Situation

$3B public medical device company grown through acquisitions over several decades under a philosophy of light touch integration. Business had outgrown the historical model where units were largely left to run independently. Fragmentation of the business interfered with the leveraging of a wide variety of assets - sales forces, technology developments, sales offices, manufacturing plants (30+), distribution centers(80+), supply chain (common vendors), ERP systems (20+), etc.

Action

Developed and implemented a 4 year consolidation plan to improve operating margin 250 bps. Led a small internal team (4 people) to develop and implement plan on a local level across the globe. Actions included the simultaneous consolidation of multiple facilities, legal entities, ERP systems and organizational structures by geographic location and business entity. Back office operations were consolidated in two global service centers and strategic procurement was centralized to enable vendor consolidation across all businesses. Process included frequent and regular updates to the board of directors and to the general employee population. Challenges overcome included consolidation of long standing organizational structure (i.e. moving from a high number of divisional leadership teams to far fewer group leadership teams), negotiations with European works councils & unions (i.e. no disruption to operations or customer service) and implementation of new internal engagement processes (i.e. how businesses and functions now interact with each other).

Result

By far the most significant organizational restructuring to date in the company’s 100+ year history. Achieved operating margin target 2 years ahead of schedule (2 years on a 4 year plan) with an incremental 260 bps improvement. Results included $70M of realized savings with 43 facilities closed or downsized and 1,100 associates exited (9% of workforce). Initiative was internally led and resourced with no 3rd party support.