Talk:Work breakdown structure

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PMP Logistics is a company based in Sydney that specialises in the distribution of a wide range of cold food/drink items to two major super market retail chains in NSW. The operation is centered on a large Distribution Centre (DC) in south-west Sydney. The DC is specifically built to handle food/drink items that have to be stored at very low temperatures. The DC works on a daily cycle where orders for cold food/drink items are received by 7 pm each day from the 125 stores of the Low-Price Supermarket chain and from the 135 stores of the Save-a-Lot Supermarket chain. These orders are faxed in from each store to the DC. The store orders are then manually entered into an Oracle database system and a consolidated order for each of the 12 major food/drink suppliers is produced. The consolidated orders are faxed to each of the suppliers by 10 pm each evening. The suppliers are contracted to deliver the ordered food/drink items to the DC by 3 am the following morning. After the consolidated orders are sent to the suppliers, the Oracle database system at the DC is used to prepare picking slips for each store. When the consolidated orders from the suppliers come in to the DC, warehouse staff pick the required items for each store, put them on pallets and load the pallets on PMP refrigerated trucks that leave the DC each morning at 5 am to deliver to the 125 Low-Price stores and the 135 Save-a-Lot stores by 8.30am each morning. Since they outsourced their supply chain management for cold food/drink items to PMP Logistics five years ago, Low-Price and Save-a-Lot have both been relatively satisfied with the cost of the service and with the quality of on-time/accurate delivery to their stores (currently meeting the target of 95% on-time/accurate delivery). However, a new competitor has recently entered the retail market in Australia and both Low-Price and Save-a-Lot are seeking to lower operating costs and improve the on-time/accurate delivery rate to 99%. Initial analysis and investigation has revealed that this can be best achieved by replacing the fax communications between the stores and the DC, and the DC and its suppliers, with an Internet-based EDI communications system. This would require that the central computer site at the PMP be upgraded in capacity to enable a website to be hosted (as well as the current Oracle database). The website would provide EDI software to allow the stores to send their daily orders via the internet to the Oracle database and orders to be sent from the DC to the suppliers also via the internet. The website and EDI software will be purchased, not developed. It was decided that for stability, the internet connections would initially utilise the public network with a simple 56KB dial-up modem connection at each store and supplier. The 12 suppliers already have adequate PC/modem capacity, however each of the stores would have to be equipped with a Pentium IV PC and a 56KB modem. Security is of concern and to safeguard the network a virtual private network (VPN) will be created using purchased encryption and firewall software that will be hosted on the upgraded PMP central site computer. Once the new EDI system has been fully installed successfully, it is anticipated that the 20 staff currently entering store orders into the Oracle database from the faxes received every evening, will no longer be required and can be relocated. No extra staff will be required at the stores or at the suppliers, as the staff who currently prepare/receive the faxes will now be trained to use the EDI system. Two staff in each store and each supplier will have to be trained to use the Internet-EDI system effectively. The project is not seen as a technically demanding as all software and hardware is well proven and will be purchased and tailored, not developed. The project challenge is in the effective sequencing, structuring and rollout of the project tasks. Rough estimates of the length of time the project will take range from an optimistic 4 months, to a pessimistic 8 months. Most IT staff and business analysts think that a most likely timeframe is 6 months. A rough estimate of costs and benefits has been done as per the table below.

Costs Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Central hardware upgrade $1.5ml PC hardware/modems $600k Website/EDI software $300k VPN software $200k Project staff costs $800k Ongoing support $300k $400k $400k $500k $500k Benefits Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Staff reduction $700k $700k $700k $700k $700k Net revenue impact of 99% on-time/accurate delivery $0.4ml $0.9ml $1.1ml $1.5ml $1.5ml Note: Year 0 refers to project startup costs A rough, initial estimate has also been done in terms of the full-time project staff required and is as follows: • Project Manager (1) • Business Analysts (2) • Hardware engineers (2) • Software engineers (2) • Network engineers (2) • Trainers (2) • Accountant (1)