What is Departmentalization by Process?
Departmentalization by process or process departmentalization is when the creation of departments is based on the production process of a product. Based on the process, the activities are grouped.
Process departmentation is applicable in those organizations where production activities need some distinct process. Especially, this method is used in large-scale manufacturing concerns such as textile, cement, chemical, medicine, etc.
Here, the activities of each process are assigned to a departmental head who is responsible for all the functions of the concerned department. This is made to maintain the working efficiency of each process and to economize productivity.
The main benefit and limitation of process departmentation are that it is only applicable in the manufacturing industry and it is not applicable in service companies where there is difficulty in identifying processes.
For example, based on the process, the department of a textile industry may be formed into ginning, spinning, weaving, dyeing, and finishing departments. The departmentalization by process is as follows:
Advantages of Departmentalization by Process
- Departmentalization by process creates job specifications as departments are prepared according to process.
- Department managers become more loyal as the process responsibility is fixed.
- Departments become dependent. So, communication and coordination become more effective.
- This method is a flexible method of departmentation. So, adaptation to changing environment is possible.
- It ensures the effective utilization of specialized skills and types of equipment.
- It helps to make proper utilization of resources and facilities.
Disadvantages of Departmentation by Process
- This method is not suitable for service organizations where processes cannot be identified clearly. Thus, it is only appropriate in manufacturing companies.
- Delay in process or wrong production of one department affects the performance of all departments also.
- There is a possibility of conflict among managers of process departments.
- The responsibility for total profit can not be assigned to a process department.