THE FACTORY OF THE FUTURE:CORPORATE NETWORK CAPABILITY

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CORPORATE NETWORK CAPABILITY

Corporate network capability describes the capacity of an enterprise to integrate both itself and its core competencies into the overall company network. This cooperation is continually optimized to benefit both the individual company and the network.

Companies with this capacity find that their transformability increases in two respects. First, they can focus on their core competencies and simultaneously profit from the company network’s inte- grated and comprehensive service range. Second, the information flow in the company network is sped up by the continual networking of suppliers and customers. The advantage of the latter is that companies are provided with information concerning market changes and adjustments in consumer and supplier markets in due time. They can thus respond proactively to technological and market changes. These company networks can take four forms, as shown in Figure 5.

Companies are not limited to only one of the four types. Instead, each company can be involved in several company network types on a horizontal as well as a vertical level. In the automobile industry, for example, it is common practice for companies to cooperate in regional networks with companies on the same value-adding level and at the same time be part of the global supply chain of an automobile manufacturer. In other words, companies do not necessarily have to focus on one cooperative arrangement. Different business units might establish different cooperative arrangements.

Behr is an example of an automobile supplier with high network capability. The company’s focus is vehicle air conditioning and motor cooling. Its customers include all the large European car man- ufacturers. In order to offer its customers a comprehensive service range, Behr is involved in nu-

The Factory of the Future-0069

merous global and local networks. In 1997 and 1998, Behr joined six cooperation projects with other automotive suppliers in which the cooperation partners were distinguished by their expertise, flat hierarchies, and accompanying short information and communication paths as well as similar cor- porate culture. The aim of the resulting expert network was to pool the necessary system technology and thus improve the position in the core business as well as to prepare the basis for entering new markets for components.

The project management is assumed by the partner with the greatest market share or the most comprehensive business logistics. It is also important that a continual communication flow exist, accompanied by rapid decision making processes and clearly defined interfaces that are well managed and intelligible for the customer. Accordingly, Behr and one of its cooperation partners have taken the initiative to jointly develop and supply front-end modules. The module is composed of the cooling system’s heat transfer, the air-conditioning condenser, cooling fan, air deflector, lighting, bumpers, and radiator grill. Together, the cooperation partners are able to provide 75% of the module com- ponents. Through this network, Behr was able to increase its market presence and revenue.

Internal Self-Organization and Self-Optimization

In corporate self-organization and self-optimization, the authority to make decisions is shifted directly to the value-adding units, creating semiautonomous organizational units. Therefore, apart from the actual output process, semiautonomous units have to integrate management and planning functions as well as coordinate functions to ensure global optima and avoid local optima.

The advantages of semiautonomous structures with regard to improved labor productivity have been confirmed by numerous studies and accepted by most experts (Westka¨mper et al. 1998). Ad- vantages include increased corporate transformability, which can be achieved through a quicker in- formation flow in semiautonomous units, and the involvement of the process owners in the decision making process from an early stage. The latter also leads to better staff motivation, which positively affects transformability.

An important task for semiautonomous organizational units is to coordinate themselves with the common target system in the course of self-optimization (see Figure 7). Making a profit is the main goal of this target system. However, the system must still be coordinated with the interests of the employees. In addition, the goals must affect wages in order to increase the credibility of the goal system.

The Fraunhofer Institute for Production and Automation (IPA) has carried out more than 100 industrial projects in which it applied the principle of the fractal company to introduce semiautono- mous organization structures coordinated by means of a common target system. More than 20 of

The Factory of the Future-0070

The Factory of the Future-0071

these projects have been further analyzed, showing increased corporate transformability and a sig- nificant change in organizational parameters.

A manufacturer of packaging machinery was among the companies analyzed. It exemplifies the changes in the organizational structure and the transition to self-optimizing structures. Before the organizational changes were implemented, the company had a classical functional organization struc- ture (see Figure 9). This structure led to a high degree of staff specialization, which was unsatisfactory in terms of the value-adding processes. For example, six departments and a minimum of 14 foremen and their teams were involved in shipping a single packaging machine.

In the course of the change process, semiautonomous units were created based on the idea of the fractal company. These units performed all functions necessary for processing individual customer orders. Part of the new structure included organizational units that focused on product groups for customized assembly processes. The interfaces of the latter no longer serve to carry out individual

The Factory of the Future-0072

The Factory of the Future-0073

customer orders but are instead needed for long-term planning and maintaining the production process (see Figure 10).

Reducing the interfaces in the planning process and at the same time adjusting the planning and control principles to the new corporate responsibility structure cut the cycle time for producing a machine by 60%.

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