Page 40 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes
If, however, they were centralized, and dispatched by somebody who had the entire
picture, the whole job could be done with fewer vehicles, let's say 60 trucks. Wow! The
potential savings were tremendous. So, they centralized them. Now, instead of a truck
going from plant A to plant B and coming back empty, the truck could pick up stuff from
plant B and deliver it to plant D. Get the idea?
Well, what happened was that pretty quickly the plants noticed that when they needed an
emergency pick up of parts to continue assembly, they didn't have a truck available. And,
first once, then twice, then again and again, they found they had to stop work in their
plants because they didn't have the parts they needed, and they didn't have the flexibility
to dispatch "inefficient" emergency pickups to get their plants back to work. As my friend
characterized it, "It almost brought us to our knees."
The story ended well, because the top executives realized that their goal was really to
optimize building airplanes (their mission), rather than to optimize fleet dispatching (a
process).
So, they gave the plants back their trucks, folded up the centralized motor pool and went
back to being (happily and knowledgeably) "inefficient." Their plants hummed once again,
and they had learned a valuable lesson about optimizing sub-functions.

In the last thirty-some years, I have been involved with hundreds of companies that have
never learned about optimizing sub-functions, and I've seen the pain and misery that
optimizing sub-functions causes.
Here is another way of stating the message:
It is de-bureaucratizing to take sub-optimized functional departments and disband them,
re-deploying the people into the line units where they will be mission driven, not function
driven. Here are some units to consider: purchasing, personnel, fleet, copying, MIS, training,
strategic planning, budgeting, and research and development.
In a bureaucracy, departments or sub-units are formed and are allowed to, or even directed
to, focus on a sub-optimal mission. "Your mission, in the copying department, is to handle
all of the organization's copying needs at the lowest possible cost."
"Your mission, in the fleet department, is to optimize vehicle efficiency, and minimize the
costs of trucking between all the plants and our suppliers."
Either of these sub-optimal missions could allow these support departments to bring the
organization's mission to a standstill if the organization's mission interferes with the
department's mission. It needs to be the other way around. Departments must support the
organization's mission.

It is de-bureaucratizing to assign individuals or sub-groups missions that are "nested"
within the larger mission.
It isn't true that decentralizing is always better. Centralizing functions for "efficiency" isn't
a great idea, but centralizing for "better support to mission achievers" may be acceptable.
The key test is who decides whether they stay or go? If it's the internal customers, then
centralizing can sometimes actually support mission achievement.
"The fleet department's mission is to support our plants in achieving quality to standard
and extraordinary customer satisfaction, and ensure that the plants-your customers-always
have whatever vehicle they need to move parts and materials so that the plants always
keep running."
Contd...

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