Combat margin erosion in five steps - Part Three: Organizational Design & Business Process Optimisation
What does ‘optimizing your organization’ mean, and how can it help you combat margin erosion?
Review and simplify your organizational structure
Do you employ managers who have fewer than four direct reports? I suggest you revaluate whether you really need these managers.
The aim is to create a flat organizational structure with empowerment of the frontline and with an increased span of control (SPOC), e.g., the number of direct reports reporting to a manager.
There is no golden rule as to what number of direct reports is ideal. The amount very much depends on the organization and the role of the manager.
It is, however, likely that there is an opportunity to take layers out of the organization in order to improve agility, effectiveness, efficiency, and, ultimately, reduce costs.
Business process optimization
When was the last time business processes were amended in your organization? Probably, it was quite a while ago.
When you optimize business processes, the aim is to simplify them and introduce standardization whenever possible.
Most logistics providers have the ability to report tracking and tracing events digitally through their websites. Often you find that there is either no focus on data quality in the organization or that the level of customization for each client is too great.
For example, the system can report 10 standard events, but 15 are reported for customer A, 12 for customer B, and 21 for customer C.
Both data quality and the absence of standardization make system usage obsolete and result in numerous individual tracking and tracing Excel worksheets, which are updated by the operations and customer service teams and then sent out to clients daily, weekly, monthly, etc.
In these cases, harmonization between the commercial and product departments is required so that, ideally, mostly standardized event reporting is offered and executed through the system.
As you optimize and simplify business processes, you want to pay particular attention to repetitive, non-value adding tasks, such as pure data entry tasks, which do not really require intelligent human intervention.
Highlight these tasks for the next step.
Want to take a deep look at your business processes? We’re here to guide you. Get in touch.