Organisation design is a key ingredient for the effective flow of information within a business. It allows seamless cross-collaboration between departments, providing employees with a clear understanding of their roles within the context of larger company goals.
For example, a common struggle faced by many companies is achieving an optimal balance between supply and demand.
In the early days of manufacturing, demand was generally higher than supply and options for customisation were limited. In fact, standardisation was seen as the preferred approach to maximise efficiency. Henry Ford’s famous quote, “Any customer can have a car painted any colour that he wants so long as it is black”. This approach reduced the impact of an organisation’s poor information flow, with limited information to communicate between departments.
Navigating differing targets between departments
However, where supply is generally higher than demand, customisation to meet the specific needs of customers is now paramount for manufacturers. The challenge then becomes treading constant tug-of-wars between sales and production teams – one primarily concerned with maximising revenue, the other with keeping manufacturing unit costs low and meeting manufacturing KPIs. The success of today’s organisation hinges on its ability to manage this effectively.
Wendy L Tate, Diane Mollenkopf, Theodore Stank and Andrea Lago da Silva discussed some of the key traits of companies that have been able to successfully manage this perennial problem in their article, “Integrating Supply and Demand“. The key here is to understand how value can be created by promoting collaboration between the supply and demand sides of the enterprise.
All too often, the key performance indicators (KPIs) for production and sales are not interrelated, so each department works towards meeting their own targets without keeping the overall objective of the organisation in mind.
Communication between sales and production can be further hampered by the failure of managers to understand how their area affects the company’s overall efficiency and profitability. A lack of analysis on the impact of production variation on a day-to-day basis can also add to the problem.
Embedding data sharing within the organisation design
Data, even when it is available, is often not shared across the organisation. Cross-departmental meetings tend to happen, at most quarterly, but often no more than annually. This encourages each unit within the company to have a siloed focus rather than concentrating on the overall success of the organisation and how they can contribute to it.
This is especially true in the case of organisations which are dependent on suppliers for their product. Effective information sharing can be the cornerstone to their success.
We came across an example of this during our work at a paper manufacturing company. Once the relevant stakeholders understood the impact of variation in production parameters and it became a topic of daily discussion, everyone became more aware of the impact of their own work on the organisation as a whole. This then became a catalyst to optimising production.
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Improving supplier-retailer relationships and leveraging information
With the rise of retail giants, retailers have become a key party in driving organisational efficiency among manufacturers. In their article “Rebuilding the Relationship Between Manufacturers and Retailers”, Niraj Dawar and Jason Stonelli looked at how these players control market access and influence consumer behaviour.
With Walmart selling 4.5 times more than their largest supplier, Proctor and Gamble, it’s easy to see the power retailers wield. Manufacturers could stand to benefit from this relationship.
Major retailers collect large amounts of data regarding customer buying patterns. This presents a great opportunity for manufacturing companies. By finding a way to access this information, they can leverage it to modify their production patterns.
Foster cross-department communication through behaviour change
An improved organisation design allows organisations to streamline decision-making processes, better align each department’s efforts to support business goals, and remove inefficient management layers. It provides clarity for roles and responsibilities, reporting relationships and importantly balances managerial capacity, creating a platform for better communication and operating effectiveness.
However, the first step to changing the way your departments communicate, and the way your company interacts with both suppliers and retailers, is organisation-wide behavioural change.
At Renoir Consulting, we are specialists in implementing change. Our methodologies to affect and track behavioural change have been perfected for over 25 years. We believe that the outcome of detailed transformation programs should be the full adoption of new ways of working, from the bottom up to the top.
We focus on real outcomes and measurable results. Our consultants work closely with teams within each client organisation to bring about a culture of discussion and analysis, fostering continuous improvement and sustainable new ways of working.
Contact our team to identify and implement growth opportunities for your organisation.
Are your KPIs across departments aligned to support business goals?
