Reference no: EM131933087

Question: If using the bottom-up approach as you suggest, how would you propose going about understanding the criteria that OK will use for the award fee?

My comment on it: The project is relatively new and requires some stakeholders to ensure success. The thing about such new projects is that everything that is done at the startup has to be strategic. It needs to encompass all departments in a way that ensures not only immediate results but also future strategic plans. There is the need to impress new and current clients in a way that will provide recommendations and loyalty to the whole concept.

At the same time, it is important to make sure that we do not adopt a myopic view. In the categories of decision making in every organization with a laid down hierarchy, the top-level management makes significant policy decisions that are strategic goals for longer periods of time like five years. The lower and mid-level management achieve departmental objectives aimed at fulfilling immediate tasks and delivery of results. As such, a bottom-up approach is needed in the planning process.

The whole concept of PickPOCIT is one that is very technical. The fields involve technicians and IT experts, a vibrant and working team constantly monitoring and updating the system to make sure it works at maximum efficiency. Being a significant group in the whole working mechanism, the lower level teams, if well-educated and skilled have the competencies required in the decision-making process. They interact first hand with the system and are better placed when it comes to the planning process.

The higher management may make the decisions, but in most organizations, such teams are made of business executives, financial and management experts who may not have the technical expertise in the IT fields and who will need to be regularly consulting the team members. Hence, the planning method which involves short-term strategies and solutions made first at the lower level and the integrated higher up in the hierarchy, in my opinion, is the best for the idea so as to give lower level management and staff a significant participatory role in the planning avoiding future complications arising from imposed plans.

CONTRACT ANNOUNCEMENT

Inventory Specialists Inc. (ISI) has recently been awarded a $9M contract by OK to design, produce, and demonstrate a prototype automated inventory picker and mailer for their company. OK is attempting to rival Amazon in its ability to quickly get orders in the hands of their customers as quickly as possible.

The system architecture is based on inventory management hardware and software (IMS) developed by ISI and must take inputs from the Automated Order Taking (AOT) software developed for OK by SAP Software and Solutions. AOT can take orders from both customers on-line as well as from company customer service personnel. If the merchandise is in stock, AOT then generates an order output that the PickPOCIT system must be able to process.

PickPOCIT will then automatically locate the product in the warehouse; select the product off the warehouse shelve; box it if necessary, and, depending on the customer selected shipping method (2-day or standard delivery), generate and paste a UPS or USPS mailing label on the box before delivering it to the shipping department. If the shipment is less than 5 lbs, and it is being delivered to an address within 15 miles of the shipping facility, the package will be prepared for delivery to the customer using a drone that ISI will purchase from Drone Delivery Systems, Inc.

If the package is to be delivered by the drone, it must be delivered within 30 minutes of the customer's order. OK will provide the AOT software as "customer furnished equipment (CFE) at no cost to ISI. ISI proposed the PickPOCIT System concept based on the adaptation of its well-proven and low cost IMS hardware and software, and a well-planned OK system integration and performance demonstration program. Previous versions of IMS have been able to:

Take in and process 200 orders a minute

Utilizing "First-In/First-Out" logic, process, locate, package, and prepare for Shipping an order within three minutes

Mean Time Between Repairs - 2500 hours of continuous operation

Software will run on existing OK computer hardware

These performance specifications are not to be compromised as a result of this application for the PickPOCIT Project.

In short, ISI proposed a Commercial Off-The-Shelf (COTS), Best Commercial Practices, Event Driven approach to the development, production, and demonstration of the prototype system. OK stipulated in their Request for Proposal (RFP) that industry specifications and standards be used and that the prototype system must accept input form the AOT software provided as CFE from OK. ISI is formally certified ISO9000 compliant. ISI proposed a project of twelve (12) months duration and was the lowest price bid. The contract is fixed price ($9M) with a potential additional award fee of 3%, split 60/40 on schedule and performance.

STATEMENT OF OBJECTIVES

OK seeks to acquire, install, and test an automated stock picker and mailer capability to get orders to their customers via a drone, UPS, or USPS depending on the size of the package and/or the delivery time the customer selects.

The system must be installed, tested, and operational by next spring in its Baltimore, Maryland warehouse in time for an operational test already coordinated and scheduled for month 11 providing validation two months in advance of "Black Friday" 2017. . If this prototype capability works, OK will purchase 50 PickPOCIT systems for each warehouse, of which there are 50 warehouses around the United States and Canada, in time for the "Black Friday" sales rush in 2018.

PROJECT PLAN SUMMARY

ISI will develop, install, train operators and administrators, and support the demonstration test of the PickPOCIT system.

The PickPOCIT project will consist of:

1. Software refinement in order to implement the SAP AOT software.

2. PickPOCIT installation and test at the OK warehouse in Baltimore, Maryland.

3. System Administrator Training.

4. Providing technical and training support during of an operational test during month 11.

Major Milestone Events for the PickPOCIT project are:

Event Date

Contract Award August 31, 2016

Project Baseline 1 month after award

SEMP (System Engineering Master Plan) 2 months after award

TEMP (Test & Evaluation Master Plan) 3 months after award

PDR (Preliminary Design Review) 4 months after award

CDR (Critical Design Review) 6 months after award

System Integration Tests 7 months after award

Full System Demonstration Tests 8 months after award

System Installation 9 months after award

Operator and System Administrator Training 10 months after award

Support Operational Test 11 months after award

Contract Test Report and all Final Documentation 12 months after award (31 Jul 2017)