Programme Managing The Supply Chain Portfolio Article - June 2010 (PMWorld Today)

PM World Today June 2010 (Vol XII, Issue VI)
PM WORLD TODAY FEATURED PAPER JUNE 2010
Programme Managing the Supply Chain Portfolio

Professor Dr Pieter Steyn
Cranefield College of Project and Programme Management
South Africa
Abstract:
Effective and efficient management of the Supply Chain Portfolio is widely regarded as
the key to optimal organisational performance. How to achieve this has remained a
complex challenge to executives. This article proposes programme managing the
project driven and non-project driven components of the Supply Chain Portfolio as a
sustainable solution to the problem.
Introduction
Stock and Lambert (2001) describe Supply Chain management as a highly interactive,
complex systems approach that requires simultaneous consideration of many trade-offs.
Supply Chain management integrates key business processes from suppliers to end
users and provides products, services and information that add value for customers and
other stakeholders. According to Steyn (2003, 2009) the Supply Chain Portfolio
consists of seven key cross-functional business processes:
1. Customer relationship management (CRM).
2. Customer service management (CSM).
3. Order fulfilment.
The abovementioned cross-functional business processes focus on serving external
customers. Moreover, in addition to managing service delivery aspects the Customer
Service Management business process also attends to product returns from dissatisfied
customers.
4.
5.
6.
7.
Product development and commercialisation.

Procurement.
Demand management and capacity planning.
Operations (manufacturing) flow management.
These four cross-functional business processes focus on serving internal customers;

hence they play a major role in supporting the three cross-functional business
processes that serve external customers.
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Page 1
Stock and Lambert (2001) identify the structural dimensions of the Supply Chain
Portfolio as the participating members, the cross-functional processes of the Supply
Chain, and the different types of process links across the Supply Chain. They identify
executive support, leadership excellence, commitment to change, and empowerment as
key requirements for successful Supply Chain management, and regard information as
a key enabler of Supply Chain Portfolio integration. However, they do not propose an
integrative model to achieve the abovementioned. They assert that, due to the dynamic
nature of modern organisations, leadership and management should regularly monitor
and evaluate the performance of the Supply Chain. They regard it as imperative that
performance goals are met, and failing so, that Supply Chain alternatives are evaluated
and change implemented.
According to Steyn (2009) the latter is virtually impossible in bureaucratic organisations
and the challenge is for organisations to transform to learning organisation paradigms
and structures. Professor DA Garvin (1993) from Harvard Business School provides the
following definition of a learning organisation: A learning organisation is an organisation
skilled at creating, acquiring and transferring knowledge and at modifying its behaviour
to reflect new knowledge and insights. He asserts that to stay competitive in the new
economy, organisations must strive to move away from bureaucratic practices towards
becoming learning organisations that are far more agile and flexible. This requires that
organisations restructure themselves accordingly.
Steyn (2001, 2009) proposes that organisations shape their cross-functional portfolios
into various programme structures, some processes serving internal customers and
others external customers. In addition to the project related programme structures of
the Strategic Transformation Portfolio, Continuous Improvement Portfolio, Capital
Expenditure Portfolio, and Virtual Network of Partners Portfolio (Semolic, 2009), they
should also shape the Supply Chain Portfolios cross-functional processes into a
programme structure, or structures depending on the business model adopted.
As shown in Figure 1 the Supply Chain Portfolio is an integral part of the crossfunctional programme structures of learning organisations.
The programme
configurations are not mutually exclusive. They support each other in an integrated way
and the strategic picture is linked to the operational activities (Partington, 2000) (Thiry
and Murray-Webster, 2000). The major organisational benefits of strategic importance
delivered by the individual programme configurations vary from effectiveness, efficiency,
and both effectiveness and efficiency. Moreover, benefits of strategic importance of the
process deliverables are measured by utilising appropriate key performance indicators
(KPIs) that are linked to critical success factors (CSFs) in a balanced scorecard. This is
generally followed by a system of appraisal and review performed by the executive
leadership to determine whether organisational benefits of strategic importance accrue
to a satisfactory degree. According to Steyn (2009) the portfolios, including the Supply
Chain Portfolio, are arranged into different programme structures each with its own
portfolio manager and support staff as illustrated in figure 2.
Page 2
BS-PM LEARNING ORGANISATION VALUE CHAIN SCHEMATIC

BALANCED SCORECARD
(BS)
FINANCIAL CUSTOMER
INTERNAL
CORPORATE STRATEGY
PORTFOLIO:
STRATEGIC
TRANSFORMATION
PROJECTS
LEARNING
&
GROWTH
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS
Performance
Measurement
on KPIs
PORTFOLIO:
VIRTUAL
NETWORK
OF PARTNERS
PROJECTS
PORTFOLIO:
CONTINUOUS
IMPROVEMENT
PROJECTS
PORTFOLIO:
CAPITAL
EXPENDITURE
PROJECTS
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS
(INNOVATION)
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS &
EFFICIENCY
MAJOR BENEFITS:
ORGANISATIONAL
EFFICIENCY
SALES & M
PURCH
MANUF
LOG
HR
PROJECT MANAGEMENT PROCESSES SERVING EXT CUSTOMERS

ORDER FULFILMENT (EXT CUSTOMERS)
CUSTOMER SERVICE MANAGEMENT (EXT CUSTOMERS)
CUSTOMER RELATIONSHIP MANAGEMENT (EXT CUSTOMERS)
PRODUCT DEV & COMMERCIALISATION PROJECTS (INT CUSTOMERS)
PROCUREMENT (INT CUSTOMERS)
MANUFACTURING FLOW MANAGEMENT (INT CUSTOMERS)
DEMAND MANAGEMENT & CAPACITY PLANNING (INT CUSTOMERS)
CUSTOMERS
FIN
MAJOR BENEFITS:
Customer Service
Effectiveness and Efficiency
SUPPLY CHAIN
PORTFOLIO:
PROJ DRIVEN
COMPNT
SUPPLY CHAIN
PORTFOLIO: NONPROJ DRIVEN
COMPNT
SUPPLIERS
FEEDBACK
P G Steyn
2010
HUMAN TALENT, INFORMATION ARCHITECTURE, INFORMATION VISIBILITY
Figure 1: Balance scorecard - programme management (BS-PM) learning organisation value

chain schematic proposed by Steyn (2001, 2003, and 2009).
P R OG R AMME S T R UC T UR E S
CEO
COO
CPO
Portfolio Manager:
Supply Chain Project
Driven Component
MAJOR BENEFITS
EFFECTIVENESS & EFFICIENCY
Portfolio Manager:
Supply Chain Non-Proj
Driven Component
MAJOR BENEFITS
Portfolio Manager:
Innovative Continuous
Improvement Projects
MAJOR BENEFITS
Portfolio Manager:
Virtual Network of
Partners Projects
CFO
MAJOR BENEFITS
EFFECTIVENESS (INNOVATION)
Portfolio Manager:
Capital Expenditure
Projects
MAJOR BENEFITS
EFFICIENCY
Portfolio Manager:
Strategic Transformation Projects
MAJOR BENEFITS
EFFECTIVENESS
Permanent supply
chain programme
structures that
enhance customer
service
effectiveness and
efficiency (serve
predominantly
external customers)
Permanent
programme
structures that
enhance value chain
effectiveness /
efficiency (serve
internal customers)
Non-permanent
programme
structure that
enhances value
chain effectiveness
and efficiency
(serves internal
customers)
Figure 2: Programme structures for the portfolio groupings.
Page 3
Non-Project Driven-, Project Driven-, and Hybrid Structures.

Programme structures for non-project driven organisations
The organisational value chain schematic in Figure 1 illustrates the Supply Chain
Portfolio programme structures for project driven and non-project driven components of
the organisation. The non-project driven component includes the three business
processes, i.e., Customer Relationship Management (CRM), Customer Service
Management (CSM), and Order Fulfilment that serve external customers. The
remaining four business processes constituting the non-project driven component are
Product Development and Commercialisation, Procurement, Demand Management and
Capacity Planning, and Operations (manufacturing) Flow Management that serve
internal customers and support the three cross-functional business processes that serve
external customers.
Depending on its business model organisations can be structured as project driven,
non-project driven, or hybrid. The latter means that the organisation has both a project
driven as well as a non-project driven component in its Supply Chain. Non-project
driven organisations generate income (revenue) by selling products and services to
external customers. In non-project driven organisations the cross functional project
management process serving external customers does not exist. Non-project driven
organisations are not in the business of doing projects.
NON-PROJECT DRIVEN LEARNING ORGANISATION VALUE CHAIN SCHEMATIC
BALANCED SCORECARD
(BS)
FINANCIAL CUSTOMER
INTERNAL
CORPORATE STRATEGY
PORTFOLIO:
STRATEGIC
TRANSFORMATION
PROJECTS
LEARNING
&
GROWTH
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS
Performance
Measurement
on KPIs
PORTFOLIO:
VIRTUAL
NETWORK
OF PARTNERS
PROJECTS
PORTFOLIO:
CONTINUOUS
IMPROVEMENT
PROJECTS
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS
(INNOVATION)
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS &
EFFICIENCY
PORTFOLIO:
CAPITAL
EXPENDITURE
PROJECTS
MAJOR BENEFITS:
ORGANISATIONAL
EFFICIENCY
SALES & M
PURCH
MANUF
LOG
ORDER FULFILMENT (EXT CUSTOMERS)

PRODUCT DEV & COMMERCIALISATION SERVING INT CUSTOMERS
HR
CUSTOMERS
SUPPLIERS
SUPPLY CHAIN
PORTFOLIO:
NON-PROJECT DRIVEN
COMPONENT
FIN
MAJOR BENEFITS:
Customer Service
Effectiveness and Efficiency
FEEDBACK
121
HUMAN TALENT, INFORMATION ARCHITECTURE, FORMATION VISIBILITY
P G Steyn
2009
Figure 3: Non-project driven component of the Supply Chain Portfolio.
Page 4
All seven cross functional business processes are present in the non-project driven
component. Of the seven only Product Development and Commercialisation is a
project-based business process. The programme management value chain architecture
for the non-project driven component of the Supply Chain Portfolio is shown in Figures 3
and 4.
PORTFOLIO
MANAGER :
SUPPLY CHAIN
Functional
Managers
ORDER-FULF
PROCESS
MANAGER
PROG M
EXTERNAL
CUSTOMERS
CSM
PROCESS
MANAGER
Functional
Employees
CRM
PROCESS
MANAGER
ProjectPROG M
Portfolio
INTERNAL
Manager
CUSTOMERS
STRUCTURE FOR THE FOUR CROSS-FUNCTIONAL PROCESSES SERVING

INTERNAL CUSTOMERS: PRODUCT DEVELOPMENT, PROCUREMENT,
MANUFACTURING FLOW MANAGEMENT AND DEMAND MANAGEMENT
ARE SIMILAR TO THE ABOVE ARRANGEMENT
SUPPLY CHAIN PROCESS TEAMS
122
122
Figure 4: The non-project driven components programme management structure.
Programme Structures for Project Driven Organisation

Project driven organisations are unique. To win orders they tender on RFPs (requests
for proposals) received from the external customers. When successful in their bids they
generate income (revenue) by doing the projects for those external customers. For
effective and efficient customer service they create and utilise cross-functional project
management processes that constitute the project driven component of the Supply
Chain Portfolio. Order fulfilment and product development become part of the crossfunctional project management process activities and are performed by the project team
members during the project lifecycles.
The cross-functional project management processes that constitute the project driven
component of the Supply Chain Portfolio are still supported by the five remaining crossfunctional business processes of the non-project driven component of the Supply Chain
Portfolio. These are CRM and CSM, Procurement, Operation (manufacturing) Flow
Page 5
Management, and Demand Management and Capacity Planning. This unique

programme management value chain architecture for the project driven component of
the Supply Chain Portfolio is shown in Figures 5, 6 and 7.
PROJECT DRIVEN LEARNING ORGANISATION VALUE CHAIN SCHEMATIC
BALANCED SCORECARD
(BS)
FINANCIAL CUSTOMER
INTERNAL
CORPORATE STRATEGY
PORTFOLIO:
STRATEGIC
TRANSFORMATION
PROJECTS
LEARNING
&
GROWTH
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS
Performance
Measurement
on KPIs
PORTFOLIO:
VIRTUAL
NETWORK
OF PARTNERS
PROJECTS
PORTFOLIO:
CONTINUOUS
IMPROVEMENT
PROJECTS
PORTFOLIO:
CAPITAL
EXPENDITURE
PROJECTS
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS
(INNOVATION)
MAJOR BENEFITS:
ORGANISATIONAL
EFFECTIVENESS &
EFFICIENCY
MAJOR BENEFITS:
ORGANISATIONAL
EFFICIENCY
SUPPLY CHAIN
PORTFOLIO: NONPROJ DRIVEN
COMPNT
SUPPLY CHAIN
PORTFOLIO:
PROJ DRIVEN
COMPNT
FEEDBACK
FIN
SALES & M
PURCH
MANUF
LOG
HR
PROJECT MANAGEMENT PROCESSES SERVING EXT CUSTOMERS

HUMAN TALENT, INFORMATION ARCHITECTURE, INFORMATION VISIBILITY
P G Steyn
2010
Figure 5: Project driven component of the Supply Chain Portfolio and the five supporting
processes as discussed in the text.
Page 6
PORTFOLIO
MANAGER:
EXTERNAL
CUSTOMER
PROJECTS
MARKETING
FUNCTIONAL
MANAGER
A N OTHER
FUNCTIONAL
MANAGER
EXTERNAL CUSTOMERS
EXECUTIVE
INF0-TECH
FUNCTIONAL
MANAGER
PROJ-TYPE A
PROG M
PROJ-TYPE B
PROG M
PROJ-TYPE C
PROG M
115
115
Prof PG Steyn (2009)
Figure 6: The project driven components programme management structure illustrating the
cross-functional project management processes of the Supply Chain Portfolio serving external
customers.
PORTFOLIO
MANAGER :
SUPPLY CHAIN
PROG M
EXTERNAL
CUSTOMERS
Functional
Managers
CSM
PROCESS
MANAGER
Functional
Employees
CRM
PROCESS
MANAGER
ProjectPROG M
Portfolio
INTERNAL
Manager
CUSTOMERS
STRUCTURE FOR THE THREE CROSS-FUNCTIONAL PROCESSES SERVING

INTERNAL CUSTOMERS: PROCUREMENT, MANUFACTURING FLOW
MANAGEMENT, AND DEMAND MANAGEMENT
ARE SIMILAR TO THE ABOVE ARRANGEMENT
116
116
SUPPLY CHAIN PROCESS TEAMS

Figure 7: The project driven components five supporting cross-functional business processes of
the non-project driven component of the Supply Chain Portfolio.
Page 7
Programme Structures for Hybrid Organisations

Hybrid organisations are plentiful and have both project driven and non-project driven
components in its Supply Chain Portfolio as described above. Steyn (2009) asserts that
to enhance value chain effectiveness and efficiency project driven, non-project driven,
and hybrid organisations need to adopt Continuous Improvement-, Capital Expenditure-,
and Virtual Network of Partners Portfolios as programme structures. Moreover, when
the need arises they must establish a Strategic Transformation Portfolio programme
structure to analyse, develop and implement emergent strategy.
The latter is required, firstly, when the organisation has to undergo radical
transformation and change. Under these conditions the programme office is staffed
from outside to overcome the constraining paradigm deficiencies in the organisation. It
is common knowledge that a contaminated organisational culture cannot cleanse itself.
Secondly, the programme structure for the Strategic Transformation Portfolio can also
be established when innovative transformation and change of a minor degree is
required. Under these conditions the programme office is staffed from internal
resources. In both cases the programme office is a temporary structure (Steyn, 2009).
Conclusion
For optimal organisational performance it is imperative that the programme structures of
the different portfolios operate in synergy, irrespective of the business model adopted
by an organisation. Coordinating and integrating the activities of the Supply Chain
Portfolio with that of other cross-functional portfolios is a key factor for success. Sound
structuring, leading and managing of the programme architecture in a learning paradigm
are the important linkages alluded to, but not defined, by Stock and Lambert (2001).
Structuring and programme managing the Supply Chain Portfolio in accordance with the
principles proposed in this article is the sustainable solution.
Page 8
Bibliography
Garvin, D A, Building a Learning Organization, Harvard Business Review, July-Aug,

1993.
Murray-Webster R and Thiry M, Gower Handbook of Project Management, 3rd Edition,

Chapter 3, "Managing Programmes of Projects", Gower publishing, England, 2000, Ed.
Rodney Turner.
Partington, David, Gower Handbook of Project Management, 3rd Edition, Chapter 2,

"Implementing strategy through programmes of projects", Gower Publishing, England,
2000, Ed. Rodney Turner.
Semolic, Brane, Virtual Networks of Partners, Proceedings of the IPMA Research Expert
Seminar, Cape Town, South Africa, March, 2010.
Steyn, Pieter G, Managing Organisations through Projects and Programmes:

The Modern General Management Approach, Management Today, Vol 17,
No 3, April, 2001.
Steyn, Pieter G, The Balanced Scorecard Programme Management System,

Proceedings of the 17th IPMA Global Congress on Project Management, Berlin, Germany,
2003.
Steyn, Pieter G, The Emergent Role of Chief Programme Officer (CPO), Featured Paper,
PM World Today, Volume XI, Issue XI, November, 2009.
Stock, J R and Lambert, D M, Strategic Logistics Management, 4th Edition, Chapter 2,

McGraw-Hill International Edition, 2001.
Page 9
About the Author:
Prof Pieter Steyn

Author
Dr Pieter Steyn is Founder and Principal of Cranefield

College of Project and Programme Management, a South
African Council on Higher Education / Dept of Education
accredited and registered Private Higher Education
Institution offering an Advanced Diploma, Postgraduate Diploma and Masters
Degree in project and programme-based leadership and management.
Professor Steyn holds an engineering degree (BSc Eng), MBA and Doctorate in
business management and is a registered Professional Engineer. Dr Steyn
founded consulting engineering firm Steyn & Van Rensburg (SVR) in 1970. He
was appointed professor in the Department of Management, University of South
Africa (1976), was Founder Chairperson (1977) of the Production Management
Institute of South Africa, and helped pioneer Project Management as a university
subject at the post-graduate level in 1979 at the University of South Africa. He
was professor of Project and Operations Management at the TUKS Graduate
School of Management, University of Pretoria from 1990 until retiring in 1998.
Pieter was Chairperson of the Commission of Enquiry into the Swaziland Civil
Service in 1993; Project Leader of the Strategic Management Team for the
Gauteng Governments Welfare Department and Corporate Core, 1994 to 1996.
He founded the Cranefield College of Project and Programme Management in
1998. Pieter is a co-author of the International Handbook of Production and
Operations Management, (Cassell, London, 1989, ed. Ray Wild) and author of
many articles and papers on leadership and management. He is Founder Fellow
of the Production Management Institute of South Africa, and a member of the
Association of Business Leadership, Industrial Engineering Institute, Engineering
Association of South Africa and Project Management South Africa (PMSA).
Moreover, he is past President of the Association of Project Management, South
Africa (APMSA) and South Africas former representative on the Council of
Delegates of the International Project Management Association (IPMA), 20002005. He is currently a member of IPMAs Research Management Board. Pieter
can be contacted at cranefield1@cranefield.ac.za.
Page 10

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PM World Today June 2010 (Vol XII, Issue VI)

PM WORLD TODAY FEATURED PAPER JUNE 2010