Functional Silo

Posted in Operations and Supply Chain Terms, Total Reads: 7173

Definition: Functional Silo

It is an individual business function which is divided into sub groups and has its own strategies and works parallel with other organizations.

Its advantages are: it does not need redundancy, are easy to benchmark/process their performance w.r.t. to other organizations and have greater operational efficiency within a functional group.

Its disadvantages include that silos aim to maximize their own goals, not the objective of the organization as the communication gap between verticals is huge. It results in customers, stakeholders not being treated well. They fail to work with cross functional teams and take its benefit.


Small companies seek differentiation and focus on niche/unique markets. Functional silo works best there as creativity and innovation are the priority things there.


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