SEGMENTING THE ORGANIZATION INTO ITS HORIZONTAL COMPONENTS

So how does this phase of the effort progress? Step 1 is to identify the horizontal
components of the organization, using a technique called supply chain mapping.
By mapping the product flows and assets used, self-contained product families
can be identified. These families will form the basis of the new organization
structure.
Each map proved to be a self-contained business within the
overall business. The products in each map used a unique set of assets and thus
could be managed in isolation from other product families. In this way, the firm
identified the organizational components of its new business model.
With the elements of the new organizational structure identified, the business
can establish the key metrics that govern each product family � a mixture
of financial and nonfinancial measures. Nonfinancial measures include such
elements as:
_ Lead time
_ On-time delivery and fill rate
_ Customer service measurements
_ Sales forecast accuracy
_ Stock record accuracy
The financial measures are, of course, the profit and loss account and balance
sheet for the product family, together with the return on net assets (RONA)
calculation that becomes possible. Figure 4.5 shows the product family �dashboard�
that became the governing reference for changes at Clarks. In this case,
the firm decided to segment its business by sectors and major product lines. The
key performance indicators were then arrayed against each major sector so that
performance could be easily monitored across the internal organization. Similar
dashboards could be constructed for other firms in other industries with the
pertinent metrics.
To effect real collaboration within a
business organization, the best practices attained by various business units or
functions must be shared across the firm, resulting in at least optimized internal
processing. The four key roles in the new horizontal organization are:
_ Product family owner � A determination of who holds responsibility
for the processes associated with each particular product within the
portfolio
_ Process owner � A further determination of who is responsible for the
key process steps across the end-to-end value chain associated with the
individual products
_ Skill owner � Identification of those people who possess the necessary
skills to reengineer the processes involved and collaborate with other
parties to bring the enhanced processes as close to optimization as
possible
_ Channel to market owner � An often overlooked role, in which the
people necessary to assure the efficient delivery of products and services
are identified and their channels to market explicitly identified, so that
optimized conditions can again be pursued