Even well-managed organizations don’t always work as efficiently and effectively
ID: 345983 • Letter: E
Question
Even well-managed organizations don’t always work as efficiently and effectively as management would like. At Hewlett-Packard (HP), billions of dollars of products—from computers and diagnostic devices to toner cartridges—are shipped each year. Customer orders come in twenty-four hours a day, 365 days a year. Nearly 16,000 different products are requested daily and must be shipped from six different ware- houses—often located thirty or more miles apart. It often takes weeks to get the products into the cus- tomer’s hand. This is a serious problem with custom- ers who have contracts with HP stating that deliveries are to be made in four hours or less. That means that from the time a customer calls the HP customer ser- vice line, they should have their replacement part and be back in operation within four hours—irrespective of where the customer is located!
One characteristic that distinguishes an outstanding organization is its ability to know when problems need to be addressed, and then proceed to do something about it. The job of correcting this problem fell on the shoulders of HP’s distribution supervisor, Loretta Wilson.
Loretta quickly assembled a team of experts—both from within and external to the organization. These included logistics, systems, and operations experts. They quickly assessed the situation and established their goals. In essence, the team wanted to “find smarter and simpler ways to handle parts fewer times at several points in the distribution channel.” They concluded that a new, high- tech facility was needed—one in which the distribution process could maximize efficiencies. The team designed a 405,000-square-foot facility and specified the precise equipment and layout of the operation. For example, sort- ing machines can sort more than forty-five pieces a minute, enabling the company to process more than sixty thou- sand products each day. Inventory is now stocked after it’s received in the warehouse in minutes—rather than the nearly eight days it previously took. Packing and crating is done with the assistance of robotics. Workstations for employees were redesigned to reduce their involvement in handling products. And a special shipping dock is equipped such that shipments can be held and their weights deter- mined right up to the moment that Federal Express backs up to the dock. The cargo is then immediately placed into the trucks and the drivers are sent to the airport. As the FedEx drivers head to the airport, they use their cell phones to call in the cargo’s weight and drive to a waiting aircraft—and the cargo is off to the customer.
Was Loretta’s team successful? Yes. The new dis- tribution facility is getting its orders filled within the four-hour limit as contractually required. Additionally, by consolidating the previous six independent facilities into one operation, productivity has risen by more than 33 percent.
Responding to the Case
11-14. Why do you think a team was needed for the design of a complex project like the distribu- tion center for HP? How would you classify this team?
11-15. Do you believe that the advantages accrued from specialization (see Chapter 4, “Organizing”) are lost or diminished when individuals from different specialties are put together on a team? Discuss.
11-16. Do you think Loretta Wilson’s team achieved its objective? Explain.
Explanation / Answer
11-14. Why do you think a team was needed for the design of a complex project like the distribu- tion center for HP? How would you classify this team?
I believe that gone are the days when one team would do all the things, today the business world is more focused on specifications and professionalism, therefore a team was required in order to design a complex project like the distribu- tion center for HP because the service of HP was lagging with respect to the industry standard. They needed to deliver the products within 4 hours from a order is placed but they were unable to meet the requirement so in order to improve and develop the process such a team was required.
The team can be classified as a special team of professional consultants, whose objective is to improve the total process of HP so that they can meet their requirements.
11-15. Do you believe that the advantages accrued from specialization (see Chapter 4, “Organizing”) are lost or diminished when individuals from different specialties are put together on a team? Discuss.
No, such things do not happen always because if we look at this issue that HP was experiencing, it was better to form a single team with professionals from different fields so that they can work together for the collective development of the organization's process. The advantages accrued from specialization may be enhanced while working in such a project because they get exposure of such critical issues which make them developed.
11-16. Do you think Loretta Wilson’s team achieved its objective? Explain.
Yes, Loretta Wilson’s team achieved its objective because the new dis- tribution facility is now able to fill the orders within the four-hours from placement of the order which was a mandate in the contract, along with that the productivity of the organization has increased by 33% because they have consolidated or merged the previous six independent facilities into just one.
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