I’ve recently been asked to help two clients with their project management software. One client is a land developer, and the other runs a manufacturing shop. These two applications are completely different in their information delivery requirements to management. To drive home that point, I’m going to give several simplified examples of each.
Let’s say you’re going to build a house for your family to live in. You have many tasks that must be completed on your critical path to get you across the finish line. You must have drawings approved. The land must be prepared, and underground utilities installed. You need a foundation, then framing, plumbing, electrical, insulation, sheet rock, roofing, etc. All of these tasks must be permitted and inspected and, therefore, must be completed by licensed tradesmen. You send drawings to each of the tradesmen you have chosen to get a bid and learn how long it will take each to complete their part. The purpose of project management software is to get a visual representation of the project using your contractors’ time estimates, so you can negotiate when each contractor must be on site for your project to be completed on time.
Let’s assume that the foundation will be ready in a week. Then, you’ll be ready for your framing contractor. But in his bid, he’s mentioned that it will take six weeks to get the lumber delivered. Ordering the lumber, then becomes an important milestone on your critical path, and you can see that you must order it before the foundation is poured. But you can’t order it before you have drawings. Completed drawings then become another critical-path milestone.
Most people don’t want the plumbing and electrical contractors in the house at the same time because they get in each other’s way. So, plumbing first, then electrical. The sheet rock can’t be completed until the plumbing and electrical are in. Project management software allows you to enter each task, how long it will take, and when it must be started to get the project completed by a certain time.
If one contractor on your critical path is late getting to your project, it will affect the timing of every subsequent milestone and the contractors you hire for those other tasks. The result might be that the other trades have to change their schedules and might not be available when you need them. Say you scheduled the plumbers for Tuesday, but the framers won’t be done until Friday. Often in this case, a delayed contractor will shift another project ahead of yours. Maybe the other project will have them tied up for a week. Now, the plumbers are starting a full week later than planned, and the electrical contractor is then late getting started, and so on.
When projects are planned using visual software, you can see in advance when there might be an issue with the next task, so you can be proactive in your planning effort. You may be able to ask the next contractor to bring an extra worker so he can finish sooner, giving your project a better chance of remaining on schedule.
Excel has a project management template known as a Gantt Chart that can give you this visual representation of your project – tasks, timelines, the critical path – to keep you on schedule … as long as you enter all the tasks required to complete the project. Forgetting to enter a milestone, for instance, the timeline for the cabinet maker to produce your cabinets, might significantly delay your move-in date.
So, project management software is a great way to manage a project where you and all your resources are focused on building one thing.
But in a manufacturing environment, it’s not the right tool. There are many differences. One is that you’re not hiring contractors who arrive when they’re needed. You have employees, who all show up every day. Each one is performing a task or operation to produce a specific item multiple times. When the first operation is complete, those items move on to the next operation to be worked on by the next operator. In this case, without some software that will tell you how long it should take to perform a certain operation on a certain number of parts, you may end up with bottlenecks, or places in your production line where one operator is ready to work, but the last operator hasn’t finished their operation. So, you have inefficiency.
Manufacturing operations need a more complex tool. Compared to a one-time construction project, there are many other factors to be considered when attempting to make a quality, functional product in large numbers and do it consistently and efficiently. The software required to do this kind of work is commonly referred to as Enterprise Resource Planning (ERP) software. There are two concepts to look for in ERP software. It must incorporate a Bill of Materials (BOM), sometimes called a routing. (There are differences, but that’s a topic for a different discussion.) And you would want the software to be able to collect some costs – materials, labor, overhead, and yield, for example.
If your company operations are properly installed into the right ERP software for your application, it will show you where the bottlenecks are so you can become incredibly efficient. It will show you exactly where to spend your cost reduction efforts to net the biggest improvement the fastest, and much more. The right software can reduce your costs significantly, pay for itself in no time, and begin to generate much more cash and organization as well as satisfaction for management and operators alike.
To continue our simplified example, when your production line is generating piles of cash, and you’ve been able to lower the cost of your product, you may need a larger facility to meet the increased demand. So, you put your facilities manager in charge of a project to increase the footprint of your facility. They may need equipment vendors, contractors, and input from many of your managers or operators to help design the new facility. It doesn’t make sense to put this project into the ERP software because now all the resources will, once again, be focused on building one thing. So now, we’re back to project management software for this one application.
Now, let’s say the land developer is going to build 100 identical, low-income homes. Rather than building one thing using outside contractors, he’s likely going to hire tradesmen on payroll, who will come to work every day. Now we’re back to manufacturing. We prepare the land on one site, then the next, then the next, etc. Once the first site is prepared, the foundation folks begin their work, etc. Now, bottlenecks become a factor, and efficiencies are incredibly important because these homes have to be built quickly, and as cost-effectively as possible.
If this developer were to make a specialty of building low-income housing in a manufacturing setting across the country, he would want to make the best use of economies of scale using ERP software. Now there are companies that are building homes in factories, quickly, efficiently, with high quality, at a lower cost, to be delivered to the prepared site. They order their materials with tight tolerances, in large quantities, and can therefore deliver a higher quality, less expensive product much more quickly than building from scratch. ERP makes this possible.
So, what is your application? Project? Or Manufacturing?
Let me know.