06/22/16 5:36 am

There was a time when many companies were able to function inside silos or specific areas of expertise.

But today’s businesses need to tear down these silos, and silo mentality to survive in a more agile and complex environment when companies are often dealing with a global supply chain.

Yet that isn’t the approach every company takes. As author Ron Ashkenas put it in the Harvard Business Review last year:

“Many organizations still have hierarchical, siloed, and fragmented processes and cultures. In fact, having to cope with a fast-changing global economy has led many companies to create even more complex matrix organizations, where it’s actually harder to get the right people together for fast decision-making.”

Taking Decisions Out Of Silos

Ashkenas argues that companies need to use the “Work Out” process developed by former GE CEO Jack Welch. Work Out was designed to break down bureaucracy and bring together people from different levels of the organization to solve problems.

In other words, Work Out was taking them out of their silos.

Ashkenas writes about working with a major high-tech engineering company, where executives were frustrated with over-budget, behind schedule programs. As the company investigated, it found its “fragmented, geographically dispersed matrix structure made it very difficult for the program managers to coordinate efforts across functions, keep everyone focused on the cost and delivery goals, and get people to reach consensus.”

So this company began holding Work Out sessions, bringing together everyone involved in a particular customer program: the program manager, the key engineers, and managers from sectors like finance, sales, and procurement. Their goal was to find a consensus for a solution in two days, and come up with a way to reach that solution.

He also writes about another firm – this one a consumer products company – that began holding forums to improve communication across boundaries, whether they were different levels of the company hierarchy, or working in various divisions.

At these forums, team leaders receive input from various stakeholders – product development, marketing, supply chain, etc. – and use that information to make decisions on cutting costs and increasing market penetration.

How Do You Change The Silo Mentality?

Here are some questions to ask yourself when looking at functional silos in supply chain management:

  • What incentives do your department heads have to make changes? Are you encouraging the silo mentality by basing performance reviews, bonuses, and other compensation simply on the bottom line?
  • Are departmental managers so intent on meeting targets that they miss the bigger picture?
  • Are long-time practices and personal relationships keeping them – and you – from doing an objective review of what is best for the company?

These might be difficult questions to face, but by knocking down the silos you’ve constructed, you can add significant savings to your supply chain without sacrificing quality.

Escape The Silo With The Right Contract Manufacturer

At Mars International, we believe that communication is a key piece to a project’s success. By communicating early and often, you can mitigate the impact caused by production problems or supply chain issues. We make sure we communicate externally and internally, keeping in regular contact with quality assurance personnel at our manufacturing facilities.

Contact us today and learn more about how we can help your business break out of its supply chain silo.

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