A sound organizational structure is essential for efficient management of the production function. The exact nature and type of organization structure for production will differ from one manufacturing enterprise to another depending upon the size of the enterprise, nature and types of products, the degree of specialization desired, production system and process type of technology employed, degree of integration, management policy, etc.
For example, a large firm may have a separate research and development section which may not be possible for a small firm. A ‘typical’ organization of production sets out the functions rather than the titles of the persons carrying out the activities. In a small firm, one manager may carry out purchasing, planning, supervisory and control activities himself. In large firm there may be a separate manager for each of these ‘activities. Whosoever carries out the work, the functions shown will usually be present in some form or another.
It must be noted that this organizational setup is not rigid. It must be modified to suit the needs and circumstances of the particular enterprise.
(1) purchasing function has been shown as a part of the production.
(2) Ancillary or auxiliary functions-activities supporting manufacturing (purchasing, storage, maintenance, etc.)
(3) Advisory functions-activities that provide advice and guidance (method study, quality control, etc.).
Benefits of Sound Organizational Structure
Sound organization structure provides the following benefits
1. Division of activities. There is logical grouping of different activities.
2. Specialization. Expert and trained employees can be employed for each function.
3. Clear-cut authority. The structure indicates the functions on which a particular manager has authority. Lines of authority identify the subordinates reporting to a manager and the superiors to whom he is expected to reports
4. Fixation of responsibility. The structure indicates the responsibility of each employee in the department.
5. Higher efficiency. A sound organizational setup eliminates duplication of work and efforts leading to increased efficiency.
6. Co-ordination. Logical grouping of activities and systematic division of work brings out Co-ordination too.