organizational structure of a small manufacturing companyorganizational structure of a small manufacturing company

The kind of equipment and production technology used in these plants. Doing so will allow you to make changes to the document. This example uses functional departmentalization, which bases the departments on the primary functions conducted by the company. Some of the biggest advantages of having an organizational chart for small businesses include the following: There are many types of organizational charts, but most small businesses will choose one of three: flat, hierarchical, or matrix. When considering organizational design for your business, there are five elements of your business to evaluate, including: 1. Over time he may create a set of huge, tightly interconnected plants that exhibit many of the same characteristics as a process organization: tight central control, inflexibility, and constraints on further incremental expansion. The parent company was confronted with a series of major capital appropriation requests and had little understanding of either their absolute merits or the priorities that should be attached to them. Responsibilities throughout the plant and also throughout the upper management hierarchy are delineated, not by product line, but by segment of the full manufacturing process. Quality and volume levels are not mixed; worker training and incentives have a clear focus; and engineering of processes, equipment, and materials handling are specialized as needed. After this review we will evaluate the advantages and disadvantages of different approaches to organizing a companys manufacturing function and then apply our concepts to recommending the type of organizational design that is most appropriate for a given company. Add design elements to personalize your chart, then share it with your organization. 4. This simplicity in turn requires either a product- or a process-focused form of organization. Culture has a profound effect on organizational structure. This suggests that a company should erect managerial dividing lines between its product- and process-focused manufacturing segments. Once your organizational chart has been created, dont let it languish. Questions of capacity, balance, logistics, and technological change and its impact on the process are critical for such companies and absorb much of top managements energies. 4. To illustrate this, let us consider two polar examplesa product-focused organization and a process-focused organization. To clarify this discussion, look at the two highly simplified organizations shown in Exhibit II and think about what the tasks of the corporate manufacturing staff and plant managers would be in each. These two sets of decisions are closely intertwined, of course. Configure and manage global controls and settings. Organizational charts are gaining huge popularity and rightly so, because they have many advantages. This type of small business organizational chart works well for defining roles and responsibilities and helps visualize the organization's employee hierarchy. 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Some relationships are relatively permanent, like the relationship between a line worker and a manager, while others can be changed as needed, like an ad hoc committee. Weve rounded up some tips, from incorporating headshots and other design elements to considering multiple versions of a chart, and expanded on them below: The best organizational structure for a small business is typically a hierarchical form that reflects the needs and current reality of the company. Or a plant belonging to a product-focused division might act as a supplier to one of the plants within a process-focused division. 3. Growth has four important dimensions: 1. A divisional organizational structure is comprised of multiple, smaller functional structures (i.e. The structural requirements for incorporating formal communication differ from more informal communication, he says. In every manufacturing company, several departments work together to achieve a successful outcome. They will be aware of technological alternatives and trends, current research, and the operating experience of different technologies at other plants. Whether you are starting your first company or you are a dedicated entrepreneur diving into a new venture, Bizfluent is here to equip you with the tactics, tools and information to establish and run your ventures. Sometimes a product is produced entirely by a single plant in such an organization, but more often the plant is only one of several that add value to the product. Consider the large auto companies. Manufacturing companies typically use traditional structures for organizing their resources. The organization chart might look something like that shown in Exhibit VII. Other companies, however, are so structured and managed that a certain rate of growth is required in order for the organization to function properly. Growth realized through geographic expansion is more problematic. Product focus can also encroach on an avowed process focus. Up to this point we have been arguing that a companys manufacturing function must structure and organize itself so as to conform to the companys priorities for certain competitive dimensions. The five types of organizational structures are the traditional hierarchy, flatter organizations, flatarchies, and holacratic. Some small businesses may find that the top of their hierarchy remains unchanging while their teams change based on the project. A companys acceptance of a low rate of growth reflects a decision, conscious or unconscious, to retain a set of priorities in which a given orientation and pattern of diversification are more highly valued than growth. Traditional structures are quite rigid, grouping employees by one or more of the following criteria: Two other types of business structures are contemporary and team structures. Since these plants are technologically based, they tend to be staffed with people who are highly expert and up to date in that technology. But it can facilitate low-cost production if there are cost advantages deriving from the scale, continuity, and technology of the process. This means keeping the organization as stable and focused as possible as growth proceeds. It is surprising that general managers sometimes tend to lose sight of this concept, since the need for priorities permeates all other arenas of management. A manufacturing manager has nicely aligned his organization according to corporate priorities when suddenly he is subjected to pressure from marketing because of customer complaints about product quality or delivery times. A recent example of a company that ventured, with considerable trauma, outside its dominant orientation was Texas Instruments entry into consumer marketing of electronic calculators and digital watches. At one end of the spectrum, a large manufacturer with independent operations in different countries, like an auto manufacturer, could have separate companies in each country. Similarly, an organization that uses the manufacturing facilities of one of its product groups to supply a major portion of the needs of another product group market would be risking the same kind of confusionthat is, a nominally product-focused organization with an organization chart like the one in Exhibit V. Exhibit V One Product Group Serving Another Product Groups Market, Exhibit VI Two Product Groups and a Supplier Plant. But frequently, as with many multinational companies, expansion in foreign countries is best met with an entirely separate manufacturing organization that itself can be organized along either a product or a process focus. Policies that control the movement of goods through the factory or factoriesprocess design, work-force policies and practices, production scheduling, quality control, logistics policies . The purpose of an organizational structure is to allocate and coordinate the company's resources so that management and employees can work effectively. It is prefilled with the names and job titles of three tiers of employee hierarchy but can be easily customized to suit your needs. The shape of your structure may grow wider or longer, depending on how many rungs of accountability your business has and how often they work together. For example, Procter & Gamble's "four pillars" refer to four departmentalization models, which it uses at the same time. This is what we call the companys manufacturing mission.. A vice president would oversee each of these divisions and report to the company president, who is responsible for all three divisions and is normally at the top of a manufacturing company organizational chart. The organizational structure for a manufacturer is usually unique from other types of companies. Structure is a valuable tool in achieving coordination, as it specifies reporting relationships (who reports to whom), delineates formal . The culture helps shape the structure by enforcing some measures. My company culture focuses on teamwork, says Anevski. But companies change and grow over time. Finally, we will discuss the various kinds of growth that companies can experience and how these expectations should affect the organization of the manufacturing function. Others feel more comfortable with a high-volume business, despite the fact that this commits them to severe cost-reduction pressure and often implies low margins. Most production managers report directly to the . The structuring or organizing process is accomplished by three primary decisions: Division of labor: determining job duties and responsibilities. Click and drag the newly pasted icon to the exact spot you would like to place it. They develop multiple uses for their product or material and follow these uses into a variety of markets. The following four attitudes shape those aspects of a companys corporate strategy that are relevant to manufacturing. The corporate level central staff is well removed from day-to-day operations, but it is instrumental in communications and coordination across groups regarding such issues as personnel policies, manpower availability, special services (from computer assistance to training programs), capital appropriation requests, and purchasing. each division within a divisional structure can have its own marketing team, its own sales team, and so on). We use the term company to refer to a business unit that has a relatively homogeneous product line, considerable autonomy, and enough of a history to establish the kind of track record we refer to here. Dominant orientationSome companies are clearly market oriented. Similarly, work-force policies interact with location and process choices, and purchasing policies interact with vertical integration choices. The production department's focus is naturally to get products out of the door quickly while keeping costs down (Note: this is true in at least 95% of manufacturing organizations, with the exceptions of the most mature companies. To achieve organizational goals and objectives, individual work needs to be coordinated and managed. Smartsheet Contributor For exceptionally large manufacturers, it doesn't make much sense to limit the company's organization structure to just one model. Types of Organizational Structures. What Is a Small Business Organizational Chart? Most small businesses won't use the more extensive structures. What Is a Manufacturing Organizational Structure? . One test of whether a company has a strategy is that it is clear not only about what it wants to do but also about what it does not want to dowhat proposals it will consistently say no to. Facilities decisions involve the following considerations: 1. This template is an example of a simple organizational chart for a small business. As the central staff becomes stronger, it begins to siphon authority and people from the plant organization. All Rights Reserved Smartsheet Inc. This typically allows companies to move faster in increasingly global markets while ensuring standards are met across the company regardless of location. A product focus, however, is inherently easier to manage because of its small scale and single mindedness. The manufacturing organization itself must be similarly consistent with corporate priorities. Again and again the root of a manufacturing crisis is that a companys manufacturing policies and peopleworkers, supervisors, and managersbecome incompatible with its plant and equipment, or both become incompatible with its competitive needs. The plants in a process organization can be expected to undertake one task that the central staff in a product organization cannot adequately perform, however. If you are just starting out with a small manufacturing plant and a couple dozen employees, a functional structure may be sufficient. As for a small company, the organizational structure chart must be concise and complete so that the whole company can move forward, with the least expense, normally and smoothly. And, because staff functions are isolated in individual product lines, the corporate staff must coordinate general policies, goals, and personnel across all the product lines. And it is further compounded by many top managers lack of understanding of the kind of changes that are needed, as well as by their unwillingness to commit the resources to effect such changes. Policies that control the loading of the factory or factoriesraw material purchasing, inventory, and logistics policies. Decisions regarding organizational design also will be highly dependent on vertical integration decisions, as well as on the companys decisions regarding how various plants are located, specialized, and interrelated. To customize the look of your chart, click on an icon in your chart. 1. Our position is not that both product and process focus cannot exist within the same company but simply that separating them as much as possible will result in less confusion and less danger that different segments of manufacturing will be working at cross purposes. It guides communication between the team and keeps the team accountable. Verify that names and titles are spelled correctly and that lines of report are correct. The production process comprises five small departments with a maximum of four members each. Slowly, focus disintegrates. The six types of organizational structures discussed here include functional, divisional, geographic, matrix, networked/team, and virtual. Weve provided some examples of the kinds of charts you might expect to find in different small business situations below. It is both difficult and potentially dangerous for a company to try to compete by offering superior performance along several competitive dimensions. BC Campus: Building Organizational Structures, Panmore Institute: Ford Motor Companys Organizational Structure Analysis, Forbes: The 5 Types Of Organizational Structures: Part 1, The Hierarchy, Division of labor: determining job duties and responsibilities, Departmentalization: grouping jobs together, Delegation: assigning authority and responsibilities, Industrial Process: includes pumps, valves, and wastewater treatment equipment, Control Technologies: includes motion control and vibration isolation products, Motion Technologies: includes shock absorbers and brake pads, Interconnect Solutions: includes connectors for several different markets. 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