The Multi-Product Chile case showed all the characteristics of a decision case. At the end of the case, Mr. Thompson, the new manager, had to face with a decision whether or not continuing with the changes started by the company. Therefore, we approached at the case with a decisive standpoint.
1. What are the specific problems & issues facing the company?
Managers organization structure chart shows that the work distribution could not be done well. There are too many managers and this might lead to a very high individual competition. The working structure of the company does not promote teamwork, each division is working individually and the staff is not working as a team and this decreases the effectiveness of the compensation system, which has also been held as an individual activity. Another major issue is the lack of trust on each other, caused mainly by cultural aspects that lead the employees to be more individual: everyone is only interested in themselves, not in the area they work in. Sales representatives are only interested on the product they are specifically selling and that causes differences with what the clients are looking for. Therefore, the company struggles to accept changes happening right now.
2. How do you evaluate the approach the firm has taken so far?
Multi-Products Chile has tried to keep up with the new trends in the market by meeting the new and constantly evolving customer’s needs. Before Thompson’s arrival, the Key Accounts review and Integrated Solutions program were already been launched. The new identification of company’s Key Accounts as a strategic relationship with the customers was aimed to create a long-term competitive advantage for the firm and creating new benefits for the clients. Integrated Solutions meant a completely different approach in the relationship with the customers: the sales representatives focused their efforts from one product and many clients to one client and a different set of products. The role of the sales representative had to evolve becoming a “consultant” for the customer.
The issue of Chilean cultural barriers to overcome, in order change their sales policy, was not an easy one. They are a closed culture and the mentioned lack of trust that emerged between the co-workers represented an issue in the team working approach required by the transition to an integrated sales model. In our view the firm has moved in the right direction. Even though the sales were doing well with no sign of a crisis, the profit margin was decreasing. The customers were asking for a different kind of service and, in order to be competitive in the future and coherent with the innovative spirit of the firm, a step forward was necessary. Meet the customer needs is the key to success and now the big challenge is trying to align the approach with the Chilean culture. Moving from a traditional selling model to an integrated also represented an opportunity to align their strategy with all the other Multi-Products branches all over the world.
3. What actions should the firm take going forward?
From an integrated solutions model standpoint, every single employee should be on the same page in terms of team motivation, company coherence, and content on the multi-products structure. This innovative model from the traditional business model has a lack of adaptability in the Chilean culture because the company’s implementation isn’t in its full effect. Therefore, a change in a more streamlined and lean management structure that coincides with the integrated sales model, which could be tweaked according to the Chilean culture, could be the way forward, especially when the profit margin is decreasing where the times of culture adaptability change are needed. The fact that the Chileans are “workaholics,” and they are dedicated, in turning their dedication to a team oriented strategy could suffice for the “one voice, one face, one company,” as part of their integrated solutions model.
The incentive structure could be tweaked as well for sales representatives, where a higher commission and bonus model for higher sales in effect could boost the company’s performance. If this is streamlined, this could be the factor increase in the company’s market share from a low profit margin. Due to the fact that Chileans are naturally competitive work oriented people, an innovative competition structure that is internal and fun could be established whereby, workers motivate themselves to beat each other, which could overall beat the benchmark targets for the sales and marketing segment in the integrated solutions model. In going forward, merging the integrated solutions model, key accounts and the Chilean culture norms, mores and values of their work standards, where the team as whole could leverage their core strengths in competition, hard work with their sales representatives, could be their main factor advantage in the market.
4. What are the key supply chain(s) links in this case? How might the supply/value chain be used as an analytical framework for understanding the organizational and managerial challenges facing the company?
This case shows different key actors of the supply chain. Starting with the initial inventory with its way of procurement. Then, they explain the way they deliver their products, which is via truck shipment mostly. The new sale solution they are implementing affects the way they will manage their orders. Adding more services in the process, as customer will need advices. Its overall way of retail is challenged in this case, aside from facing an overhaul in the sales division; its supply chain has to be adapted to answer the new needs. The company will need to pivot from a push production to a pull production. Hence, most of the supply chain is affected. This is the main organizational challenge, because every aspect of their current supply chain will have to change. They want to reach the next level, going from a simple offering of products to a retailer of solutions, as mentioned earlier. For the supply chain, that means, more reactivity and flexibility.
Several layer tools needs to be implemented. They should apply a just in time production, meaning that they will have, at least, to use the lean manufacturing to eliminate the wastes in their production. They will work with smaller trucks to sale more often. A reduction of their waste in the manufacturing process, and the pace they can change their production should be as low as it can. Its sales people need to learn how to work together, but the top management needs to be on the same page regarding this project, everything will start with their support. And it’s a real mistake that they still have people openly doubting the overall at this point of the process.
The challenge would be to rally those executives. Then create an atmosphere where collaboration is valued and useful. The entire success of this overall relies on the way people can adapt to it. And it won’t be easy regarding the social value that Chile people developed. The organizational side is important, but should not be the main focus, as it is motioned in the case that they are still delivering in time their products. But keeping these changes in mind is important for the long term, which is also a switch in the company’s culture.
5. How have STEEPLE factors impacted the company?
The social aspect of Chile has a direct impact on our company, as people in Chile are workaholics where they are more focused on individual goals than the company’s goal. The use of incentives to individual sale representatives will help increase the sales but this will again drive them towards their own individual goals. Technological innovation helps us in deriving 30 percent of sales. There is potential in the market but the economy is increasing slowly as compared to other Latin American countries. Being political stable since last 10 years, there are legal issues regarding regulation and standards while dealing with other countries.
To conclude, the wisest option for Thompson is to continue the overhaul of the company’s management and organizational systems. Because Multi-product Chile is at a critical point where it has to adapt in order to stay competitive. Even if the project faces difficulties, it has to be achieved. The main factor for success, aside from the technical parts, would be to rally the employee towards this project. Starting with the executive, this is inconceivable that they are still facing trust issue from the managers at this point of the project. Regarding the technical part, in order to be able to deliver according to the new standards, they will have to switch their production from a push production to a pull production. We would recommend starting with the basic tools of the lean manufacturing.