Applying Manufacturing Concepts to Project Management

Introduction
Successful Enterprise Resource Planning
[ERP] implementers have used best practices
from Manufacturing in their ERP Projects -
often as a part of preparatory work
In this document, we take a closer look at two
concepts from the world of manufacturing and
their applicability to Project Management
Two Concepts:
– Look at the operation time - as a part
of the throughput time.
– It can be a small or major part of the
throughput time - depending upon how
you manage your manufacturing cycle
– Apply these simple concepts to every
activity of a Project
– Ensure that you don’t contribute to
delays, which do not add value to the
end objective / your deliverable

– Manufacturing Cycle Effectiveness – Also apply these to your day-to-day

activities in personal life, and see the
– Bill of Manufacturing and Optimization
impact!
Concepts

Manufacturing Cycle Effectiveness [MCE]

Bill Of Manufacturing [BOM]
MCE Processing Time /
Many of us are familiar with Bill Of Materials
Throughput Time
[BOM]

Throughput Time Processing Time + – Bill Of Materials, is a parent-child

relationship built as per technical sub
Inspection Time + systems
Movement Time + – For example in a car, the Bill of Materials
for the power train would consist of engine,
Waiting / Storage transmission, propeller shaft, differentials,
Time axles and their sub level components
– Similarly there would be a different Bill Of
Processing Time Set-up Time + Material structure for electrical system,
hydraulic system etc...
Operation Time – All these are from the Designers’ point of
view - as experts in the respective field
– None of these elements can be zero design the power train, electrical systems,
hydraulic systems etc...
– Industrial Engineers with special skills, plan
the plant layout, to optimize processing, The Bill of Materials, if used as it is, is not
movement and wait times suitable for optmization in manufacturing
– They select suitable machine tools to
optimize the set-up time, operation time and
investments

© Ganesh Srinivasan, 2006. All international rights reserved.

This information cannot be reproduced or distributed without legal permission from me
[sganesh13@yahoo.co.in ] or [sganesh13@gmail.com ]
 Applying Manufacturing Concepts to Project Management
We need to make / rebuild the parent-child
relationships as per manufacturing process
– The engine and transmission, along with
some components from electrical system,
hydraulic system etc... is normally made as
a sub assembly
– Many other sub assemblies are made and
fed to the required stage in the assembly
line. Examples of some sub assemblies are
indicator lamps [both LH and RH], Wheel
Assemblies etc...
– All these sub assemblies and components
are fed to the respective stage of the
assembly line.
– The parent-child relationships, built as per
manufacturing stages /processes are called
as Bill Of Manufacturing
– In discrete manufacturing, the number of
– Visualize the assembly line as a project
plan and the sub assemblies and
components being fed to the respective
stages as sub projects / activities
– Leading manufacturers across the world
have successfully optmized manufacturing
resources and processes
Similar Optimization concepts, can be
applied to Project Management as well
– We often mix up and get confused
between Bill of Materials and Bill of
Manufacturing in Project Management
– For example in the case of IT Projects,
UNIX, Windows, Java, .net are
technology based activities [Bill of
Materials]
– What we need often, is planning of
activities based on billable stages /
deliverables, which are irrespective of
the technologies [similar to Bill of
Manufacturing]
© Ganesh Srinivasan, 2006. All international rights reserved.
This information cannot be reproduced or distributed without legal permission from me
[sganesh13@yahoo.co.in ] or [sganesh13@gmail.com ]
Optimization Concepts
Before getting into optimization concepts, let
us understand some definitions
Manufacturing is generally classified as
– Continuous: like in petroleum refining,
paint manufacturing etc.. or
– Discrete: like manufacturing of
automobiles, computer hardware, telecom,
equipment, consumer durables etc..
– In continuous manufacturing, there are
fewer inputs / raw materials added at
respective stages and the process once
started, goes on, uninterrupted. You don’t
start the line, until all materials are available
components are large and material
shortages are possible, as you start the
manufacture / assembly. Hence you need
different optimization concepts /
methodologies
– A typical project can be compared to the
discrete manufacturing scenario - with all its
positives and limitations
Let us further define sub levels of discrete
manufacturing:
– ETO:- Engineered To Order - examples are
manufacturing of power plant equipment,
nuclear reactor, boiler etc.., where in the
product and its sub systems are designed
and manufactured as per order
– MTO:- Made / Manufactured To Order -
typical examples would include custom
configured desk top computers
– ATO:- Assembled To Order - very similar to
MTO with subtle differences. The typical
examples would include contract
manufacturing of Washing Machines,
iPods, Television sets etc.
 Applying Manufacturing Concepts to Project Management

– PTO:- Procured To Order - very similar to

ATO, except that the goods are procured
rather than being assembled
– MTS:- Manufactured To Stock - typical
examples would include FMCG items like
detergent cakes, coke / Pepsi, some
consumer durables like washing machines,
iPods etc.
The time to market / time to deliver is
lowest to highest in the following order
– MTS
– ATO / PTO
– MTO
– ETO
Have a closer look at the chart below
Visualize the project, the sub projects,
groups of tasks and simple tasks as
equivalent of Finished Goods, Sub
Assemblies, Components and Raw
Materials
Some thoughts:-
– What are raw materials and components?
They are a set of standardized and
reusable commodities [best practice: Japan
has developed a nation-wide standard for
commonly used bolts, nuts, washers etc. I
did not notice similarstandardization, while
working with few American Companies]
– In IT projects, we build reusable routines as
components
– Can we look at a similar approach to any
project in general?

DE-COUPLING POINTS IN PLANNING

Raw Compo Sub Finished

Materials nents Assemblies Goods

ETO Forecast Order Order Order

Based Based Based Based

MTO Forecast Forecast Order Order

Based Based Based Based

ATO / PTO Forecast Forecast Forecast Order

Based Based Based Based

MTS Forecast Forecast Forecast Forecast

Based Based Based Based

© Ganesh Srinivasan, 2006. All international rights reserved.

This information cannot be reproduced or distributed without legal permission from me
[sganesh13@yahoo.co.in ] or [sganesh13@gmail.com ]
 Applying Manufacturing Concepts to Project Management

– Can we standardize some processes, to
start with, if not physical components, of
many projects running in any company?
– Tools like Six Sigma come in handy here, to
standardize small little set of activities,
processes etc.,
The ‘Order’ in the diagram below is like a
typical Project while the ‘Forecast’ refers
to reusable components - standardized
processes, physical things [like
prefabricated construction materials] etc.,
– HP, Dell, CISCO, IBM offer custom
configured products
– Similar is the story with some auto
manufacturers. Many Japanese auto
makers operate in MTS scenario as well
– Samsung, LG, Sony, P & G are typical
examples of MTS scenario
– Many more examples can be illustrated
When it comes to Project Management,
we think that every project is like a power
plant [typical ETO]

Consciously or unconsciously are we

Let us look at some examples of what
manufacturing companies have done
Many have moved closer to MTS / ATO / MTS
scenario, even though they typically belong to
ETO category
making things complex? - I can quote
many examples from failed SAP
implementations
Can we reorient ourselves to move
towards MTS / ATO / MTO scenario?

TO REDUCE CYCLE TIMES, TO OPTIMIZE RESOURCES, THE KEY IS TO

MOVE CLOSER TO MTS / ATO FROM ETO / MTO SCENARIO

Raw Compo Sub Finished

Materials nents Assemblies Goods

ETO Forecast Forecast Order Order

Based Based Based Based

MTO Forecast Forecast Forecast Order

Based Based Based Based

ATO / PTO Forecast Forecast Forecast Order

Based Based Based Based

MTS Forecast Forecast Forecast Forecast

Based Based Based Based

© Ganesh Srinivasan, 2006. All international rights reserved.

This information cannot be reproduced or distributed without legal permission from me
[sganesh13@yahoo.co.in ] or [sganesh13@gmail.com ]