Lean Enterprise Style Effects
Lean enterprise style is a set of techniques and programs applied both to operational activities and to the organizational structure, which together focus on eliminating non-value adding activities (waste). Lean principles found their reflection in Toyota’s organizational structure, which is flat and has few management layers. Toyota believes that responsibility should be placed at the lowest possible level, giving work units a high degree of autonomy in problem solving. Therefore, in Toyota numerous work group leaders have a narrow span of control. Responsibility in the company is more focused horizontally, and managers are often in charge of the entire value chain of a specific product. Functions work closely together in order to reap the benefits of scope economies and to accumulate knowledge and expertise. They aim to assist product development, working simultaneously on all the products and prioritizing their tasks according to company objectives (Found, Dun & Fei, 2009).
The objectives of Walmart are similar to those of Toyota: elimination of non-value adding activities and improving efficiency. Therefore, their organizational structure reflects the cost-cutting strategy by implementing a flat structure with few management layers between the headquarters and store managers (Hill & Jones, 2008). Walmart maintains a balance between centralization and decentralization, by delegating operational authority to the local management, while controlling performance using centralized information system. Such approach gives store managers the possibility to make decisions regarding the inventory level and product assortment, thus improving the ability to serve customer needs in the most efficient way (Weihrich & Cannice, 2010).
Both Toyota and Walmart try to create lean enterprises, pursuing the strategy of waste elimination and cost reduction. Their organizational strategies are flat with the strong trend of responsibility delegation to the work unit/store level. However, Walmart has more functional orientation, while Toyota’s organizational structure focuses on products rather than functions.
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