Centralized infrastructures are preferred when the flow of information and open communication between divisions and upper and lower management is LESS than ideal. Decentralized infrastructures are preferred when the flow of information and open communication between divisions and upper and lower management is ideal. A decentralized infrastructure is one in which decision making authority is spread throughout the organization as opposed to being concentrated in top-level management positions. There are benefits and drawbacks to both decentralized and centralized infrastructures and a benefit for one will be a drawback for the other and vice versa.
Decentralized infrastructures can be used when quick decision making is important because those closest and most familiar to the problem have authority to make decisions. This in turn allows top management more time to devote to long range strategic planning, as more of the day-to-day decision making responsibilities are shifted to lower level managers. Because of the fact that authority is spread among many managers, a lack of company focus can occur. As a result, the use of enterprise resource planning systems is helpful in integrating and providing information to managers throughout an entire organization.
One thing to remember is that in order for decentralized organizations to function properly, there must be an adequate flow of information between the various levels to ensure coordination between segments and a reduction in duplicative efforts and duplicative costs. However, a centralized infrastructure may be preferred if managers lack adequate training to be involved in decision making, especially at early stages of their careers.
As more companies rely on field employees, outsourcing and other ways to save on costs, the way people work and how work gets done is going to be fundamentally different, especially since today’s worker can be relied on to be connected and wired in at all times. Utilizing tactical process improvement concepts such as Six Sigma, while focusing on how to make humans co-exist with automation, instead of focusing on how to make automation co-exist with humans, enables for optimal customization and socioeconomic integration, while ensuring profit increase is realized through reduced costs, reduced cycle times, increased efficiency, accelerated schedules, improved service quality, improved visibility, increased performance and reduced errors.
The Internet of People, for the Internet of Things.
Custom Communications and Logistics Technology for the Next Generation.