To turn the situation around and improve competitiveness, management decided to revise its product strategy – and also redefine the supporting industry and value chain strategy.
A cornerstone of the new industry and value chain strategy was a holistic approach, where the “recipes for success” in each market segment reflected backwards throughout the entire value chain.
This lead to the design and structuring of two distinct and different value chains:
One value chain was designed to deliver highly customized products, towards bigger customers who typically placed large but infrequent/irregular orders.
The second value chain was designed to deliver more standardized products and options, towards smaller customers who typically placed smaller orders on an annual cycle.
Functional strategies and goals were all aligned with the overall value chain strategy, affecting essentially all functions involved; sales, R&D/innovation, purchasing, manufacturing, logistics, sales and operations planning and aftermarket.
A complete organizational overhaul was made to support the realignment; in which functions were separated towards the two distinct value chains. Select subsets of functions were kept common across value chains in order to support synergy capture – where this did not conflict with the “recipes for success” per value chain.
To make the new strategy and organization operational, a new operating and governance model was also defined, where each value chain was given new process designs, roles and responsibilities, as well as performance goals and KPIs.