Success with the PMO: Digital supply chain transformation

PMOs can sometimes be perceived as unnecessary overhead for already expensive supply chain transformations. In reality, the opposite is true, and if they are not constructed, supported or structured properly, the project will fail.

Supply chain transformations are very complex projects that require coordinated activities in finance, operations, supply chain, procurement, engineering, product development and leadership functions. The Program Management Office (PMO) is responsible for the coordination of activities between these groups of people. If the PMO is set up sub-optimally, projects tend to fail. In the Project Management Institute’s Pulse of the Profession survey from 2018, only 58% of organizations fully understand the value of project management. The organizations that undervalued the PMO for driving change reported an average of 50% or more of their projects failing outright (PMI, 2018). 

In our recently published book, “Technology Optimization and Change Management for Successful Digital Supply Chains,” we thoroughly examine the challenges of digital supply chain transformation, and in one of the chapters, we show how the establishment of the PMO plays a critical part. The chapter is based on our first-hand experience from our global supply chain transformations.

To start, the chapter details the issues that require a good PMO:

1. On-going operations can de-prioritize the project and steal resources. This can happen because digital supply chain transformations are strategic projects in which financial and operation benefits are often times not realized for months or even years. Day-to-day firefighting and operational issues will create a natural competitor to the funding and resources in the transformation project.
2. Scope creep can occur for a number of reasons, ranging from poorly documented requirements and boundaries to poor engagement of project sponsors. Changes to projects will always happen. The role of the PMO is to thoroughly review changes through a defined change request process. It’s important to understand that the change control process should not be the “party of no.” If an out of scope request adds significantly more value than the original scope, and the PMO is willing to re-schedule and re-allocate activities and resources to accommodate it, it should be accepted.
3. Transformations this big require multiple work streams with multiple plans. If these plans are not all integrated in a single plan, it turns into chaos. There will be multiple source of the truth and a never-ending administrative nightmare for the PMO. This ultimately erodes confidence in the PMO and the transformation in general.  MS Excel or Project don’t cut it here. A web-based integrated project management tool is always necessary for these types of projects.
4. Similar to point 3, the many work streams require a healthy dose of coordination. Much of the work is not serial; rather, it occurs in parallel and each work stream must have visibility of other work streams’ activities due to the inter-dependencies. 
5. PMO leadership and practitioners need to have the skill, experience and mindset to be good at what they do. Simply layering on PMO responsibilities to the business or operations teams is a mistake. This approach makes two faulty assumptions: that people have time for it and that they are properly skilled for the job. Supply chain transformations deserve their own dedicated PMO.

The solutions to these issues are not easy, but the good news is that we have a playbook. First, we detail the structure, routines, communication, governance and other knowledge areas of the Program Management Office. Our system is grounded on the principles of PMI’s Project Management Body of Knowledge and tailored for the distinct challenges of the digital supply chain transformation. Secondly, the PMO has to be highly skilled in project management as well as supply chain and be fully (and visibly) supported by the business leadership. PMO responsibilities are no place to hide the B players. It has to be an experienced high performance team with direct reporting lines to business leadership. These folks have to drive and sell the project at the same time. Finally, the PMO must create the “burning platform” for change. This requires analysis and insights into what areas of the business will improve and the timing of the improvements as a result of the supply chain transformation. This ultimately wards off some of the scope creep and competing initiatives that the transformation will inevitably face.

Digital supply chain transformation is not easy. It requires a healthy doses of leadership, structure, and communication – and a good PMO satisfies that requirement. KPMG knows how to do this, and we have thrived in that role.

For more on creating a digital supply chain, please reference select chapters of Technology Optimization and Change Management for Successful Digital Supply Chains, a pivotal reference source that provides research on the application of digital business transformation programs to improve strategic, tactical, and operational supply chain processes.