Strategic Supply Chain Management - Supply Chain Online

CHAPTER 3 Core Discipline 3: Design Your Organization for Performance 111
GUIDING PRINCIPLES FOR ORGANIZATIONAL DESIGN
There are many ways to structure an integrated organization, and hundreds
of publications on organizational behavior, human resources management,
and organizational change management try to offer guidance.
But there is no off-the-shelf blueprint for designing an effective supply
chain organization. And to compound the difficulty, there is likely to be
limited tolerance for an ineffective design because the supply chain runs
at the core of the business’s ability to generate daily revenues.
The decision to set up an integrated supply chain organization is
only the first step of many, but it is a strategically important one with profound
consequences. As you plan, design, develop, and implement your
new organization, keep in mind these four guiding principles:
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Form should follow function—that is, organization should mirror
process.
For every process, assign an accountable function or individual.
Know, grow, and keep your core capabilities.
Organize around the skills you need, not the skills you have.
Let’s look at each of these principles more closely.
Form Follows Function
Many companies still use a traditional operations model. Yet improving
end-to-end supply chain performance is extremely difficult in an organization
with a functional structure and management responsibilities. This
is why any integration of your supply chain processes likely will require
major organizational change to align your people, processes, and metrics
to support your strategy.
Agere Systems is an example of a company that reorganized to support
a new top-down planning capability. Agere provides advanced integrated-circuit
solutions to manufacturers of personal computers (PCs),
wireless terminals, network equipment, and disc drives. In the mid-1990s
the company made major investments in supply chain systems for enterprise
resource planning (ERP) and advanced planning and order management.
With the new systems in place, it was able to do fully integrated,
automated planning—everything from high-level supply chain planning to
production scheduling for each manufacturing facility—on a daily basis.
The goal was to greatly simplify planning, keep manual intervention to
a minimum, and improve customer service while improving asset utilization.