Proper Organizational Design

Organizational design refers to the process of assessing and selecting the structure and formal system of communication, division of labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives, including supply chain objectives.12 Although formal charts illustrate an organization’s formal design, they also present an incomplete picture. Organizational design is much more than a series of lines and boxes across a chart.13 Exhibit 1.5 highlights the more important features that promote the achievement of purchasing objectives.

The use of teams as part of supply chain design will continue to be important. However, managers should use teams selectively. Few studies have established a clear connection between teaming and higher performance, and even fewer have quantitatively assessed the impact of teaming on corporate performance. The use of organizational work teams to support purchasing and supply chain objectives does not guarantee greater effectiveness.