May 15, 2013

Should we centralize or decentralize our function?



Matt Wrye is my guest blogger for today. Matt has his own acclaimed blog, Beyond Lean, and I'm honored to share his insights on Lean Reflections. Matt takes up a perennial issue -- one that's not easily decided -- whether to get some process or service under one big umbrella, or get it closer to users by giving them their own resources to do it themselves. Here are Matt's thoughts...

Centralized vs. Decentralized

Should we centralize or decentralize our function?

Have you ever heard this question come up?  I bet so.  It is a very common question.  The discussion could be around any area of service like procurement, IT, HR or many other functions that I haven't mentioned.

I always seem to get the follow up question of "So what does lean say we should do?"
My simple answer is "Whatever makes the best sense for your company and your situation today."

Most hate hearing this, but it is the truth.  There is no lean perspective on this question. Both sides have good points and bad points to them.

Centralizing a function can help to reduce the number of people doing a the function. This can create fewer points of contact and less confusion in the organization as to who to contact.  A centralized team allows for tighter control on policies and procedures and their adherence to them.  The people in the centralized role will perform the function more often and that can help to really make the process efficient.

Decentralizing a function creates less handoffs in a process.  People in one area aren't asking for people in another area to do the work.  This can cause more errors and add lead time to a process.  People doing the function can be located closer to the customer and be able to understand the needs of the customer better.

As you can see, both options have some great benefits.

What you have to do is understand which one of these options best fits the need of what you will be doing.  If you want tight control over data entry then maybe a centralized group.  If you want everyone to be able to purchase what they need in a timely fashion then maybe decentralizing purchasing is the answer.

Lean doesn't tell you what to do.  If just gives you the lens to look at situation and evaluate what is best to do.

1 comment:

Anonymous said...

I am often surprised that people think that lean has an automatic answer to such a large question. I find the Lean and its tools are best applied and understood at a detail level. Even this question of central or not central. Lean is about Processes. So I would ask what are you doing now? What doesn't work well? Do the processes that don't work well, work better in a centralized or decentralized setting? Or is there some flaw/hang-up/barrier in the process itself and it has NOTHING to do with central or not central question.

thanks for the article

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