Companies starting warehousing & distribution sites have a lot of work to do. Warehouse projects like new sites and automation implementation are transformational supply chain programs. But they need the right teams to have a successful delivery. So implementation owners have an important decision to make. It's about resourcing. Who will implement the site?
The project team is a critical element of success. Team composition of skills and experience, and functional integration is perhaps the most important factor in project delivery.
There's a strong case for engaging external consultants to help your distribution and warehousing projects succeed. Although there are some drawbacks to consider, here are the reasons to bring in external help:
Getting that first order out the door right!
Startup Resource Planning
Many factors go into planning startup team resourcing.
First is the total resource plan required for starting a site, or implementing automation. This includes a minimum of
- an operations lead,
- project manager,
- industrial engineer,
- facilities lead (engineer / project manager) and
- IT business analyst.
Larger or smaller projects will require more resources or different titles, but these are core roles to fill in each of them (plus shared supporting functions like Safety, Finance, Purchasing, and others).
Specific skillsets that can help on large projects include things like large capital or infrastructure project management, testing and IT systems consultants, IT Infrastructure consultants, owners' representatives and construction management consultants, automation and warehouse design consultants, solar and sustainability technologies, and others.
There are many functional specialties which can go into warehouse and distribution projects. If your project's scope of work and work-breakdown structure doesn't have a clear internal competency pool to access, then it is worth considering accessing a consultant.
Companies that regularly start sites may have groups that they can draw resources from. Operations may have an Assistant GM, for example, who can split his attention.
But operating companies that start sites only once-in-a-while may not have those resources available. That's when it's time to consider using external resources.
A good indicators that you might not have the right resourcing in-house for a project is looking around your organization and thinking "wow, who's going to do that role on this project?" If you're drawing a blank, if there's no team or person that comes immediately to mind, there's probably a resource gap to fill.
Using Company Resources
What then happens is this: The company pulls resources from existing sites to work on the startup and then returns them to their homes when the project is complete.
This presents several issues:
- Total workload: Are the team members overloaded with their 'old' jobs and the ad-hoc work of starting a site? Who's going to do their jobs while they're gone or occupied?
- Continuity to the new site. New sites may become dependent on the "startup teams" to operate, and transitioning them out can be like ripping off the band-aid... or tourniquet.
- Expertise: The new project team members may not have the expertise to do what they're being asked to do for the implementation at the level that's needed for success. They may be experts at their job, but taking on new types of work can be risky. For example, a project manager may do well at coordinating and task tracking, but whether the PM is experienced at complex project scheduling or has worked through software projects can make a difference between an on-time project and surprise delays.
All of these things raise execution risk for the project in planning, design, and delivery. Missed requirements or planning can end up costing companies an awful lot of money.
On the plus side, internal resources are cheaper and faster than bringing on external consultants. They also tend to know the company organization better. This however can cut both ways; internal resources may also be constrained by their jobs or organization where an external partner can provide objective, "another set of eyes" inputs.
With internal resources, there are pluses, but there are also definite risks to manage.
The Cost of Mistakes
A botched implementation can be very expensive. A project go-live date is a promise to the business. So think about these things over a 3-month delay: (in no order)
- Lease payments
- Wages for employees
- Employee turnover
- Continued displacement of company startup resources
- Lost sales for the company
- Supply chain effects on the company
- Overflow space that hadn't been planned earlier
- Licensing costs
- Impacts on customer relationships
- Costs of reworking a solution
- and on and on!
The amount of risk in a bad implementation can do tremendous damage to a company. We've seen many cases of implementations, especially with 3PLs, go very sideways on schedule and cost. With all these possible costs, it's worth mitigating risks up front. And a good way to mitigate many risks is having the right team on board from the start. This can mean bringing in qualified external resources for key roles. This includes project managers, business analysts, engineers, and others.
Using External Consultants
Expert consulting allows you to bring in the right expertise at the right time to reduce your implementation risk. Experts have usually seen issues and problems in a variety of settings and companies and know how to head off the risks before they start. They can smooth the path to implementation.
Further, these external resources can train and transfer knowledge to the company for future projects. This includes subjects like getting projects started, conducting planning, being confident in your design, controlling the projects from start to finish, and so on.
So the benefits are clear: the risks of implementation go waaaaay down with the right partner.
The downsides of bringing on consultants include:
- Onboarding: External resources need to be informed about what they're doing to be effective. This takes time and effort.
- Access: External resources need to know who to go to for what, and have access to those resources, to be effective.
- Alignment: A key risk of external resources is that they don't have as much organizational knowledge or influence, or that they may not be aligned to the organization. This can impact their ability to do a good job, even if the individual is very competent.
- Cost: The project cost of external resources is typically higher than internal resources. And it is very visible since it is an external expense! Sometimes the cost is more than internal resources by a lot, if you compare the project time to salaried time. But viewing the cost in isolation is a mistake. It should be viewed as part of the total successful project package and insurance against failure.
These reasons lead to a lot of hesitancy in bringing on external resourcing, especially if the company is already geared to executing projects or on an inflexible budget.
Conclusion
Expert external consultants can mitigate the likelihood or magnitude of expensive startup events. This is a huge benefit. But they're not for every company. Companies with regular implementation teams and established process probably don't need external resources unless they're working on something new.
But if you don't have the right resources already in your company, you can mitigate onboarding, alignment, and access risks with early engagement of the right partner.
And the cost can start to look like a bargain when you consider the impacts of startup "mistakes" on cash flow and customer relationships.
To learn more reduce warehouse/DC/FC project implementation risk, reach out to PL Programs through the contact form here. We look forward to hearing from you!