The Impact of Logistics Innovations on Project Management Mary Poppendieck, Poppendieck.LLC Introduction A project is a “temporary endeavor undertaken to create a unique product or service” (Project Management Institute, 1996). Projects include building a structure, developing a product, and executing a contract. Logistics “plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption” (Council of Logistics Management, 2000). Logistics is usually thought of in connection with military or manufacturing operations. However, there can be projects involved in logistics (eg. building a bridge to move troops) and logistics involved in projects (eg. supplying material to a construction site). It is not surprising, then, that these two disciplines interact and learn from each other. In this paper, great events in logistics are examined to uncover their impact on project management. Great Logistics Feats of Antiquity In May of 218 BC, 29 year Hannibal led about 40,000 troops, thousands of horses, and 38 elephants over the Pyrenees and Alps from Spain to Italy, a feat which had been considered impossible. During this 15 day ‘project’, his troops built jetties and rafts for the elephants to cross the Rhone River, raided towns for provisions, and struggled through avalanche-blocked mountain passes while under attack. Many of the troops and most of the elephants were lost, but even in this weakened conditioned, Hannibal defeated the Roman army that awaited his arrival. (Encyclopedia Britannica: Hannibal) Hannibal has been singled out as a forerunner of grand strategy in military campaigns. His superb logistics while crossing the Alps is a precursor of military logistics today, a discipline in which the US military is considered the world leader. The routine logistics of military operations are interspersed with unique, temporary ‘projects’, of which Hannibal’s crossing is a prime example. The project management challenges of crossing the Alps included fixed resources, limited time, physical obstacles and troops with mixed allegiances who were ill-suited to the task. The techniques Hannibal used to meet these challenges (planning, field engineering, rapid movement, periodic re-supply, and attentiveness to troops and animals) are standard military practice today. (Encyclopedia Britannica: Strategy) There are other great feats of antiquity which are forerunners of today’s project management practices. Building the pyramids comes immediately to mind. The Great Pyramid in Egypt was built around 2500 BC. It took about two decades and somewhere between 20,000 and 100,000 laborers to erect. Stone was cut with crude hand tools, transported without wheeled vehicles, and put into place without lifting machinery. This “masterpiece of technical skill and engineering ability” remains “perhaps the most colossal single building ever erected on the planet”. No taller building was built until the 19th century. (Encyclopedia Britannica: Giza, Pyramids of; Building Construction)
Published in Proceedings of PMI Seminars & Symposium 2000 Houston, Texas, September,2000
Construction projects today are not significantly different than those which built the pyramids. An architect designed the building, materials were obtained from quarries and transported to the site, experts in various ‘trades’ prepared the materials and constructed the pyramid. Built to a fixed plan, time and resources were more or less unlimited for the pyramids (unlike today). There is another impressive feat that has been executed from the most ancient of times and continues to this day: The Event. Perhaps it is a wedding or a funeral or a coming-of-age ceremony – just about any large gathering has always required serving a lot of food to a lot of people in a very short time. Perhaps several clans gathered once a year, and there was a woman who was particularly good at organizing such events. Planning, gathering food, attending to living quarters, cooking, serving, might be a tradition or a ritual, but the event always came off best if someone behind the scenes was coordinating it all. In some sense, the most seasoned project managers throughout various cultures and times might be the event organizers who really knew how to throw a good party on a inflexible schedule with limited resources. From Logistics to Project Management All of the knowledge areas of project management were are developed in these three examples of logistics from antiquity: staging a celebration, managing construction, and executing a military movement. A celebration required excellent procurement, scheduling, quality and resource management. Construction projects required superior planning, managing a fixed scope over a long time, procurement and human resource management. Military movements needed excellent execution, careful management of fixed resources, precise timing, superior human resource management and continual risk assessment. Viewed from a different perspective, advances in logistics might be thought of as starting with project management. For instance, military logistics may start with unique projects, like ferrying elephants over a river, but once the technique is developed, it can be reused to ferry other large items over a river. Feeding a large number of relatives may be a project the first time it is done, but feeding hundreds of people a sit-down dinner in fifteen minutes is routine logistics at conventions held every day. Even the pyramids were more or less standard burial structures for a period of over 500 years. (Encyclopedia Britannica: Pyramid) The disciplines of logistics and project management overlap in such a way that it is not always possible, or even necessary to tell them apart. Projects that are repeated and standardized may become exercises in logistics, while the first implementation of a logistical solution might be considered a project. Since both disciplines often address similar problems, there is likely to be a significant transfer of ideas from one discipline to the other. Traditionally, logistics has been the focus of much study and innovation. Since logistics is usually applied to on-going operations, improvements in logistics usually result in increasing benefits over time. If, for example, the cost of a single car can be reduced by a dollar, then in a factory making 250,000 cars annually, a quarter million dollars will be saved each year. The author has observed that major advances in logistics usually make their way into project management in ten or fifteen years, since the same forces that spurred the paradigm shifts in
Published in Proceedings of PMI Seminars & Symposium 2000 Houston, Texas, September,2000
manufacturing from a different, often broader perspective. This globalization of the economy has played a large role in bringing Just-In-Time and the Theory of Constraints to logistics. Globalization has influenced project management also. In the electronics industry, very rapid time-to-market with ‘cast-in-stone’ release dates are required for new products, and Theory of Constraints project management is being widely applied to meet these challenges. Lessons for the Information Industry One of the fundamental driving forces behind paradigm shifts in logistics is an overwhelming need for lower cost and less specialized labor, which leads to standardization. This is often followed by an opposing force, the desire for customization. Standardization In 1800, the lack of enough skilled workers to make rifles in the face of an impending war was an unacceptable situation that demanded the invention of standardized, interchangeable parts. In the early 1900’s, the demand for inexpensive transportation that allowed ordinary people to travel great distances was a key forcing function in the emergence of mass production. It’s easy to see this drive for standardized, interchangeable parts at work in the information industry. In 1983, the IBM PC took the world by force, rapidly becoming the standard of the industry and soon outstripping IBM’s ability to maintain control. (One can imagine that Henry Ford had to invent the assembly line to avoid the same fate as IBM.) Standardized Internet access, embodied in standard web browser capability, has driven the online revolution that is sweeping the country. A single cell phone frequency in Europe has spurred European cell phone use to a far greater level than in the US, which has multiple cell phone frequencies. In the face of a huge demand for a standardized document format, Microsoft jeopardized its position by releasing incompatible versions of Microsoft® Word, while Adobe® Acrobat® filled the vacuum with a standardized ‘Portable Document Format’ (PDF). Standardization is driven by an insatiable need which cannot be satisfied at an acceptable price by the available techniques or skilled people. Today the software industry has an enormous gap between the need for programming and the available programmers. It should be obvious to students of economic history and that the software development environment is ripe for a massive switch to standardized, interchangeable, mass-produced components. Mass Customization As brilliant as Henry Ford was, he missed out on a major trend that overtook the success of his Model T. After two decades, people began to get tired of black (the only color of the Model T). Copying Ford’s methods, other manufacturers figured out how to make inexpensive cars, and they started adding new features. Ford’s failure to recognize the shift in customer desires caused his company to loose its overwhelmingly dominant position in the industry. (Encyclopedia Britannica: Henry Ford) In the 1970’s the same thing happened to the US car makers – their
Published in Proceedings of PMI Seminars & Symposium 2000 Houston, Texas, September,2000