Applications of Process-Oriented Teams in Materials Management

Author(s):

Thomas E. Callarman, C.P.M., CFPIM
Thomas E. Callarman, C.P.M., CFPIM, Associate Professor, Arizona State University, Tempe, AZ 85287 602/965-3888.
John Kovach, Jr. C.P.M.
John Kovach, Jr. C.P.M., President and CEO Orion Management Services, Inc., Simi Valley, CA 93406 805/526-0329

81st Annual International Conference Proceedings - 1996 - Chicago, IL

Abstract. In the recent past, we have all been told how we can build teams to improve performance related to productivity, quality cost and delivery. Many consultants, managers and other practitioners help us to develop team structures, develop cohesiveness among team members, develop team strategies and objectives, etc., but few have truly communicated specifically why it is important in materials management. In this paper, we develop the justification for the use of teams in the processes that make up materials management.

Introduction. Team work has always been a desired state in business, even when the organizational structure encouraged departmental performance standards the were exclusive. The best performing departments were almost always staffed and managed by people who were good at getting support and cooperation from other departments that interfaced with their activities. A buyer/seller relationship has always existed even though pyramidal organizations, with their supportive personnel and compensation policies, inhibited a consistent and high level of interdepartmental team work.

In today's increasingly changing reengineered organizations, team work is a true measure of a company's success. Companies that fail today will evidence a low level of team work present in the operations. We have a new set of criteria to learn and employ as we move forward into the reengineered state of business. For simplicity, we will say that an organization with the traditional pyramidal structure is in the P-state and an organization with a reengineered structure is in the R- state.

Characteristics of a Good Team Player. Since team work and membership on cross functional teams, and particularly materials and services management teams, are becoming standard and mandatory to perform the organization's materials functions, it would seem that good team players would be in great demand. We would be remiss if we did not discuss the "what of being a good team player. In our experience, we have discovered that there are seven basic characteristics that describe a good team player.

  1. The ability to focus on the mission.
  2. The recognition and admission of his/her own strengths and weaknesses.
  3. The ability to place the team's agenda first and to integrate his/her personal agenda with the team's agenda.
  4. The ability to define, simplify and solve problems using facts and logic without involving personal conflicts.
  5. Possesses commitment and enthusiasm.
  6. Experiences and expresses pleasure in others' success.
  7. Accepts praise with grace.

We must acquire these characteristics if we are to be successful in the companies today who are in the R-state and utilizing the team concept to become more and more competitive. If we are lacking in two or more of these characteristics our chances of long term success in a company are slim to none. We need to be resolutely hones with ourselves in assessing these characteristics in ourselves. are we missing any of theses seven? If yes, can we fix ourselves? If no, we need to give serious consideration to working outside a corporate environment.

Focus on the Customer. One of the great strengths of reengineering is the emphasis placed on satisfying the customer. The main emphasis is cantered on the company's ultimate customer who purchases its products and/or services the discipline and practice used to obtain this corporate behavior carries over into general practice and we begin to find customers to satisfy everywhere we look. This corporate practice of satisfying and servicing customers has given rise to the use of the cross functional team to help us understand and communicate with internal customers as well as external customers. Since every segment of our organization is concentrating on serving and satisfying the company's external customer, each of our needs are for support of some activity we are engaged in to attain our goals of supporting, servicing and satisfying our external customers' needs. In the organization using cross functional teams, as we satisfy the needs of our team members, and internal customers, we are consequently contributing to and achieving the corporate goal of serving and supporting our external customers.

Why Do We Need Cross Functional Teams? We have always had to integrate functions. Because of the control requirements in the old pyramidal structure, this integration was primarily accomplished through specific functional control (departments) without ongoing production integration. this approach is like placing a directional sign for the d\start of a walk at the enc\d of the walk rather than at the beginning, with others along the way. It works if everyone does the right things and makes no mistakes. Of course, no one accomplishes this all the time because no one is perfect. Clearly, mistake were not discovered in a timely fashion and corrections were time consuming and costly. With cross functional teams interacting along the walk way (production line), mistakes are discovered immediately and corrected quickly. Less time spent -- lower costs. Are cross functional teams necessary? Yes, if we are to compete in our rapidly changing world.

In the R-state, cross functional teams are critical to the effective operation of the processes that make up the reengineered organization. Since they are essentially replacing what was once called middle management, we have to ensure that no essential management functions fall through the cracks. In the R-state, the Acquisition Through Delivery Process (Materials Management) functionally replaces the manufacturing and sales departments and a host of service and support departments that supported these two. The Acquisition Through Delivery Process may have direct application to a single product or service alone or it can be a sub-process of a large multi-product Acquisition Through Delivery Process. The team should be formed to contain a level of expertise in all applicable functions sufficient to allow the empowered team to make and implement all necessary decisions to acquire, convert and deliver necessary components, service and a quality and cost appropriate final product, on time, to the various internal and external customers.

The Cross Functional Team. The following functions and elements of expertise need to be present for an effectively operation process oriented team:

  1. Function: Materials/Services Management - Acquisition
    Expertise:
    • Material Handling
    • Inventory Management
    • Materials and Production Planning
    • Customer Relations
    • Order Processing
    • Cost Accounting
    • Human Resources
    • Services Management and Welfare
  2. Function: Conversion Management - Production Management
    Expertise:
    • Production Operations
    • Maintenance Management
    • Maintenance Operations
    • Cost Accounting
    • Services Management and Welfare

Whether we have a pyramidal or reengineered company structure, someone has to be responsible for these functions. The principle of authority commensurate with responsibility is an absolute must is a team is going to truly function. One view of consensus is that "consensus will occur whether arrived at voluntarily through discussion directed and complied with after discussion." Regardless of which way we choose to go, it is clear that the team leader is responsible for the decision and therefore must authorize it.

Cross functional teams furnish the means by which we overcome P-state concentration of control in the heads of groups. In order to empower people to make the decisions necessary for the execution of their responsibility, we have to insure that those collective decisions, being made independent of control, are not in conflict with our overall goals, which are to serve and satisfy our external customers. Cross functional teams promote the philosophy of internal buyers and sellers and consequently sensitize the organization to the needs of all customers. Cross functional teams, properly managed, insure that these intra-company customer needs support the needs of the external customer.

The Team Leader. With these principles in full operation the team leader of the cross functional team can feel constant assurances that the company's goals are going to be met. The question arises--who should be the team leader? Some feel that the person responsible for directing the most personnel or in charge of the most assets should be the team leader. These feelings appear to be hangovers from the Pyramidal Days. Actually, the team leader should be the person with the most demonstrated ability to motivate people and minimizing the time necessary for the team to arrive at a consensus. This could be anybody on the team regardless of his/her fiscal or other organizational responsibility, and normally should emerge from team meetings and be chosen by the team itself. In any event, we can see that this latter thinking will produce incentive to be good at motivating people, since to be named "team leader" is similar to departmental promotion in the P-state.

Control in the R-State. All of this discussion raises several legitimate questions. Among these are: 1. Where did the concentration of control go after the P-state? 2. Can we get along without it?

The answer to the second question is simple, no we cannot get along without controls. The answer to the first question is a little more complicated to consider. The controls are still there, but have been dispersed into smaller modules and the basis for control has been reoriented. The old priority of management was 1) Policy, 2) Implementation and 3) Results. Results were measured for conformance to policies. However, since greater control was placed in the policy level, implementation methodology was essentially directed from the policy level. Consequently, results were more a measure of power being exercised at a high level and implementation was measured by how closely it conformed to the direction dictated by the policy level. If implementation did not conform, then changes were made, many times without consideration of the results. Results, under the pyramidal structure, were predicted by the power person through his/her direction of the implementation process. Results were measured by how close they came to the prediction and not necessarily by how good they really could have been. If either the implementation or results were out of "whack, we would change the policy or redirect (adjust) implementation (or both) and repredict results.

Thus, how we did our work was dictated from above and our results were consequently predicted from above. If we followed policy and consequent implementation directions we were a "team player" and desirable even when ewe achieved poor results. after all, results were not our responsibility. In the R-state, policy is made by the investors or their designers. Policy includes or is predicated upon a desired state for our eventual product. Implementation is determined at every level by those responsible for taking the action. functional and cross functional teams insure timely corrections to implementation activities. consequently, since empowered implementations will be measured by the results (the desired state of the final product), all points of implementation must take responsibility for the results. Further, attaining higher levels of final product expectation or even superseding this expectation becomes much more likely than in the P-state. Clearly making each function and each action point within the functions responsible for their results and empowering them to accomplish those results comes closer to satisfying all customers--both those inside the company and those who are buying our final product. This philosophy is what makes successful reengineering possible.

The Materials Management Teams. Let us consider the Materials Management Teams and what they can bring to the cross functional Acquisition Through Delivery Process Team. Within the Materials/Services Management team, we would have the following six sub-teams:

  1. The Acquisition/Materials Sub-Team
  2. The Acquisition/Outside Services Sub-Team
  3. The Acquisition/Inside Services Sub-Team
  4. The Materials Handling/Internal Sub-Team
  5. The Materials Handling/External and Product Delivery Sub-Team
  6. The Inventory Management Sub-Team.

Each of these sub-teams would have membership on the Materials/Services Management Functional Team and by this team's participation on the Acquisition Through Delivery Process Team, we would have a vertical communication line to the customer.

At every interface between different functions throughout the organization, an action point cross functional team would be established by policy. These are the primary internal Buy/Sell relationships. This concept insures a horizontal communications line. Remember, every team is empowered to complete its task responsibility.

Teams and the Reengineered Organization. Team efforts are being used more and more within the reengineered organization because their operation uniquely focuses on the overall goal of today's competitive company which is to provide required products and services to all of our customers as the means to provide products and services to our ultimate customer buying the final product and services. The reengineering revolution is causing us to gather the new techniques and methods that have been developed over the past twenty-plus years by those operating in the P-state, and who were frustrated by their inability to get more competitive or remain competitive in a rapidly changing and shrinking world. The techniques used in the P-state have helped an outdated organizational work philosophy last much longer than it should have.

The reengineering efforts in this country are simply reorganization so that we can change the way we do work by employing these new techniques and many more that will be developed at an accelerating pace as we get more involved. The keys to making these new organizations most effective and productive are:

  1. Functional and cross functional team formation should be automatic wherever functional responsibilities interface.
  2. Teams must be given the responsibility, authority (empowerment) and resources necessary to complete their tasks.
  3. Company ownership must clearly communicate their desired future state and goals.

We are currently in a transition between the P-state and the future. After the R-state who knows, but we should make ourselves part of the process of moving to the R-state and help develop the new techniques and organizational changes that will define the way we will work for years to come.


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