Matrix Management

Matrix management in the supply chain

Supply chains are becoming an increasingly important part of large organizations. They are a significant source of competitive advantage and represent a large portion of the cost base of most organizations. But is matrix management relevant to people in the supply chain?

Supply chains incorporate a number of jobs that have traditionally been organized functionally – purchasing, manufacturing, logistics and distribution, etc. Each of these may have very different needs. Purchasing, procurement and logistics, for example, are becoming increasingly global, and can include very specialized roles. Manufacturing is primarily local with most people based in physical locations.

Because supply chain activity tends to cut across the traditional functions, it is usually a prime example of matrix working.

It is clear there are huge advantages to be gained from all business functions working from a common set of systems and information. In the operation of a supply chain, the level of integration provided by common ERP systems may mean that a complex dual reporting structure with multiple bosses is largely irrelevant. We could therefore continue, in theory, to use a functional and vertical organizational structure across the different elements of the supply chain, provided that a sufficient coordination is provided by the shared process.

We (at Global Integration) are seeing an increased use of matrix management within the supply chain to integrate the way people work across functional silos, with many organizations having introduced a formal matrix organization structure to reflect this.

It seems likely that supply chain organizations will become increasingly integrated in terms of management reporting lines as well as systems.

But be warned! They may well develop into ‘horizontal silos’. If this is the case, we need to find capability building mechanisms to maintain and develop the specialist skills needed within the supply chain.

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