Supply chain management (SCM) and project management (PM) work together like the director and producer of a big-budget film. They are different disciplines, and they serve different functions.
Supply chain management (SCM) and project management (PM) work together like the director and producer of a big-budget film. They are different disciplines, and they serve different functions. But without each other, the movie won’t get made (or it will flop at the box office).
SCM manages logistics, similar to the role of a film’s producer. They ensure that all the resources needed for production are available. This includes everything from raw materials to the shipping company that delivers final products to the customer. Their goal is to meet market demand as efficiently as possible. Whereas PM, like a film’s director, concentrates on optimizing the execution of specific projects within timelines, budgets and scope. The key difference is that PM still aims for efficiency, but their success is determined by the longer-term commercial effectiveness of project outcomes.
Like a movie script unites directors and producers, an organization’s strategic goals unite PM and SCM. Examples of shared remits include improving customer satisfaction, reducing operational costs, and accelerating time-to-market.
As such, it won’t be breaking news to supply chain managers and project managers that their jobs intersect. If a new product is advancing through the innovation pipeline, SCMs and PMs must work together. Successful demand forecasting, risk management, and resource planning all require cooperation. But to realize the performance advantages that this relationship can produce, they must also share their most valuable practices. In doing so, they can increase the agility and resilience of their organization.
We’re going to break down how sharing methodologies, knowledge, and tools can power strategic goal progress for both PM and SCM. But before we do, let’s recap the functions they serve and where their disciplines overlap.
Purpose
The purpose of SCM and PM aren’t the same, but they are closely aligned with one another:
- SCM exists to maximize the value of products throughout their lifecycle. It’s mainly concerned with controlling production and distribution costs to increase profitability. It also seeks to continuously improve customer satisfaction, increasing profitability through repeat business and referrals.
- PM aims to maximize the value of investment into developing new products and programs or improving existing ones. This is achieved through planning and controlling budget, schedule, and scope. Investing in something new carries risks for any organization, so PM is an integral discipline for mitigating them.
What They Can Share to Succeed
Shared understanding is most important at the purpose level of PM and SCM. Tensions may occur due to PM's finite nature and SCM's cyclical nature. However, the alignment of their purposes presents opportunities for collaborative problem-solving and innovation. This could play out as joint workflows, process improvements, or even new products based on shared insights.
Scope
The scope of SCM and PM is where their most significant differences lie:
- SCM oversees a company’s entire production and distribution process. This includes specific processes like quality control, logistics, and inventory, which are continuous.
- PM has a smaller but no less valuable remit. It oversees one or more projects from start to finish, including the timings, budget, and scope.
Although this is the norm, there are still scenarios where project managers and supply chain managers have to grapple with each other’s scope. Project managers need a solid understanding of the supply chain to create realistic timelines and budgets. They also need it to ensure effective risk management. Supply chain managers need to zoom into the details of a project’s scope to understand the impact production will have on the supply chain. This is particularly important if a product involves new components, materials, or manufacturing processes.
What They Can Share to Succeed
PM methodologies can help supply chain managers improve the agility of their supply chain by providing a clear framework for planning and managing changes. These could be reactive changes, like switching suppliers due to cost increases or closure. Or they could be proactive changes, like Nike’s RFID product tracking.
SCM doesn’t have the same popularized methodologies as PM. But, the emerging digital supply network (DSN) model offers immense value to PM. Its emphasis on a continuous flow of information from the whole supply chain can strengthen project planning and outcome predictions.
Tasks
There is a clear distinction in some of the day-to-day tasks involved in PM and SCM:
- PM tasks focus on the successful delivery of a project. This includes creating a clear scope of work, allocating resources, and scheduling activities so the project team can meet the project’s goals.
- SCM involves procurement, inventory management, logistics, demand forecasting, supplier relationships, and customer service.
There are, however, some key areas where their tasks overlap:
- Risk management is central to both functions. In some cases, the same risks are involved. Let’s take the semiconductor shortage in 2021 as an example. Not only did this disrupt automotive supply chains, but it would have also affected the design and development phases of new car model projects.
- Monitoring and reporting performance are the proof of progress for PM and SCM, even though they operate on different scales. Supply chains are vast, interconnected networks of suppliers, manufacturers, distributors, and retailers. This makes ensuring timely and accurate data a significant challenge for supply chain managers. Particularly in contrast to project managers whose data is less likely to rely on external partners. Nevertheless, SCM and PM both have to reassure stakeholders that their efforts are working. And they both have to provide evidence if they need to make changes.
- Forecasting has always been a core task for the SCM function. But with the rise of project portfolio management (PPM), it is also a growing priority for PM. SCM has to anticipate demand. Meanwhile, PM can use historical project data to estimate a project's time and resource requirements before it begins. With high-quality data and a PPM tool with machine-learning and AI-powered features, teams can also predict project ROI.
What They Can Share to Succeed
SCM and PM can combine their risk management and contingency planning to supercharge performance. As a result, project plans will be more resilient to changes impacting the supply chain, improving success rates. In addition, supply chains will be better prepared for the arrival of new products. This reduces waste from areas like inventory mismanagement and lead times.
Shared data views also open up more opportunities for SCM and PM. Together, they cover the whole product journey—from concept development to retirement (or upgrade). Consolidating this data in a single, live view can yield even more accurate ROI predictions and demand forecasts. It can also facilitate more comprehensive and compelling reports for stakeholders.
Skills
The skills you need to succeed in SCM and PM are strikingly similar:
- Stakeholder management is the essence of SCM and PM. In SCM, strong relationships with suppliers support more effective risk management. At their most advanced, they can also lead to organizational growth via collaborative innovation. For project managers, project success is contingent on how conflict is managed. It could be a conflict between project teams or stakeholders and the project scope, schedule, or budget.
- Clear communication between teams and stakeholders keeps the wheels turning in SCM and PM. But articulate emails and well-run meetings are only the tip of the iceberg if you want to achieve optimal coordination and collaboration. That is why most SCM and PM teams invest in software solutions that centralize their workflows. Some tools can serve both functions by offering integrations and OpenAPIs.
- A strategic mindset elevates the disciplines of SCM and PM to keep up with the demands of today’s turbulent markets. A siloed, fire-fighting approach isn’t sustainable in a time of mass redundancies and multiple trade route disruptions. SCM and PM leaders must replace it with cross-team contingency planning and process innovation for organizations to survive.
What They Can Share to Succeed
When your department has its own OKRs to fulfill, it’s easy to slip into siloed thinking. But a joined-up approach will give supply chain managers and project managers time to focus on developing the soft skills needed for success. Cloud-based solutions that centralize data, documentation, and collaboration can deliver this by streamlining workflows and facilitating faster decisions.
A Shared Path to Success
SCM and PM face many of the same threats to their performance. But this creates the conditions for smart operations leaders to carve a new, shared path. One that leverages the strengths of their peers.
This is where the project management office (PMO) comes into its own. As a center of excellence for best practices and a data-driven strategic function, the PMO is well-positioned to galvanize the link between SCM and PM.
It can do this by:
Standardizing project management processes. If every project works to the same processes, every stakeholder knows their role, what to expect and when. This includes SCM. It makes efficiency easier to control, which is particularly good news for supply chain managers.
Enhancing an organization’s data capabilities. The PMO’s emphasis on high-quality, comprehensive data sets can yield significant advantages for PM and SCM. Using PPM software, PM and SCM can get instant access to project, portfolio and supply chain data. This helps inform faster, more accurate decision-making.
Providing tools for cross-team collaboration. Collaborative workflows can be tricky to coordinate, particularly if you have distributed teams. But, the PMO’s resources, such as a powerful PPM tool, can centralize and simplify work. It does this by creating a single source of truth for project documents and data, as well as integrated communication functions.
