The New Supply Chain Organization
Which operational model should you choose? Stratex Networks successfully meets the challenge of supply chain reorganization. SHOSHANAH COHEN
enior management teams across many industries are increasingly realizing how strategic their supply chain is to business: that it is, in fact, one of the critical success factors—for profitability as well as productivity. Yet configuring a supply chain strategy that aligns with the business strategy, and organizing both people and process around that strategy, are no easy matters. Just as there is no universal definition for the supply chain organization, there is no one-size-fits-all approach for crafting that organization. There are, however, several characteristics of effective organizations that should be incorporated into any design, and we’ll address them here: • The organization is aligned to support the overall business strategy. • There is agreement on what internal core competencies are needed. • The organization is capable of executing all required supply chain processes—whether through internal capabilities or strategic partnerships with companies that can provide required competencies. • Metrics are in place to provide objective information about organizational effectiveness. • A set of practical design principles is used to structure and populate the organization. In today’s business climate, of course, adaptability and agility are key. Your strategy may be changing more frequently than ever, and your supply chain organization needs to keep up with the changes you’re
making, whether large or small. Such restructurings may require that you redefine roles and responsibilities to focus on changed objectives, reduce process complexity, or develop new competencies and skills for newly required capabilities. Or you may simply have the need to “clean house” or redeploy resources that are not performing to expectations. Organizational change is also required as you make changes in how you evaluate supply chain performance. In a traditional functional organization, supply chain metrics are often designed to motivate behaviors that optimize performance within a specific department or function. As your supply chain strategy and associated process design evolve, you will need to embrace a new set of metrics designed to motivate behaviors that optimize performance for the company as a whole. If your organization is not restructured in a way that facilitates achievement of these objectives, target performance levels will not be reached, and the entire strategy may be questioned. The converse is also true: The metrics you put in place to measure supply chain performance must support and encourage the behaviors you expect of the people within your organization.
Design Considerations What are the issues and challenges that you should consider in designing the appropriate organization for your supply chain processes and strategy? Traditional opera1
© 2003, 2006 PRTM
tions organizations are functionally oriented. That is, key supply chain activities and associated groups report directly to their relevant functional managers. A typical functionally based organization may have logistics (receiving and shipping) and manufacturing reporting to an operations vice president, and separate procurement and customer order-management groups. This type of organizational structure was typical of many companies in the 1970s, and it is still quite common today. In the 1980s and 1990s, companies began to transition to organizational structures that grouped many, but not necessarily all, core supply chain functions within one department. Many of these companies still had the position called vice president of operations, but the responsibilities expanded from a purely functional orientation: These managers now had responsibility for management of the supply base and fulfillment of customer orders
in addition to manufacturing and physical logistics....
Links: © 2003, 2006 PRTM
© 2003, 2006 PRTM
The restructuring was completed over a period of several months, roughly following the schedule of the manufacturing transition
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