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by David R. Brousell, MA Editorial Staff   How should manufacturers organize their companies to compete in the global marketplace of the 21st century? Should there be tight, centralized control of all major processes or should the model be decentralized, with local control by divisions and business units over how they do things and what systems they run? The questions are timely and relevant because many manufacturers these days are trying to establish common business processes and practices in their companies. This transformation comes in response to the globalization of manufacturing. Now, more than ever before, manufacturers are realizing that to grow profitability in their hyper-competitive markets they need to be more innovative in what they make and in how they manufacture. They must fully leverage every physical and human asset, and they must integrate their information systems, in the back room and on the factory floor, to a greater degree than ever before. These trends were center stage at the recent ARC Advisory Group conference in Boston. In a talk entitled "Enterprise Interoperability Challenges," Jim Porter, chief engineer and vice president of safety, health & environment, and engineering at DuPont, described how DuPont's business transformation efforts -- slogan: "The Power of One DuPont" -- are closely linked to systems interoperability. The problem, though, is that industry standards for interoperability are sorely lacking. Porter referred to a NIST report that estimates that the cost of inadequate interoperability in the U.S. capital facilities industry is $15.8 billion per year, a figure he considers low. For DuPont and other companies in his industry to achieve the interoperability they need, Porter called for the development and adoption of process industry data integration standards and a shift to what he called a "future state": the information-centric enterprise. Porter's emphasis on information may be the linchpin of the organizational question. If DuPont and other companies do indeed rationalize their automation and information systems, integrate them and achieve real interoperability, and truly create knowledge by allowing personnel to access their vast storehouses of data in order to make timely business decisions, will the system interdependencies force upon them a centralized operational model? Will the system dictate how things are done? My sense is that today's corporate trend toward rationalizing and integrating systems is unprecedented in scale and scope, and could break historical patterns of pendulum swings between centralized and decentralized models. After all, the emphasis today isn't just on integrating internal systems. Now, companies are creating deep system interconnections, and interdependencies, in business ecosystems involving numerous partners and suppliers. Nevertheless, Porter and others at the ARC conference felt that a hybrid model is the most realistic approach. "Marketing and sales are purely decentralized organizations," noted Manjit Babbra, chief technology officer at Philip Morris International. "Every market is different." "If I have a standard process and automate it, it will lock down," Porter said. "But it's hard to lock down functional excellence by a system. Centralize for efficiency, decentralize for effectiveness." What's your view on which corporate organizational model will prevail? Write to me at Dbrousell@thomaspublishing.com. |