Background and Challenge
The client, an approximately €900 million, global food ingredient manufacturer that grew through several acquisitions, asked L.E.K. to lead the reorganizational design process of the company, which wanted to move to a more efficient organization.
The client, a worldwide leader, faced several opportunities, such as industry consolidation, growing and highly profitable adjacent segments, development of African and Asian markets, and new segments (e.g., gluten-free, organic).
It also faced several challenges — such as its status as an independent BU organization without overall margin optimization for the group, the end of rapid growth in Eastern Europe, concentration of the largest players, payment terms imposed by larger players, key clients insourcing vs. outsourcing, and capital to finance development and industry consolidation moves — which it hoped to address with an organizational redesign process.
Approach and Recommendations
- Closely worked with the client to identify key strengths and weaknesses of the current organization, and based on that, defined key objectives for client organization and key roles for the company globally and for each function, with key decision rights allocated by function
- Agreed on a new organizational design, and detailed key new processes arising from this new organization
- Sized cost savings within the new organization, and defined a migration plan to set this new organization model, in order to facilitate the client’s successful transition from independent geographical units to a global company
Results
- We determined the most efficient organization based on both revenue and margin optimization from a global operations perspective
- We defined a new organizational design based on the creation of global support functions to replace functions that used to work separately in the different regions, which included determining the new organization’s key roles, objectives, decision rights and processes
- We also quantified cost savings within the new organization design and defined a high-level migration plan to facilitate the client’s transition
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