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Metal 3D Printing: Navigating Organizational Challenges at ABC-Printer-3D


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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 finding e 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.

Integrated Financial Model

ABC-Printer-3D Italy's current financial turmoil underscores the urgent need for an Integrated Financial Model that encompasses both the operational and strategic facets of the business. This model should meticulously categorize all costs, especially those related to machine design and development that are currently absorbed without direct customer billing.

By assigning an hourly cost to design and development activities and including salaries for the Business Developer and IT Manager, who function primarily for the benefit of the parent company, the model will facilitate a clearer financial picture. This approach is vital in metal 3D Printing, where precision in costing and pricing can significantly influence competitiveness and innovation. An effective model enables the Italian branch to demonstrate its true financial performance, optimizing resource allocation and justifying the need for greater autonomy from the German parent company.

Recommended Best Practices:

Learn more about Integrated Financial Model 3D Printing

Change Management

The revelations from the organizational analysis signal a critical need for a comprehensive Change Management strategy. ABC-Printer-3D Italy finds itself at a crossroads necessitated by the acquisition by JapanCompany and the existing convoluted management structures.

In the highly innovative and competitive field of metal 3D printing, agility and responsiveness are paramount. The company must embrace change management principles to realign its operational strategies, redefine roles and responsibilities, and ensure compliance with health and safety laws. This process involves engaging all stakeholders, from the CEOs to the frontline employees, facilitating a culture of transparency, accountability, and Continuous Improvement. The ultimate goal is to transition from a state of disorientation to a well-structured organization that is capable of leading in the dynamic metal 3D printing market.

Recommended Best Practices:

Learn more about Change Management Continuous Improvement

Business Strategy Example

The scenario at ABC-Printer-3D Italy exemplifies a compelling case for revisiting and reformulating its Business Strategy. The lack of clear objectives and direction has left employees disoriented, a situation untenable in the fast-evolving metal 3D printing industry.

A redefined business strategy should focus on leveraging the company's Core Competencies in machine design and Customer Service, while establishing clear revenue streams for design activities currently benefiting the German parent without clear compensation. This strategy should also include developing a unique Value Proposition for the Italian market, differentiating ABC-Printer-3D Italy from competitors and aligning with the broader strategic goals of the new Japanese ownership. Strategic clarity will enable the Italian branch to assert its role within the global organization, ensuring it contributes effectively to innovation and growth in the metal 3D printing sector.

Recommended Best Practices:

Learn more about Customer Service Core Competencies Value Proposition Business Strategy Example

Supply Chain Management

In the context of metal 3D printing, where production relies heavily on precision and the timely availability of specialized materials like metal powders, the importance of robust Supply Chain Management cannot be overstated. The current lack of clarity around procurement processes and the informal management of supplies for service workers at ABC-Printer-3D Italy poses significant risks to operational efficiency and product quality.

Developing a clear, structured Supply Chain strategy that encompasses reliable sourcing of metal powders, spare parts, and consumables is crucial. By securing a steady flow of high-quality inputs, the company can avoid Disruptions, maintain production schedules, and meet the stringent requirements of 3D printing technology. This also involves reviewing supplier relationships and establishing clear criteria for selection and ongoing evaluation, ensuring that the supply chain becomes a strategic asset for the company.

Recommended Best Practices:

Learn more about Supply Chain Management Supply Chain Disruption

Compliance

ABC-Printer-3D Italy's non-compliance with Legislative Decree 81/2008 is a glaring risk that could lead to sanctions and reputational damage, particularly detrimental in a high-tech industry like metal 3D printing where company reputation significantly impacts customer trust and business opportunities. Ensuring compliance requires a multifaceted approach: Firstly, a thorough review of current practices against legislative requirements is needed to identify gaps.

Following this, the company must develop and implement an action plan that addresses these gaps, including training for employees, establishing health and safety protocols, and appointing a responsible safety officer. Regular audits should be conducted to ensure ongoing compliance. This effort will not only mitigate the risk of legal consequences but also demonstrate the company's commitment to employee wellbeing and sustainable practices, essential in today's business environment.

Recommended Best Practices:

Learn more about Compliance

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