KENT CHEMICAL PRODUCTS

Transcription

1 - everest consulting forever upwards KENT CHEMICAL PRODUCTS structured success karen isabela alejandro michael

2 the challenge analysis THE CHALLENGE How can Kent Chemical restructure their organization to accommodate for varying regional differences and create one global strategy? THE INDUSTRY THE BARRIERS MARKET SEGMENTS Interaction between Functions and Regions THE COMPANY Employee Resistance THE STRUCTURE Disconnect between Global and Local Strategies 2

3 the industry OPPORTUNITIES THREAT Large growth within core business line (fire retardant line) Changing consumer preferences for safety and green practices Varying regulations between various product lines and offerings Increased price competition for a commodity good KEY TAKEAWAY Increased competition within the market for a commodity good requires Kent Chemical to strengthen collaboration between regions to cut costs and continuously innovate through research and development. 3

4 market segments Consumer Goods Medical Plastics Fire Control Customers Regulatory and Local Needs Decentralization Potential Consumers in the USA, Brazil, and France. Applications which vary on local consumer usages and niches. Minimal requires local marketing teams Hospital Supply and Medical Device Companies High standardization that exists across multiple regions, global sales relationships High few, yet large global accounts allow for centralized management Multinational manufacturers, governments, and local fire prevention National relationships critical for sales, yet globally standardized. Medium source from global R&D yet sales require regional relationships KEY TAKEAWAY: Each segment requires different level of sales integration, however share similar R&D requirements. 4

5 the company WEAKNESSES STRENGTHS Global organization operating with local strategies Shrinking gross margins as global growth has increased Bottle-neck production inherent to current organization structure Strong product development and innovation capabilities Support from CEO of Kent Chemical for a global strategy and vision VALUE PROPOSITION Offer innovative and functional chemical products that are customized to regional demands KEY TAKEAWAY KCP must leverage the CEO s global strategy position to share knowledge as well as create economies of scale through its entire operation 5

6 current structure Chairman and CEO KEY TAKEAWAY Vital to reach economies of scale with KCI and KCP Vice Chairman and Director of R&D President, Kent US Vice Chairman Bottleneck in decision making VP of US Staff Groups VP of Consumer Products C-Suite Executives President of KCI VP Fire Protection VP Industrial VP Medical Plastics Appropriate structure as it accommodates for differences in industries No respect for GBDs GBDs Regional Director, EMA Regional Director- Americas Regional Director Asia-Pacific VP of KCI Staff Groups Regional directors are too highlevel and structures does not allow KCP to share resources across industries 6

7 gap analysis CURRENT STATE BARRIERS FUTURE STATE Successful global operations and reputation Constant restructuring creating distrust in employees Lacks global strategy Interactions between functions Employee resistance Disconnect between global and local strategy Becoming a global company that shares resources and strategy 7

8 strategic priorities THE CHALLENGE How can KCP restructure their organization to accommodate for varying regional differences and create one global strategy? THE BARRIERS Interaction between Functions and Regions Employee Resistance Disconnect between Global and Local Strategies STRATEGIC PRIORITIES Transparency between Functions and Regions Reduction of Redundancies Employee Morale Increase Profit Margins 8

9 corporate strategies DIVIDE PRODUCTS DECISION MATRIX CONSOLIDATION Split consumer products away from medical and fire retardant supplies Implement consultant s decision matrix to specifically target needs of each product line and region Consolidate KCI & KCP by redesigning organizational structure to have industry specific streams with regional representatives SEPARATE LINES Allows consumer department to better focus on local needs DIVIDE PRODUCTS Reduces employee morale through clear division of product Split consumer lines products away Limits from joint medical R&D capabilities and fire retardant supplies Reduces economies of scale CONSULTANT DECISION Promotes communication amongst regions DECISION MATRIX Creates many decision points and bottle necks Implement consultant s decision Complexity matrix to increases specifically target uncertainty needs of each of roles product Does not line provide and region economies of scale across product lines Economies REORGANIZATION of scale within various industries CONSOLIDATION Increased communication amongst regions Consolidate Clear global KCI organizational & KCP by redesigning strategy organizational structure to have industry Employee discontent with specific streams with regional another change and timeliness representatives 9

10 the rankings Transparency between Functions and Regions Reduction of Redundancies Employee Morale Increase Profit Margin DIVIDE PRODUCTS DECISION MATRIX CONSOLIDATION 10

11 the new structure Executives (VP Treasurer, VP Legal, VP Accounting, VP of HR, VP PR) Kent Chemical Fire Protection EMEA ASIA AMERICAS R&D and Manufacturing U.S.A EMEA Consumer Products ASIA AMERICAS R&D and Manufacturing U.S.A EMEA Medical ASIA AMERICAS U.S.A R&D and Manufacturing Company consolidation of KCI and KCP Bigger focus on industryspecific streams with regional representation Increase collaboration between R&D and manufacturing through additional use of ERP 11

12 operations KEY ACTIONS Consolidating industry manufacturing and R&D Create regional sales offices Develop segment exclusive Enterprise Resource Planning system ACTIONS Identify industry-leading ERP system to purchase Implement and test segment-exclusive ERP systems Adopt global procurement system from ERP advantages Open new local sales offices where not present Assign new manufacturing roles to fit segment driven model Adopt new monthly R&D town halls and crossfunctional workshops to share knowledge YEAR 1 YEAR 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12

13 what will you do about HR? GOAL RETAIN EMPLOYEES AND CREATE AN UNDERSTANDING AND AUTONOMY OF EMPLOYEE ROLES CLEAR JOB DESCRIPTIONS AND CAREER PATHS ADDITIONAL INCENTIVE PROGRAMS AND OPPORTUNITIES CHAMPION PROGRAM FOR CHANGE Employee 1-on-1 consultations to understand employees career goals for new placements Realignment of key staff into the new organizational structure Providing industry based bonuses incentivizes the global strategy and promotes collaboration to reduce redundancies Rotational program and secondment opportunities Establish subject matter experts to gather divisional feedback Monthly town hall meetings in order to obtain and apply the feedback 13

14 human resources KEY ACTIONS Relocating necessary employees Eliminating redundant roles Create communication and training program and change management program ACTIONS Redesign organizational structure Conduct internal resource audit Initiate resource planning and relocation Create severance and relocation packages Design change management program and establish career planning program and 1-on-1 consultation to keep morale up Eliminate redundant roles YEAR 1 YEAR 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 14

15 historic margin decline $ $ $ $ $ $ $ $- Historic International Sales vs Consolidated Operating Margins Net Sales Consolidated Operating Margin 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 15

16 projections In Millions of US$ Revenues $1,628 $1,937 $2,238 $2,624 $3,077 $3,607 CAGR of Revenues 18.98% 17.25% 17.25% 17.25% 17.25% COGS $1,150 $1,339 $1,700 $1,993 $2,246 $2,525 Gross Profit $478 $598 $538 $631 $831 $1,082 Gross Margin 29.36% 30.87% 24.04% 24.04% 27% 30% SG&A and R&D Expenses $316 $377 $410 $481 $523 $613 SG&A and R&D Expenses as a % of revenues 19.41% 19.46% 18.32% 18.32% 17.00% 17.00% Operating Income $162 $221 $128 $150 $308 $469 Operating Margin 9.95% 11.41% 5.72% 5.72% 10.00% 13.00% Organizational Restructuring CAPEX $ 8 $ 8 Profits Before non-operating Costs $162 $221 $128 $142 $300 $469 16

17 margin projections 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Margin Projections Gross Margin Operating Margin 17

18 cost breakdown Budget In USD Employee programs: Change management and communication $ 3,000,000 Relocation and Severance Packages $ 1,500,000 Organizational Redesign $ 750,000 ERP system $ 3,000,000 New Sales offices $ 3,000,000 Manufacturing Adjustments $ 4,500,000 TOTAL $ 15,750,000 18

19 risky business SEVERITY RISKS MITIGATION CONTINGENCY 1) Employee resistance to organizational change 2) Segment model fails to create collaboration New incentive program and change management approach New rotational placement to spread learnings and expose teams to best practices Adopt phased roll-out starting with the most stable division (Fire Retardant) Revert back to current R&D model LIKELIHOOD 3) Implementation of ERP systems creates high costs Increase operating production to create supply buffer for shortages Adopt phased roll-out approach for ERP implementation 19

20 measuring success THE CHALLENGE How can KCP restructure their organization to accommodate for varying regional differences and create one global strategy? THE BARRIERS Interaction between Functions and Regions Employee Resistance Disconnect between Global and Local Strategies STRATEGIC PRIORITIES Transparency between Functions and Regions Reduction of Redundancies Employee Morale Increase Profit Margin KEY PERFORMANCE INDICATORS Clear Roles and Decision Making Gross Margins Increased to 30% 75% Satisfaction in Employee Feedback Operating Profit Margins at 13% 20

21 KENT CHEMICAL PRODUCTS structured for success CLEAR ROLES AND DECISION MAKING GROSS MARGINS INCREASED TO 30% 75% SATISFACTION IN EMPLOYEE FEEDBACK OPERATING PROFIT MARGINS AT 13% THANK YOU we welcome any questions karen isabela alejandro michael