Scalable Organization Structures and Evolution

 

Below is a good example of a balance organization structure in Supply Chain Management. It’s scalable for the business.

Best in Class Supply Chain Organization:

 

Want to be a "best in class" organization? Then follow the lead of highly successful companies and adopt these 10 practices in your own operation.

• Establish a governing supply chain (SC) council- Note: Best results for organizations – have representatives on the SC council from across your Lines Of Business (LOBs) and Special Product Groups (SPGs)
• Properly align and staff the supply chain organization
• Make technology work for you
• Establish alliances with key suppliers
• Engage in collaborative strategic sourcing
• Focus on total cost of ownership, not price
• Put (all) contracts under the supply chain function
• Optimize company-owned inventory
• Establish appropriate levels of control and minimize risk
• Take green initiatives and social responsibility seriously

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Figure 1] Example of a supply chain management organization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MIT’s slide above and points below regarding Organization Design and Trade-Offs to be consider:

 

1. Strategic vs. Operational Coordination

i. Where in organizational Hierarchy does supply chain belong?

ii. Is it a peer to Operations, Manufacturing, Sales, etc..?

 

2. Line vs. Staff Coordination

i. Where do line activities occur?

ii. Does supply chain activity occur in within all areas or only staffed in supply chain?

 

3. Centralized vs. Decentralized Coordination

i. Which activities are best administrated and controlled from a central (headquarters) location?

ii. Which activities are best administrated and controlled from decentralized (regional) locations?

iii. How is coordination made between regions, countries, business units (BUs), channels, divisions, etc.?

 

Having the right people, good processes and best technology for scalable and improved business.

Key is finding balances and trade-offs between the three.