photo source: www.cwnutritionforbodyandmind.com/running-shoes-your-perfect-fit/
This report is conducted as an assignment for a University. The scenarios, figures and parties are all fictional.
This is a project plan for developing and launching new era running shoes. The new shoes are going to be called smart shoes: NIKE “PROJECT X- SHOES”. What makes them smart shoes are the features they have. The shoes can measure and analyse various metabolic markers from the users foot; for example heart rate, blood sugar levels and hydration level of the user. The shoe itself gathers training data; time, distance, burned calories and altitude. In addition the shoe is equipped with wireless data transfer software that enables full synchronization with NIKE+ ™ sport watches and Sports Tracker ™ – mobile application.
The target market for PROJECT X- SHOES is nothing less than global, revolutionary shoes for everyone, everywhere.
1.1. Scopes and objectives
Scope of this project is limited so that development of electronics is not part of this project. Electronics of the shoe has been developed in a different project and meant to be used in several other shoe development projects as well. Electronics are sold as NIKE PROJECT-X chip kit (also called WDT chip kit). This means that costs of electronics are calculated simply by amount of kits. Objective for this project is to develop a shoe that makes running more interesting. Our shoe will give people different kind of information that they can use in order to improve their running and other health issues. We want to give people more value in their running hobby with this product. The goal for this project is to develop the shoe and launch it to the market.
1.2. Project plan
In this project plan we are going through all the major steps in planning, project development and launching the project in project management’s perspective. We have plans for time scheduling, resources and tasks, cost control, risk management, human resources concerning the project team and quality management.
2. TASKS AND RESOURCES
The project’s process flow is the following. All the tasks needed to achieve the project’s goal go under these main steps:
There are different tasks in each step of the project. Task division is going to be made with the help of WBS, work breakdown structure. The idea of it is that a difficult task is divided in many different subtasks. This helps us to recognise how many resources do we need and what kind exactly.
The WBS is a hierarchical decomposition of the total scope of the work to be carried out by the project team to accomplish the project objectives and create the required deliverables. Each descending level of the WBS represents an increasingly detailed definition of the project work. The WBS is finalized by assigning each work package to a control account and establishing a unique identifier for that work package from a code of accounts. (A guide to the project management body of knowledge PMBOK Guide 2013: 132.)
Figure 1. Project tasks illustrated using WBS. (please click a figure to expand)
Resources needed in our project are the following: people, spaces, equipment, money and material. We are going to use our own employees and facilities for all phases except production. We get money from our investors so that we can start the development and production. We will buy the material and deliver it to China where the production will take place.
We need employees to plan and design the new shoe. We will get the microchip from our sub-contractor. Another sub-contractor in China will then produce the product. We will need to do the marketing plan and marketing related activities, test the product, plan and monitor costs and launch the product.
We have six people in the designing team, six people in production related activities, ten people in the marketing, four people who take care of the finances and six people in testing. Project manager guides all these teams in their work and uses their knowledge when taking care of risk management, human resources and quality management.
The work will be divided inside the groups in the following way. In the first part of project we are going to plan and design the new shoe. Here we need all of the six employees to use 100% of their work time to do this project. In the marketing team, all the members have to use 60% of their work time for this project. They will start after the product has been developed and before it goes to the production. In the production phase we have six people working for this project 100% of their work time. They will continue the work like this until the launching. Employees taking care of the finances has to use at least 40% of their work time to this project from the beginning till the end of it. Employees who do the testing are going to join the project when the first prototype is ready and when the first real product is ready. The testing will take about 1 week each time to be tested. During that time all the testers has to use 100% of their work time for this project.
photo source: www.nikeinc.com/news/new-nike-free-hyperfeel-functions-as-an-extension-of-the-foot
3. TIME MANAGEMENT
The process of developing PROJECT X -shoe can be roughly divided in four different task categories; product development, production, financial activities and marketing and sales. Beside these there are also project start up and project close up, which are activities linked to project management itself. Some of the tasks related to e.g. financing and marketing and sales are ought to be ready before actual product development work starts, these are so called pre requisitions for the project.
To manage the schedule of the project there is a gantt chart created, showing start and end for the project, duration of different activities, dependencies between activities and also milestones of the project. The gantt chart eases to follow up and control of the project, as it will be maintained and the actual progress of the tasks will be marked there beside the plan (Meredith & Mantel 2000: 332-335).
Product development is planned to start early next year. Project start up meeting will be held in December 2013. There are roughly nine months reserved for the project including time for production of the first batch and delivering it. Project itself will be finished after the launch party in project close up meeting.
Tasks within product development are quite strongly linear and linked with each other. Also some of the tasks in product development are needed to be finished before tasks in other categories can start. E.g. final version of the shoe must be ready before many actions in production and marketing can start. Also activities in production plan are linear and linked to each other, whereas marketing and financial activities are not so tightly linked, and many activities can be occurring at the same time.
There are some milestones in the chart demonstrating important phases of the project. They ease the follow-up of the project and divide it to manageable sub targets. They are easy to notice, and give quickly idea of the important points to anyone looking at the chart. Important milestones are e.g. final version ready for production and first bulk order arriving, as these affect other activities quite a lot.
Figure 2. Gantt chart of time schedule. (please click a figure to expand)
4. QUALITY MANAGEMENT
Quality management is defined as the act of overseeing all activities and tasks needed to maintain a desired level of excellence. This includes creating and implementing quality planning and assurance, as well as quality control and quality improvement. It is also referred to as total quality management (TQM). (Investopedia 2013.)
The quality management process of each produced shoe starts before the first stitch to the shoe is made; NIKE “PROJECT X- SHOES” go through a very thorough quality management process that is divided into three separate sections that offer options for corrective measures. The NIKE “ PROJECT X- SHOE” quality management process follows these three steps. The Quality Management process of the shoe (materials and production of the actual shoe) do not include the Quality Management Process of the NIKE PROJECT-X software /chip that is developed and manufactured in another production facility.
4.1 All over Material Quality Testing- Pre Production
All the materials and leathers are controlled and tested to guarantee that they meet NIKE´s quality requirements before entering production. Taking random samples of the raw material and stress testing the fabric and inspecting leather thickness controls this. This procedure is done to ensure the high quality and uniform of products in the production phase. (Nike, Inc. 2012b.)
4.2 Production Inspection
This inspection is performed when around 30% of goods are finished. We select the semi-finished products or some packaged finished products at random for checking. At this stage shipping sample is also send and monitored for quality. This enables us to identify problems in the early stage of production, so that continued production of a large number of nonconforming products can be avoided, and we can take corrective measures and also provide timely feedbacks to the clients. At this stage, we identify problems in early stage and recommend corrective measures and aim predict the productivity and time of completion.
4.3 Final Random Inspection
This inspection is carried out when mass production is finished, and at least 80% of goods are packed and ready for shipment. Samples are selected randomly according to international sampling standards and carefully checked, to ensure that the goods are in accordance with original samples. If all the randomly checked products pass the inspection, the goods are shipped to their destinations as planned. (Nike, Inc. 2012a.)
4.4 ISO standards (ISO 2013)
All the inspections for our shoes are conducted following international (ISO) standardization procedures related to our model:
Footwear — Test method for the determination of the resistance of elastic materials for footwear to repeated extension — Fatigue resistance
Footwear — Test methods for whole shoes — Abrasion resistance
Footwear — Test methods for whole shoes — Flexing resistance
Footwear — Test methods for outsoles — Flex resistance
Footwear — Sampling location, preparation and duration of conditioning of samples and test pieces
Footwear — Test methods for heels — Resistance to lateral impact
Footwear — Test methods for insoles — Abrasion resistance
Footwear — Test methods for insoles — Resistance to stitch tear
The full production process and total quality management of each shipment is done within one fiscal month to guarantee in time shipping for retailers. The following gantt-chart demonstrates the Productions and Quality Management process of the production for a shipment done in any one of the NIKE production facilities.
Figure 3. Gantt chart of Productions and Quality Management process of the production. (please click a figure to expand)
5. COST CONTROL
5.1. Time phased budget (figure 4.)
Time phased budget shows finance needed monthly to cover up project costs. We have a letter of intent with NIKE to finance the whole project according to calculated costs. We receive financial item from NIKE at the beginning of each month. In case our costs go over the budget we also have agreement with bank for short term corporate loan maximum of 275 000€ which is about 15% of budget.
5.2. Budget for each project phase (figure 5.) (Pelin 2009: 179-182.)
5.3. Cumulative costs (figure 6.)
5.4. Cost table (figure 7.)
The table 7. shows total costs of each phase and monthly finance needed to cover up monthly costs of phase. Monthly costs are calculated by dividing total costs of the phase by duration of phase in months. We don’t need large amount of capital to buy material in stock because supply chain we are using is excellent in managing JIT principles.
Duration of each phase (figure 8.)
5.5. Material costs
Tables below (figures 9. 10. 11. Pelin 2009: 174-178); shows where our material costs are conformed by multiplying amount of material by unit cost of material. It is divided roughly to elements of shoe and marketing material which conforms of posters and cardboard figures but is not explained more closely here because of its scale of items.
Amount of material:
5.6. Labor costs (figure 12.)
Amount of labor (figure 13.)
Unit costs of labor (figure 14.)
We are using workers from 2 wage levels in this project. Some workers use only some of their work time in this project which is taken consider by capacity percent of person. Calculations are made by calculating total months of work for different wage levels in different phases and multiplying this by level of wage. Monthly work is conformed of amount of monthly wage persons by level multiplied by phase duration and multiplied by percentage of capacity used to this project. Other costs conforms of legal responsibilities.
5.7. General costs (figures 15. 16.) (Pelin 2009: 174-180 & Saaranen et. al. 2011: 37-39.)
Rent costs conform of m² office base used by the project divided by the total office base of the company and multiplied by the total office rent. At the production phase rent cost is conformed to the same principal from the facility and storage rents. Administration costs and other costs are small random costs which are not explained more closely here.
Directional estimation of critical point and profit opportunities:
We have a letter of intent with the retailer that we sell the Project X- shoe by the price of 100€. Based on calculated data the critical point is been achieved if we managed to sell 21 678 units. Our marked department have estimated that total sale of the product will be about 150 000 units. For this amount of units the total cost of a shoe pair is 28€.
This assessment should not be interpreted as a final calculation of project profits. It is just a raw frame to perceive relations of estimated costs and profits in different production amounts.
6. RISK MANAGEMENT
Risk is usually seen as a threat, but it could also be positive, then it’s seen as an opportunity. If risk happens it has an effect on at least one of the project objective which could include scope, schedule, cost or quality. (Marchewka 2013: 240 & A Guide to the Project Management Body of Knowledge; PMBOK 2008: 275) Each risk should have its own owner in the project: employee monitors the project in order to identify any new or increasing risk and reports it forward so that risk controlling tasks takes in place. Although project manager is the key person managing risk processes. (Marchewka 2013: 241.)
This project has its own, identified risks, which are well analyzed and risk responses are planned; which risks could be taken by controlling or reducing threats or maximizing the opportunities. If risks possibilities are ignored, might it lead to the big financial losses. The proper closure in the end of the project will reduce risks in future projects. Decisions relating to the risk issues take place in the project team planning meeting e.g. by brainstorming, with checklist analysis, RBS and Risk Matrix.
The main risks which could impact in this project are categorized by a RBS; Risk Breakdown Structure (figure 17.) which includes Technical, External, Organizational (internal risks) and Project Management risks. (A Guide to the Project Management Body of Knowledge; PMBOK 2008: 280.) Project objectives are exceptionally listed on same chart for the clarity.
After RBS Probability and Impact- Matrix (figure 18.) is created by prioritizing risk ratings with probability and impact: very low, low, medium, high or very high priority. Risks probability (value range from 0,05 to 0,80 : 1,00 means absolute certainty of happening) and impact on the project (value range from 0,05 to 0,80 : 1,00 means significant impact) (A Guide to the Project Management Body of Knowledge; PMBOK 2008: 280, 219)
Figure 17. RBS (risk type order not prioritized by a number). (please click a figure to expand)
Figure 18. Risk Probability and Impact-Matrix.
First of all various quality issues are high level probability risks and part of technical aspects (risk 1. & 3.). All processes (both project and products) are big part of PROJECT X- shoe risk management, so there should be a key person in monitoring the certain phases so that person reports before inclusive mistakes happen. Of course engineering, designing and high level planning needs to be done properly all the way from developing to production and distribution. Project manager is responsible of these internal risks as well as some HR-functions e.g. training of the employees in critical tasks (risk 11.), which partly prevents technical mistakes to happen. Project team needs to ensure that subsidiary or subcontractor fulfills all the critical manufacturing quality levels in every area.
Mistakes in decision making may lead to budget overruns, which are typical risks. (risk 15.) To prevent mistakes project manager need to collect professionals from different business areas; teamwork is in the main part, which leads to the multi-professional atmosphere and decision making process. Also political climate, especially legislation and business system in China (which has modern communistic characters), means that firm should make contract between the companies how the payments are handled safely (risk 8.).
Designing is part of technical risks, so project manager must ensure that communication works between sales, marketing, engineers and designers, this has an effect in the final product e.g. is it simple enough (risk 2.); so that design delivers customer needs and absolutely follows a customer-oriented view. Risk of major delays may lead to high utilization rate. Unpredictable events occur so the manufacturing team needs flexibility to avoid (risk 12.) capacity under- or overruns.
Transaction and commercial risks (9.) are partly dealt with insurances and agreements with bank which includes standard terms; what kind of documents are needed e.g. shipping documents to get paid. Overseas logistic risks and carrier delays could takes place both in production phase and distribution phase e.g. delivery for retailers (risk 5.) So choosing the best supplier with reasonable price is important.
Project manager takes care of legal aspects as well as social responsibility, so a sense of these things is important in the risk control. Project manager needs to consider work welfare aspects with HR-unit; e.g. how subcontractor will take care of employees (risk 13.). In the worst case scenario NIKE overall image or reputation may suffer due the an-humane cheap labour usage. Same thing with other subcontractors (risk 4.): well done follow up could prevent errors and quality problems in different phases. In possible communication and cultural conflicts (risk 14.) could prevent if the project team (or at least manager) has the multicultural working experience and overall proficiency to work as a manager. Company responsibility questions includes human capital (as the whole project), and requires both management and leadership skills. Recruiting of the best candidates with helped by HR-unit, and getting them committed is also a big part of the project, and if someone leaves the project, should there be the second option on standby (risk 10.).
Lastly, a description how to foster high probability of positive risks (6. 7.). Warehouse should be ready to serve the big units and project manager must get the buying and ordering teams involved, e.g. JIT- just in time- philosophy which requires good inventory and shipping. Project manager should also exploit the second opportunity so that it really could happen and e.g. the customers can enter in the brand website. This means good internal communication with marketing and sales teams, strong external communication aka marketing and media relations. Social media possibilities must exploit: getting the publicity, creation of the expectation and positive hype before the launch.
7. PROJECT TEAM
In order to create a successful project the communication and cooperation must be effective. The responsibilities and roles of the project team have to be clear to all parties involved. Therefore coordination of the project functions is necessary, especially when the teams cross-functional. A responsibility chart helps to avoid overlooking crucial obligations and communication demands. (Boddy 2001: 104-106.)
The project manager has the main responsibility in this project. He/she is accountable for all major decisions and overall project success. There are five other key responsibility managers in the project; they are Marketing-, Manufacturing-, Sourcing/Logistic department managers and after-market services. The project manager has approving power over any tasks and needs, and is to be consulted before any major decisions will be made. The department managers are each responsible for individual tasks. The project team is cross-functional, which means that they all are involved in some part of the project and have different tasks in various stages. The functions can be seen from the responsibility chart (figure 19.)
Each task has its own timetable, which can be seen from the time management section. After completing some tasks department managers need to be informed in order to carry out the next step of the work. Though the role of project manager is distinctive, some decisions need input from other managers as well. That is why regular progress reports are conducted together with weekly project team meetings. Keeping the stakeholders informed is the responsibility of the project manager as well as anticipating their reactions.
The project manager has five key activities that need to be secured in order to create a successful project. These activities are communicating effectively, influencing, monitoring progress, securing resources and agreeing goals. (Boddy 2001: 64-65.) In this project there are various departments involved in the project that is why obtaining support and commitment between the groups is important. Project manager must obtain resources and manage their effective use, also they need to be identified and retained. Ensuring agreement with goals is crucial to gain successful project outcome. For this to work, overall objectives and goals need to be set and be prepared to react to any changes in them. This is also one of the hardest tasks of the project manager.
Figure 19. Responsibility chart. (please click a figure to expand)
We had two meetings where we discussed the project and it’s scopes and objectives. In the first meeting we concentrated on the project and its aspects and in the second meeting we divided responsibilities and decided the tools that we would use in the work. In the beginning of the project planning stage we decided to use a social media service as a channel for interactive communication between team members; using a closed Facebook-group for this project proved to be very efficient due to the high usage of the service. We used this channel to get feedback on the divided responsibilities, for open communication and overall brainstorming in regards to how we should proceed with certain aspects of the project.
We used Microsoft Excel, Smartsheet- software and Project in a box- program in creating the charts and material to the project plan. All prepared material, both texts and charts, were collected to Google Docs-template and edited via that with help by other team members. This way of working gave a great opportunity to look after what other team members have done, in which phase are we, also the risk of different aspects overlapping was minimized.
When we only had two face-to-face meetings and the rest of the time we communicated through internet, we see that we learned a lot about work in a project where the people are not in the same place. For example international projects are probably mostly like this. This way one needed to learn how to communicate so that everyone understands and gets the point. All in all we feel that using tools like Facebook and Google Docs, were really helpful and made personal commenting and input easily available for all team members.
In certain parts of the work it was hard to limit the accuracy of issues while keeping things plausible. For example cost management in general level is not very complicated but when going deeper in where the costs have formed there comes many issues that have to be taken considered. For example in real cases when calculating staff costs there could easily be more than 15 levels for wages in addition work hours should be calculated according to time spend on specific project. There also could be monthly- and hour based wages which complicates things even more. If project includes more than couple of people it comes necessity to have organized system to do the calculations, otherwise calculations get really difficult to keep in order.
The team worked well together, each did his/her part of the plan and submitted it when agreed. We had deadline for the work some time before actual deadline, so we could still modify the final version and make it more coherent. After this the Project X Shoe- project plan was published online via WordPress.com. There were no major overlapping in the work, and members had nicely connected their part with rest of the material. Setting clear responsibilities and time frame for the project helped to get the work done on time.
Total amount of words: 4052 (excluding charts)
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