Are the right people in the right places and how many do we need?
By Jim Morgan -- Purchasing, 11/18/1999
By the end of the 1980s American business was much trimmer and better able to compete in the world market. Still, there was one more move that many companies felt they needed to make.Reengineering (sometimes called downsizing, right sizing, and restructuring) in the late 1980s was being promoted as the best way to bring the corporate structure in line with its processes. In simple terms, under reengineering a company's processes are matched to the organization that is responsible for carrying them out.
In many cases what the reengineers found when they started to examine the organizational structure of many companies was redundancy. Large numbers of managers (middle and upper) were mainly involved in confirming decisions and actions that had already been made.
As more and more reengineering reports are completed, many heads began to roll. In many cases the big problem was that the old function silos no longer matched up with the processes that were taking place. In many companies, for instance, the supply function was truncated by artificial department walls that separated purchasing from production control, logistics, and finance.
In many cases cross-functional teaming was urged by the reengineers as a temporary move on the way to a completely changed supply operation. Much of the reengineering that took place in this period dealt with allocating the resources needed for world competition. In a growing number of companies--in automotive, machinery, and electronics industries--the best answer appeared to lie in greater use of outsourcing and contract manufacturing.
Actually contract manufacturing is one form of outsourcing. Loosely defined, outsourcing involves the taking of an operation or function traditionally performed in-house and jobbing it out to a contract manufacturer or third-party service provider. Outsourcing gets down to conserving corporate resources for use where they are most effective. Most companies no longer have the resources to be the best at what they do, so they look for suppliers that are strong where they are weak.
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