Background
A leading global plastic-packaging manufacturer, operating across multiple verticals and known for its efficient unit costs, was facing significant organizational and strategic challenges. These included:
- An unhealthy rivalry between key functions and business units
- Frustratingly slow decision-making processes
- A low customer net promoter score (NPS)
- Declining market share
Despite excelling in cost management, the company struggled with internal friction and an inability to adapt to rapidly changing market demands.
Approach
L.E.K. Consulting began by thoroughly assessing the client’s then-current state operating model. This assessment considered both the organizational structure and nonstructural ways of working, comparing them against industry best practices and market demands. The analysis revealed that the existing operating model was a legacy system designed for operational simplicity rather than innovation and customer responsiveness. The market had shifted toward emerging customers that demanded rapid innovation, flexible manufacturing arrangements and creative commercial deals. However, the company’s operating model was geared toward a minimal number of stock-keeping units (SKUs) produced in high volumes, which was misaligned with new market demands.
To address these challenges, we reset the operating model to prioritize commercially centric functions. Key changes included:
- Inverting influence: shifting the focus from operations to customer-centric innovation
- Flexible manufacturing: encouraging shorter manufacturing runs and greater SKU diversity
- Governance and processes: redesigning governance arrangements and core processes to support a more agile and customer-centric organization
Results
The implemented changes had a profound impact on the organization:
- Reduced organizational friction: By aligning the operating model with market demands, internal friction significantly decreased
- Improved customer satisfaction: Customer NPS improved as the company became more responsive to customer needs
- Regained market share: Increased customer satisfaction translated into regained market share, demonstrating the effectiveness of the new operating model
Conclusion
This case study highlights the importance of aligning organizational structures with market demands. For corporate executives and manufacturing professionals, it serves as a testament to the power of a customer-centric approach in driving business success. By prioritizing innovation and flexibility, companies can overcome internal challenges and achieve sustainable growth. If your organization is facing similar challenges, consider partnering with L.E.K. to transform your operating model and unlock new growth opportunities.
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