Grain Silos, those towering cylindrical containers, have found a new life around regional Australia, as a canvas for some spectacular murals. (search "Australian Silo Art Trail") The silos may vary in size but their consistent feature is that they are isolated from each other, even when physically grouped together.
In business, the term has been adopted to describe an organisational structure that hinders communication or cooperation between departments. This is often reinforced by setting KPIs that focus on each department separately, regardless of the fact that, if an organisation delivers a product or service, there will be a supply chain, consisting of multiple departments, doing the work to deliver it to the customer.
Isolated KPIs can cause waste, as each department strives to reach its own KPI, to the detriment of the complete supply chain. An example of this this can be seen as an unwillingness to share resources across departments, to smooth out an uneven workload and maintain "flow", which can be the result of using a departmental KPI for resource utilisation.
One solution is to make the primary KPI apply to a supply chain from end to end, with all departments working to achieve that goal. This can be illustrated in its simplest form, where one department hands over work to the following department in the supply chain. Where KPIs are department focussed there may be a wait time before the next process can be started, whereas if the focus is changed to the whole supply chain, there is no wait time and the process can flow. It's fairly obvious when you think about it but easy to overlook in a complex organisation.
