'You see, Barak,' I said, while his wife Michelle served the soup, 'businesses are structured in a way that's not logical to the product and money flow.' Firms are organised in functional silos, I explained, while a supply chain crosses all business functions, with the silos creating needless barriers. Most departments have lost sight of the customer. So why stick to this structure?
Ok, I wasn't invited to the Obama's. But if I was, this is exactly what I would want to discuss. If the most influential politician alive was interested, I would tell him the structural flaws of modern firms impede product and cash flow and the ability to meet customer demand.
The typical organisation chart is like a pyramid. In reality, a business consists of a 'finance pyramid', a 'purchasing pyramid', a 'commercial pyramid', a 'personnel pyramid', and so on. Each one has its own rules, performance indicators, and reporting mechanisms.
Now consider the communication and collaboration breakdowns that supply chains suffer when progressing products from their 'procurement pyramid' to their 'production pyramid' and then their 'logistics pyramid'. Next to their struggles, some of Obama's diplomatic challenges feel like a bit of a doddle!
Maybe the advantage of the pyramids lies in the information flow. But wait: everyone always complains about not being kept in the loop, being told too late, or lacking the visibility. So that cannot be the reason for it.
Surely it is for the customer's sake? But where do they come in when, at the end of each month or year, the 'finance pyramid' forces the 'logistics pyramid' to run down its stocks, irrespective of customer demand.
Actually, I can't think of a good reason. Functional silos don't help a firm run its supply chain and effectively meet customer demand.
The phone is ringing I have to go now. It's probably Barak Obama calling to invite me round for dinner ...
Hugh Williams
Founder of supply chain planning specialist consultancy Hughenden