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Kcc Supply Chain Management

Essay by   •  October 9, 2013  •  Case Study  •  1,420 Words (6 Pages)  •  2,197 Views

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Identify the important key recurring decisions that must be made effectively for KCC to be successful. In KCC's functional organization, who had the authority to make these decisions? Who has the authority to make these decisions in KCC's new divisionalized organization?

When KCC commenced business operations they had the luxury of a monopolistic market environment. However, with time, competition and a downturn in economy requires the company to be innovative in numerous angels to stay ahead in competition. Firstly, the organisational structure must be aligned to bring more efficiency across the board to increase productivity. Another, significant decision that requires periodic assessment is the line of products being offered. The company has to decide if they wish to expand their product offerings, to diversify their offerings to the market or having a combination of both. KCC also has to be wary of promoting their products and dealing with logistics such as distribution channels. Furthermore, increase in production cost also means the company has to make decisions relating to locality of production. The nature of KCC's business is such that Research and Development plays an important part as competitors will bring out new innovative products to the market. Therefore, decisions will have to be made on how much investment is to be made on research to develop the existing product range.

Prior to the new divisionalised structure, the Vice Presidents in charge of sales, supply chain and finance and administration and the managers in charge of advertising and research and development had authority to make decisions for and behalf of their departments. However, each of them would ultimately report to the co-founders.

Under the new divisionalised organisation, the divisional managers were given the authority to make decisions pertaining to the functional aspects of his or her division. This has given more authority to the management team unlike previously whereby the co-founders had far more involvement in the decision making process.

2. Did KCC's top management go too far in decentralizing the corporation? Did they not go far enough? Or did they get it just right? Why?

In order to answer the series of questions set out above, the rationale behind decentralising has to be ascertained. First and foremost Kevin Wentworth the CEO of the company felt that it would be advisable for them to make changes to the organisational structure. Towards this end he believed decentralising would generate efficiency and better usage of assets. The rationale was that it would also improve customer focus and reduce cost in relation to stock keeping units (SKU). The idea was also to make their main products, namely; retail products and custom products into two profit centres. This would in turn create value to the organisation rather than merely growing. In a nutshell what the management wanted was to achieve an operating method which accounted for financial responsibility through a controlled mechanism.

Decentralising has its advantages as well as its disadvantages. Through decentralising a company can achieve better customer focus as decisions are made primarily by people dealing with stakeholders to include customers. In addition, it creates motivation amongst staff as they feel they are involved in the decision making process and this generates more satisfied employees resulting in satisfied customers. However, on the other hand, decision making may not always necessarily be in line with the strategic goals of the company. Furthermore, policy implementation could be hampered. Leadership issues could also be a significant factor in a company decentralising.

From the information provided it appears that the company have certain issues that may hinder the expected objective being achieved. The company middle level management who were to take up more responsibility were not trained to step up. Furthermore, the company staff found it difficult to understand the mechanisms of operating under a decentralised regime. The total lack of transparency on how the decentralised organisational structure would work made the staff members more sceptical about the process. But there were benefits to be achieved from a financial point of view if the system was to work in an efficient manner.

My take on the matter is that the company was right to promote a decentralised organisational structure but the decision to implement the process without first consulting senior management

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