Even well-managed organizations don’t always work as efficiently and effectively

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

1.  A team was needed for the design of a complex project like the distribution center for HP because of the complexity of the problem. Since the whole logistics and distribution issue needed to be sorted out and such a complex problem cannot be handled by a single person, so a team was required to brainstorm various ideas, do proper planning, implement strategies and track the progress. In handling logistics issue, the team should typically compose of logistics manager, IT manager, operational manager, warehouse expert etc.

2. No, the advantages accrued from specialization are not lost or diminished when individuals from different specialties are put together on a team because in a team, proper roles and responsibilities of each and every individual is clearly defined in accordance with their expertise. The specialization of different members of the team are put to good use in the team and their knowledge and experince can be helpul for strategy formulation and implementation.

3. Yes, in my opinion Loretta Wilson's team achieved its objective since the team was able to design a full proof logistics and distribution system for HP which was able to deliver products to different customers within 4 hours of them placing the order with HP as per their contractual terms. This helped in greater customer satisfaction and the team was able to identify problems in the existing system and improve them.

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