The MAJIQ Blog

Enterprise Operational Roles - Centralized Logically or Physically?

Aug 22, 2018 8:03:06 AM / by David Pawelke

David Pawelke

Who, what, where? 

We talk to a lot of customers about optimizing roles and responsibilities for people within their supply chain delivery organization. One fundamental question that often gets raised is, “What activities can people perform across the enterprise (versus locally), and where should they be located?” For a long time, the trend has been to have people in proximity to the mill operations. This close proximity was especially true for machine & trim schedulers as well as transportation planners. logical physical quote paragraph 1_1Last minute changes on the weekend or re-planning after downtime in the middle of the night you are heremeant these people were coming into the office to clean things up. Location of Customer Service folks has often depended on a company’s product and customer diversity. In enterprises where each mill makes different products, or they are in different geographic locations customer service is often set up along product lines, where reps are located near the mills where their products are produced.  In some of these cases, we have seen organizations encourage (require) their customers to contact two or different people to order different products from them. One thing that is true for all our customers is their desire to have the most knowledgeable people providing the best service to their customers. The question remains, where can they be located to provide that service while streamlining the operation?  There are a couple of stories I want to share.

Centralized Services – One Hundred and Ten Stories

The Sears Tower, (now the Willis Tower) in Chicago Illinois was designed and built by the Sears-Roebuck corporation to support their goal to fully centralize all of their non-store employeesshutterstock_569684029_willis towerinto one large location, getting rid of a regional autonomy model built after World War 2. The initial plan in 1969 called for 3,000,000 square feet (280,000 m2) of office space to house everyone. In the design years leading up to construction, the company's optimistic growth predictions pushed that number up to 4.5 mil sqft. When completed in 1973, the Sears Tower was 110 stories, making it the tallest building in the world, surpassing the World Trade Center twin towers in New York City which only held the title for less than two years. One of the reasons Sears centralized the way they did was to enable more control of the regional business model they had created. The divided hierarchy had grown more and more distant and autonomous, and Sears felt it was

 crucial to have a more consistent approach and predictable outcomes across the company. Better communication was going to be key, and in 1969 when the Sears Tower plan was hatched that meant bringing people together in one place. The Sears Tower held the record for tallest building in the world until 1996 when the Petronas Towers were completed in Kuala Lumpur, Malaysia; the same year that Sears moved their last employees out of the Sears tower to smaller office space outside of Chicago. Nine years later, Sears, was sold to K-Mart. Centralization wasn’t the only reason that Sears retail business declined; however, I believe that Sears executives would agree, they suffered the further they got away from their customers and their core.

 Decentralized - One Story 

IBM embraced remote employees early on, actually installing a few remote terminals in key people’s homes as early as 1980. By 2009, long before most of us had heard of telecommuters 40% of IBM’s, then 380,000 employees were already working from home. Driven primarily as a method of cost-cutting, by 2009 heavy use of remote employees had reduced IBM’s office space by 78 million square feet, saving about $100 million annually, and created a gain of $2 billion in sales of 58 million sqft of office buildings.

In May of this year, IBM announced that they were rethinking remote employees and bringing people back into IBM offices, especially in the areas of R&D and Digital Marketing. As a self-styled innovation company (they had 8800 patents over the last 12 months) they feel like collaboration and new ideas will flourish quicker and allow them to bring more products to market. After 20 straight quarters of declining revenues and tens of thousands of layoffs over the last few years, they hope this will help spur more profitable times.

New Tools - New World?

Physical centralization of organizations and departments is still widely done. Often, these are done at corporate headquarter locations which tend to be in higher cost of living in urban areas, which helps companies with recruiting executives. Centralizing is often used as a method to refresh an operating group and get organizations out of well-worn ruts. However, it can hurt with recruiting and retaining operational talent that understands your customers and your products. New technologies are changing a lot of these practices though. 

logical physical quote paragraph third

Unifying Communication?

With the rapid onset and adoption of unified communications, tools like phone, messaging, video conferencing, and broad access to high-speed internet, and the ability to deploy these tools quickly and at a much lower cost versus the significant investment in years past is significantly changing a lot of how we can work. It certainly has increased people who can work from home either part-time, when needed or more and more full time. Statistics vary as to increased or decreased productivity, again depending on culture, personality, and roles. A lot of companies used to move their A player employees to their corporate location as they moved up the food-chain. That is changing, where a better quality of life and lower cost of living play into both the employee and employer's advantage to keep those employees where they are. For key knowledge roles like customer service, machine, and transportation scheduler's, we see more and more what I will call ‘Logical Centralization.' They are staying put at the production facility but taking on a greater role across the enterprise to perform those functions across facilities.

IT Communication Tools are not enough

Having the right people in the right place, with the IT tools to collaborate effectively isn’t enough. You need software solutions that give your operations up to the minute visibility of orders, production, downtime, inventory, and shipments. Not a system built through spreadsheets and stagnant reports. You need an integrated software solution that provides you the ability to see, adapt, and action things all from one place and have the capability that lets you leverage your talent across your mills and locations.

MAJIQ's Elixir Solution - Enterprise Visibility and Actionability

MAJIQ’s Elixir solution provides this enterprise-level visibility and optimization tools to allow your organization to act on it. Elixir lets you think and see globally, and act locally regardless of where your people are based. One application, one login, with the capability to bring best practices throughout your organization. We have worked with customers to improve transportation, scheduling, and customer service by using the most talented people, where they are located, working for the enterprise. With these Elixir our customers have reduced costs, streamlined operations, trained new people easier and quicker, while significantly improving and maintaining perfect orders and on-time deliveries.

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MAJIQ has provided Manufacturing Execution Systems and Integrated Planning, Trim Optimization, and Sales Order Processing Solutions to the Pulp, Paper, and Nonwovens industry for 30 years.  Our Elixir product recently added integrated Transportation Management, as well as new Web integrated Warehouse Management tools to better improve deliveries, inventory accuracy, and reduced handling.  

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Topics: Industry, centralization