Project managers for supply chain companies must use the correct language and frameworks to convey information to all stakeholders. This enables parties to work together effectively and make the best decision possible.
3. Driving Continuous Improvement
Procurement project managers foster continuous supply chain and logistics improvement by working with other parties to analyze past results. They also help identify improvement opportunities and develop plans to reach those goals.
For example, supply chain management companies have historically focused on reducing inventory to minimize the risk of leaving products in the warehouse for too long. This has resulted in decreasingly large but more complex warehouses. To improve the results, these companies must balance size and functionality.
In this context, project managers help determine a warehouse’s optimal size and functionality. They also ensure that the shipping company has the right processes, systems, and procedures to make the warehouse work for its business.
4. Establishing Accountability
Project management provides an important oversight role for logistics and supply chain companies. It enables managers to establish who is accountable for the success of a project and its deliverables. As a result, project managers contribute to increasing commitment and avoiding finger-pointing when things don’t go as planned.
For example, if a shipping company loses a shipment, the responsible party is accountable for the loss. When an out-of-stock situation occurs and costs increase, cost-cutting is blamed. In contrast, project management provides a good starting point for identifying the root cause of these issues and developing ways to eliminate them.
A Logistics Project Manager’s Role
Achieving the above benefits depends on how well supply chain experts use project management to improve performance.
To help make this easier, the following describes the role of a project logistics manager.
A logistics project manager is a business expert whose primary objective is to manage any assigned logistics and supply chain projects. They introduce the project management framework and apply it to business operations. They also develop business processes, implement continuing education, and assess projects’ risks.
As a result, they have access to various functions across the logistics and supply chain team, including:
- Supervise the transportation of goods and services
- Schedule and oversee the supply chain management activities
- Manage warehouse and transportation staff
- Resolve supply chain issues and customer-related complaints
- Maintain inventory reporting
The role of a logistics project manager includes the following:
- Define and implement procurement procedures. A logistics project manager should establish a framework defining how to manage competing demands and make decisions. This person should also create a process for identifying and vetting suppliers.
- Emphasize transparency. Transparency is essential for a supply chain project manager to ensure accountability when outcomes don’t meet expectations. It also creates an environment that fosters the exchange of ideas and solutions.
- Optimize processes. Logistics and supply chain project managers should continuously analyze working procedures to identify areas of improvement. They should then develop a strategy for improving the company’s procurement efficiency.
- Act as a resource. A logistics project manager should be a subject matter expert who guides and supports subordinates. In this role, they should have a deep knowledge of the company’s logistics and supply chains.
- Ensure accountability. Coordinating logistics and supply chain projects is complex. That’s why a project logistics manager must have the authority and resources to oversee all aspects of a complex project. This can be done only if they are held accountable for the project’s success.
- Oversee execution. Successful procurement project managers create opportunities to improve their supply chain business. That’s why they should monitor the evolution and performance of the company’s logistics and supply chains. They also need to ensure these processes align with the company’s strategic objectives.
Those are some of the essential roles a logistics project manager plays. These strategies and their ability to navigate complex processes are part of a successful career in supply chain management.
The role of supply chain project managers has evolved from managers of purchasing projects to those who manage supply chain processes.
Because of this evolution, logistics and supply chain project managers are open to more than one area of expertise. As a result, they can take on different roles in a company, depending on their knowledge and organizational need.
Successful procurement managers communicate with business leaders regarding their processes and projects. They review past projects and identify improvement opportunities.
Logistics project managers should have a broad knowledge of the company’s logistics and supply chain processes. Because of this, they are resources to other logistics and supply chain team members.