The
MBA program in Supply Chain Management
at NC State University is unique among business
schools. With the support of the Supply Chain
Resource Consortium, an industry/university
partnership, the program brings the industry into
the classroom, involving students, faculty and supply
chain professionals in finding solutions to the
real industry problems. This project-based approach
to education reflects the new model for business
schools described by Peter Drucker.
For
more information...
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Peter
Drucker...
"Management is a practice, like medicine;
and the model should have been the medical school,
where the bulk of the teaching, especially the most
important teaching of the M.D. in his or her residency,
is performed by practitioners. Unlike medicine,
where you can bring sick patients into the classroom,
business education does not allow you to bring an
organization into the classroom. You can, however,
bring experience in through your faculty and students.
Business educators should be out as practitioners
where the problems and results are."
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8/4/04
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The
Role of Organizational Design
by Rob Handfield |
More
organizations are seeking new approaches to compete
through a competitive supply chain strategy. Many
of these strategies involve the following elements.
| • |
Development
of a centrally led supply chain organization
that is not fragmented and aligned with corporate
strategic initiatives, with the authority to
collaboratively lead the behavioral and cultural
changes required across business units. |
| • |
Conscious
development and modification of supply chain
structures to meet business requirements |
| • |
Leveraging
of corporate spend |
| • |
Building
of cross-functional teams that reach across
organizational boundaries to manage the supply
chains to achieve strategic goals and provide
exceptional value to stakeholders. |
| • |
Integration
of key suppliers into cross functional teams
to leverage suppliers skills, knowledge and
capabilities for each organizations mutual benefit
|
| • |
A
disciplined focus on logistics excellence through
the use of standard processes, practices, technology
and sharing of information to ensure supply
chains are effective, efficient and continuously
striving for the next step in performance improvement |
| • |
Being
a Customer of Choice through rapid payment,
equitable and ethical treatment of our suppliers |
Execution
of these strategies is contingent on a supporting
organizational structure. Recent research validates
the fact that supply chain improvements are achieved
when organizations recognize the importance of SCM
at a senior level. Specifically, successful organizations
are characterized by:
| • |
A
Senior executive responsible for SCM who reports
to the CEO |
| • |
A
corporate committee that is actively involved
in providing direction to the implementation
of SCM strategies |
| • |
Coordination
of strategic initiatives accomplished centrally
with the active involvement of business units |
| • |
Ownership
for operational aspects of SCM remaining with
operational business units |
| • |
The
focus of SCM operational aspects moving from
transaction execution to coordination and synchronization |
| • |
Common
services centralized for improved efficiency
and control over strategic initiatives and coordinated
process planning across all business units. |
Recent research suggests that leading organizations
are adopting organizational structures with the following
characteristics:
| • |
A
Senior executive responsible for SCM who reports
to the CEO |
| • |
A
corporate committee that is actively involved
in providing direction to the implementation
of SCM strategies |
| • |
Coordination
of strategic initiatives accomplished centrally
with the active involvement of business units |
| • |
Ownership
for operational aspects of SCM remaining with
operational business units |
| • |
The
focus of SCM operational aspects moving from
transaction execution to coordination and synchronization |
| • |
Common
services centralized for improved efficiency
and control over strategic initiatives and coordinated
process planning across all business units.
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To
drive value into the organization, the supply chain
management organization must report to the CEO.
Supply chain transactions will become largely automated
(80% of transactions) to allow Supply Chain Associates
to focus their energy on value-added supply chain
strategies and processes.
This organizational model is best described by Peter
Drucker’s management concept of “federal
decentralization”:
| Any
organization requires both strong parts and
a strong center. The term “Decentralization
is actually misleading—though far too common
by now to be discarded. Federal decentralization
requires strong guidance from the center through
the setting of clear, meaningful and high objectives
for the whole. The objectives must demand both
a high degree of business performance and a
high standard of conduct throughout the enterprise”
(1). |
Organizational capabilities and effectiveness are
significantly impacted by horizontal or collaborative
practices such as cross functional teams, information
sharing, and participation / involvement in decision
making by customers and suppliers (including internal
to the company but outside of the organization)(2).
These practices increase horizontal expertise and
effectiveness.
It will require significant changes to deploy this
organizational model. Most company supply chain
structures are fragmented and not aligned with senior
management initiatives. However, structure must
follow strategy, and not the other way around.
Sincerely,
Rob Handfield
References:
(1) Drucker, Peter, The Practice of Management,
1956, p. 214.
(2) Galbraith, Jay R. (1993). Competing with Flexible
Lateral Organizations. 2nd Ed. Addison-Wesley.
Reading MA. Pg. 1-11.
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