The common business assumption is that large is beautiful and scale automatically leads to economies. Yet as the Financial Times pointed out it does not necessarily follow that mating two elephants will naturally produce a gazelle.

Therefore on going from local to global, organisations need to ask what will truly be more effective for being organised globally and what considerations would make it desirable to create regions or sub-regions within a global structure.

The Work Structuring approach looks at the business transformations to understand the intrinsic rhythms or patterns in four key areas; the technology used, the nature of the manufacturing process, the nature of the market and behaviours of customers and the nature of the supply chain.

Work structuring has been successfully used to address these issues on a number of occasions. The Work Structuring principles, methodologies and tools taken as a whole throw a powerful light on what often appears to be a very complex set of issues and allows elegant and appropriate solutions to be derived.

Two examples are given below of work done for organisations seeking to derive effective structures appropriate to their market in a global context.

Example 1:- Pigment Manufacturer

WSL worked with a pigment manufacturer, which had grown by acquisition to cover a global market place. The companies that made up the new global company clearly had excess capacity in the areas of manufacturing and possibly sales and marketing. However, were the company to simplify the production environment, how would this affect the supply chain and how well would it suit the customer base?

A single Work Structuring consultant worked with an internal team of managers to analyse the business situation. The resulting business transformation analysis rapidly enabled them to see that the company, its product and its market place had a number of clear patterns to them, which needed to be reflected in the organisational structures if they were to be effective.

Technology and Manufacturing

The technology for manufacturing was truly global. The manufacturing plants could be designed to back each other up so that cleaning and refits could be planned on a global scale. Bulk supply could be organised by sea and the time scales for transport were within the rhythm of demand of customers. In addition the margin on the product made transport cost-effective. This indicated that a global manufacturing unit should be set up and that the dynamics of manufacturing would allow it to meet the customers’ needs wherever they were placed.

Sales and Marketing

The same analysis also showed that the pattern in sales and marketing was different from that in manufacturing. An analysis of customer-base, the way in which customers purchased and conducted their business showed that there was not one pattern that could fit all. An attempt to impose the same structure for account management as had been adopted for manufacturing would hinder meeting the customers’ needs. Further analysis of customers showed there was:

• a small number of significant, high-value accounts that truly purchased globally,
• a large number of customers whose purchasing and trading pattern were only regional

and that these would be hindered by being handled globally.

This lead to the establishment of a global key accounts team that truly did operate on a global basis and regional sales teams managing the majority of regional customers.

Supply Chain

Customer demand, however, was almost entirely regional. Even the customers who purchased globally, manufactured regionally and therefore pulled through material in a regional pattern. This led to the establishment of a number of regional supply areas each based round a regional depot capable of providing an efficient buffer between the global manufacturing policy and the demands of regional pull-through.

Benefits

The newly-established structure was elegant, effective and met the needs of the customer without sacrificing the organisation’s drive for effectiveness and efficiency. The number of customers supplied in full went up (there had previously been a rationing situation) and at the same time the total stocks in the supply chain went down.

Example 2:- Bottle Plastic Manufacturer

An analysis was carried out by a single Work Structuring consultant and a team of local managers from a company manufacturing bottle plastic. They found the following:

Technology

The company had previously realised that there was a single technology used to make the plastic everywhere in the world. The technology was therefore global and interchangeable between areas. On this basis the company had decided that it needed to be a single global company, organising itself around its global manufacturing strategy, with a single price list and standard approach to all customers.

Sales and Marketing

However, analysis of the company’s customers showed that they behaved significantly differently in its two major regions. This was partly dictated by an uneven presence. In Europe it was one of the leading suppliers owning a very significant share of the market, whereas in the USA it was only the 4th largest supplier of bottle plastic. This meant that its approach to customers on the two sides of the Atlantic needed to be very different. Each had to be appropriate to the different market conditions, customer demands, competitive position, etc.

Further investigation showed that the “commodity plastic” mentality generated by being a dominant supplier in Europe had led the company to overlook a range of significant “value add” products that would enable it to differentiate itself from its own high volume, low margin products as well as making it more competitive in a significant niche. This was particularly significant for the USA market.

This analysis led to the establishment of regional sales teams handling a different mix of products, at margins adjusted to the demands of the regional markets.

Manufacturing and supply chain

This widely differing pattern in customer demand and the sensitivity of the product to the cost of transport meant that a global manufacturing strategy would fail to support the local market opportunities, even though the technology would have permitted it. Therefore, manufacturing needed to be organised regionally.

Benefits

The insights from this analysis enabled the company to build a customer-focused organisation that increased market share in the USA and maintained the favourable trading situation in Europe. The insights into the differentiation of products in the range lead to the development of a line of higher margin business, which again increased its profitability.

Summary

The use of Work Structuring in these two accounts led to technical, manufacturing, sales and supply chain structures that were integrated together so that collectively they served the needs of the total businesses better. Further to this the resulting structures were more closely aligned to the needs of the market and the individual customers that made it up.

This in turn provided do-able jobs in all the areas, which released the enthusiasm of the staff. Taken together the resulting organisations were better motivated, more streamlined, more customer-focused and therefore more successful.