This week, the business development manager for International Logistics Services (your project management case study) has returned from a meeting with Walmart. Walmart and Proctor & Gamble successfully pioneered the use of vendor managed inventory (VMI), which is cited in the article, New Models for a Single-Manufacturer Multi-Retailer Supply Chain Under Vendor Managed Inventory Program (Links to an external site.). The VMI concept enables the vendor or manufacturer to decide on the timing and quantity of restocking store shelves up to a certain maximum using data from the retailer. During the meeting, Walmart suggested that International Logistics Services might implement a VMI on their behalf. This would mean that International Logistics Services would need to develop a system and a process to obtain the data from Walmart and assume responsibility to order product from the various vendors and ship to Walmart ensuring no stock-outs without exceeding the maximum. The business development manager suggests that this requirement be added to the scope of the Logistics Services Improvement project.
On the one hand, this is an opportunity that could enable Walmart and International Logistics Services to develop a new innovation that ultimately may reduce ongoing costs for Walmart, and enable International Logistics Services to earn additional revenue. On the other hand, this new requirement would add risk to the project, as there are several fundamental issues that need to be addressed. In addition, International Logistics Services would need to develop information technology and processes that would be integrated with Walmart on the outbound side and on the inbound side with Walmart’s suppliers. A rough estimate indicates that the additional project investment would be $75,000. Finally, International Logistics Services has not yet secured Walmart’s business, though the two companies have worked together in other countries and have a good relationship.
Tomorrow, the director of logistics services, the business development manager, and you will discuss the proposed change to the project scope. As the project manager, prepare for the meeting by evaluating the opportunities and threats to add new requirements this late in the planning stage.
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