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ABC-Printer-3D Organizational Analysis: Autonomy and Control Needs


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Role: Consultant
Industry: Metal 3D Printing


Situation:

I have to report on an organizational analysis I carried out. ABC-Printer-3D Italy is a small company owned by ABC-Printer-3D Germany. It is made up of three business lines: commercial (sales), customer assistance (services) and machine design for the German parent company. The company management does not have the service activities under control because they are managed directly by the German parent company. The German parent company designs and produces innovative machines for additive manufacturing. There are also two independent functions Business Development and Information Technology with only one person that depend only on Germany and the management of the Italian branch is not aware of what they do. The companies were recently purchased by a major Japanese company, JapanCompany, which supposedly wants to have the situation under control. • There are three CEOs and their respective areas of responsibility are unclear • The company is not compliant with Legislative Decree 81/2008 consolidated text on health and safety at work; • Management does not have control over expenses: approval and allocation to the various cost centers; • There are employees hired without management having been informed; • It is not clear who is responsible for the company's income statement and for signing the balance sheet; • It is a company that is making a loss because all the design activity is done for the German parent company and therefore all the costs do not have a customer to charge them to. This means that criteria must be defined to attribute the costs of design and development to the German parent company in order to balance the income statement. It is not correct to just write them off at the end of the year without keeping them under control. • The company objectives are not clear; • The lack of a clear direction of the company generates disorientation towards employees; • The consultants they relied on were not adequate. The result that emerged is that the management of the German parent company (ABC-Printer-3D Germany) must be convinced that the Italian branch (ABC-Printer-3D Italy) needs greater autonomy and their interference in the management of the company must cease have negative impacts. In my notes I wrote the following notes: • The corporate mission of ABC-Printer-3D and its corporate objectives are not defined and communicated • Business processes and their interrelationships are not defined. Indicators are missing. • Review the structure of ABC-Printer-3D Italy and the mutual relationships with the parent company ABC-Printer-3D Germany • Define more clearly the responsibilities and tasks among the managing directors, avoiding overlapping of powers • Defining the safety organizational chart and formalizing the figure of the Employer until it can fulfill the non-delegable obligations of appointing the RSPP and carrying out and updating the Risk Assessment and related issuing of the DVR with the obligation of a certain date • Defining the internal organizational processes and the related mutual interrelationships and reviewing and formalizing the intragroup ones, avoiding bypassing the top management and managing people and activities from Germany without the ABC-Printer-3D top management being informed • Uniform purchasing procedures and provide clear and defined procedures in relation to the type of product/service supplied. • Clearly define the cost and responsibility centers within ABC-Printer-3D Italy and avoid interference from ABC-Printer-3D Germany. • Clarify intragroup economic relationships, especially for those activities carried out in favor of the German parent company which are not invoiced to a specific customer. Define an hourly cost for the product design and development activity (engineering) and for the Business Developer and IT Manager figures who carry out activities in favor of ABC-Printer-3D Germany but whose salary pertains to the income statement of ABC-Printer -3D Italy. The management of ABC-Printer-3D Italy should be guided by the logic of effectiveness, efficiency and legislative compliance. The balance sheet of ABC-Printer-3D Italy should be in balance. The Enginnering, IT activities carried out for others (Singapore), Business development as they are carried out exclusively for the benefit of ABC-Printer-3D Germany The activities carried out must have an economic justification within the annual and non-annual management income statement be based on covering losses at the end of the year. • Identify who will have responsibility for the economic-financial management of the company and will consequently be responsible for signing the financial statements. • Define a management planning and control system based on a forecast of the economic-financial management (budget) divided between the main cost centres, with clear attribution rules and verification of deviations. • Provide for greater autonomy of the management of ABC-Printer-3D Italy and avoid interference by ABC-Printer-3D Germany • Review relationships with suppliers of the main consultancy services (SSL, RSPP, training, legal, personnel management, accounting, ...) • Regulate and clarify the procurement methods of products (spare parts, metal powders, consumables, ...) for supply to end customers • The end customers of the machines can purchase the metal powders both from ABC-Printer-3D and from other existing suppliers on the market • The management of PPE for service workers is not formalised, even if they have it and they are adequate and effective • Need to better define the role of managing directors by delegating tasks and responsibilities to them, including that of managing relations with the German parent company to avoid interference and interference in the management of ABC-Printer-3D • There is a risk of sanctions for failure to comply with legislation on health and safety at work, with employment legislation (management of the employment relationship) • There is the possibility that the intragroup operations between ABC-Printer-3D Italy and ABC-Printer-3D Germany, if there are no reasons for the economic subsistence of the operation, could be considered as maneuvers to evade tax legislation to alter the balance sheet and reduce taxation in Italy.


Question to Marcus:


Can you organize what I tell you and write a report with the evidence I found and the result of the analysis?


Based on your specific organizational details captured above, Marcus recommends the following areas for evaluation (in roughly decreasing priority). If you need any further clarification or details on the specific frameworks and concepts described below, please contact us: support@flevy.com.

Supply Chain Management

In the context of the metal 3D Printing industry, effective Supply Chain Management is pivotal to ensuring the seamless operation and profitability of ABC-Printer-3D Italy. Given the specialized nature of the metal powders and other consumables required for 3D printing, establishing robust Supply Chain protocols is essential.

This includes developing standardized procurement procedures, ensuring a diversified supplier base to mitigate risks, and setting up a real-time Inventory Management system to track the consumption rates of materials. Moreover, considering the innovative aspect of metal 3D printing, keeping abreast of advancements in materials science and integrating them into the product offering could provide a competitive edge. Therefore, fostering strong relationships with suppliers and instituting clear procurement methods are critical steps towards enhancing operational efficiency and maintaining quality standards in the production process.

Recommended Best Practices:

Learn more about Supply Chain Management Inventory Management Supply Chain 3D Printing

Change Management

The restructuring required within ABC-Printer-3D Italy necessitates a comprehensive approach to Change Management, especially considering the intricacies of metal 3D printing—a field that is both rapidly evolving and technically complex. Addressing the identified issues such as unclear management structures, lack of defined processes, and the need for financial accountability will require not just structural changes but also a shift in Corporate Culture.

In implementing these changes, it is crucial to communicate the vision and strategic objectives clearly to all stakeholders to gain their buy-in. Given that the metal 3D printing sector thrives on innovation and agility, fostering a culture that embraces continuous learning, flexibility in operations, and openness to adapt to new technologies and market demands will be key to achieving sustainable growth and Operational Excellence.

Recommended Best Practices:

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Financial Management

For a company like ABC-Printer-3D Italy, which operates in the high-tech and fast-paced metal 3D printing industry, establishing a solid Financial Management framework is crucial. The current lack of control over expenses and the absence of a defined responsibility for the company’s financial health are alarming.

It is imperative to implement an Integrated Financial Model that includes clear cost-center allocation, budget forecasting, and financial planning with specific emphasis on R&D expenses. Considering the industry’s project-based nature and the high costs associated with machine design and material innovations, adopting activity-based costing can provide more accurate insights into profitability and Cost Management. Furthermore, developing a transparent internal charging mechanism for the design services rendered to the German parent company can help in accurately reflecting the income generated and the costs incurred, ensuring financial sustainability.

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Learn more about Integrated Financial Model Cost Management Financial Management

Strategic Planning

The lack of clear company objectives within ABC-Printer-3D Italy is a significant barrier to its success, especially in an industry like metal 3D printing, where technological advancements and market demands evolve rapidly. A Strategic Planning process that aligns with the dynamic nature of the 3D printing industry is essential.

This involves setting short-term and long-term goals that are both ambitious and achievable, focusing on innovation, market expansion, and technology leadership. It also requires a clear definition of the company’s Value Proposition in the Competitive Landscape of metal 3D printing, identifying niche markets or specialized applications where ABC-Printer-3D Italy can leverage its capabilities for a Competitive Advantage. Effective strategic planning will also pave the way for targeted R&D efforts, optimizing resource allocation towards projects with the highest market potential and technological feasibility.

Recommended Best Practices:

Learn more about Strategic Planning Competitive Advantage Value Proposition Competitive Landscape

Organizational Design

The challenges faced by ABC-Printer-3D Italy, from unclear management roles to ineffective control over various business functions, underscore the need for a comprehensive overhaul of its Organizational Design. In the metal 3D printing sector, where innovation and speed to market are crucial, the company's structure must be conducive to agility, clear communication, and seamless collaboration across departments.

Instituting a matrix structure could facilitate better coordination between the Italian branch and its German parent company, ensuring that both entities are aligned in their goals yet flexible enough to adapt to the fast-evolving demands of the 3D printing market. Additionally, defining clear roles and responsibilities, coupled with establishing direct reporting lines and accountability mechanisms, will be critical in enhancing operational efficiency and fostering a culture of ownership and innovation within the company.

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Learn more about Organizational Design

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