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© 2012 Boston Strategies International, Inc. 1

Strategic AnalyticsOverview

April 2016

6/9/2017

This report has been prepared by Boston Strategies International at the request of CLIENT for the purpose of establishing its operating strategies. It may not be appropriate for other purposes or audiences. This report contains forward-looking statements and projections with respect to anticipated future performance of CLIENT, suppliers, customers, and/or general or specific economic conditions and factors that are based on Boston Strategies International’s analysis of market trends and external data. Forward-looking statements and projections are not guarantees of future performance and involve significant business, economic and competitive risks, contingencies and uncertainties, which are difficult to predict. Accordingly, these projections and forward-looking statements may not be realized and actual results may vary up or down. This report may not be reproduced or distributed without express written approval from Boston Strategies International.

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Organization DesignSelected Case StudiesOctober, 2016

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Case Study Page

Corporate Functional Analysis and Headcount Adequacy

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Management Structure, Job Descriptions, Process Redesign, and Interim Leadership

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Organizational Structures Effectiveness Study 5

Staff Competency Assessment and Rating 6

Governance Best Practice Benchmark 7

Organization Structure Evolution Roadmap 8

Organization Definition & Roll-Out 9

Outsourcing Evaluation, Planning, and Implementation

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Contents

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Key Challenges

• Sales and organizational growth forced change and adaptation

• Profit squeeze surfaced the need for outside expertise

Why BSI was Selected

• Functional analysis database

• Reputable and reliable analysis

• Strong base of European company experience

Project Scope

• Finance & accounting

• IT

• Logistics

• Production management

• Marketing, advertising, and public relations

• Sales management

• Executive management

Project Approach

• Benchmarked organizational overhead costs and functional performance

• Analyzed cross-divisional internal as well as external comparisons in finance and accounting, information technology, logistics and production management, purchasing, real estate, and human resources

Financial Benefits Realized

• Identified a bloated organization with an efficiency opportunity equivalent to 25% of personnel

Operational Benefits Realized

• Greater job activity detail and accountability

• Clarity of mission and departmental effectiveness

ABOUT THE CLIENT

Industry Electrical Equipment

Revenues $4 billion

Employees 35,000

Location France

BSI Service or Solution Functional Analysis

CORPORATE FUNCTIONAL ANALYSIS AND HEADCOUNT ADEQUACY ASSESSMENT

CASESTUDY 429

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Key Challenges

• Operational failures highlighted deficiencies in the maintenance organization and management personnel

• Labor issues complicated the relationship with maintenance staff

• Management wanted to replace leadership while straightening out the problems


• Helped avert a catastrophic financial event by identifying an impending operational problem before it occurred

• Executive confidence in consultant judgment in a politically charged situation

Project Scope

• Interim management of aircraft maintenance operations (replaced an incumbent manager)

• Reorganization of the division

• Redefinition of responsibilities and rewriting of job descriptions

• Preparation of a 5-year plan to align staff around a common mission, vision, objectives, and targets

Project Approach

• Reorganized the division, including reassignment of incumbent managers

• Designed an organization structure and mapped ‘should-be’ processes around lean management and reliability-centered maintenance principles

• Rewrote job descriptions, clarifying accountabilities

• Developed a 5-year plan in collaboration with department managers

• Set individual and group targets around the targets from the long term plan


• $3 million annual savings

• $2 million per year reduction in labor costs


• Clear leadership and direction

• Rapid elimination of operational risk

ABOUT THE CLIENT

Industry Maintenance

Revenues $35 billion

Employees 100,000

Location United States

BSI Service or Solution Reorganization

MANAGEMENT STRUCTURE, JOB DESCRIPTIONS, PROCESS REDESIGN, AND INTERIM LEADERSHIP

CASESTUDY 20

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Key Challenges

• Ineffective organizations

• Inefficient structures

• Inflexibility and inability to adapt to changing competitive conditions


• Reputable, deep, and thorough analysis

• Experience with a broad array of companies

Project Scope

• Studied organizational structures of major US companies over time, as they grew and evolved from functional to divisional and conglomerate organizational management paradigms.

• Elicited conclusions about which organizational structures were the most effective

Project Approach

• Analyzed company financial performance, C-level reporting relationships, headcount, spans of control, and financial performance

• Determined the sources of efficacy of alternative organizational structures

• Stratified the results by industry and size of company


• Financial analysis showed that that the appropriate structure for each industry, size, and stage of development leads to superior financial performance


• Organizational efficiency

• Organizational effectiveness

• Greater predictability and accountability

• Flexibility, ability to change

• Agility and speed of adaptation

ABOUT THE CLIENT

Industry Multi-Industry

Revenues Industry Leaders

Employees 10,000+


BSI Service or Solution Organization Analysis

ORGANIZATIONAL STRUCTURES EFFECTIVENESS STUDY

CASESTUDY 427

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Key Challenges

• Catastrophic budget overrun highlighted deficiencies in staff competency at many levels

• Inbreeding and low turnover resulted in a lack of objectivity and knowledge around marketplace and competitive best practices

• No training and development; perpetuation of previous practices


• Supply chain expertise

• Process industry focus

• Audit and assessment frameworks

Project Scope

• Organization mission, vision, objectives, targets, and organization to achieve them

• All operations personnel

• Management and individual contributors

• All plants worldwide, with initial focus on US operations

• Group and individual competency

Project Approach

• Interviewed all staff

• Rated individual competence, strengths, weaknesses, and training requirements, using maturity matrices and best practice assessment tools

• Suggested new hires and outplacements to address short-term and long-term gaps

• Recommended individual and collective organization development initiatives, including training, development, monetary and non-monetary incentives, and compensation realignments


• $2.8 million savings realized, which would not have been possible without staff alignment and collaboration

• Increased staff productivity and efficiency


• Dramatically increased accountability

• Alignment around executive-endorsed goals and increased corporate competitiveness

• Enabled a cost-saving consulting engagement

ABOUT THE CLIENT

Industry Specialty Minerals

Revenues $1.5 billion

Employees 3,000


BSI Service or Solution Staff Assessment

STAFF COMPETENCY ASSESSMENT AND RATING

CASESTUDY 431

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ABOUT THE CLIENT

Industry Oil & Gas

Revenues 100 + billion

Employees 350,000

Location Asia

BSI Service or Solution Project Strategy

Key Challenges• Increasing participation in major capital project consortia

led to many actual and potential governance dilemmas• Need to learn quickly from other companies that have

been through many consortia experiences

Why BSI was Selected• Oil and gas contracting experience• Major capital project database• Extensive contacts at leading oil and gas companies

Project Scope• Joint Operating Agreements• Alliance contracts• Joint Venture agreements• Stage gate models of innovation and technology

development• 11 oil and gas companies• 63 consortia• Organization structures• Decision‐making processes• Governance matrices• Contracting approaches• KPIs

Project Approach• Primary research• Analysis of effectiveness• Classification into best practices and stages of excellence• Identified personnel competencies required to successfully

manage large, complex joint agreements• Recommendations regarding organizational structure,

agreement clauses, and professional skills and development required to successfully manage megaprojects

Financial Benefits Realized• Avoided significant overhead (indirect) costs and

investment (direct) risks of being a novice in a high‐stakes international consortia

Operational Benefits Realized• Smoother collaboration with partners• Leapfrogging to “best practice” mitigated learning curves

and associated costs

CASESTUDY 218

GOVERNANCE BEST PRACTICE BENCHMARK

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ABOUT THE CLIENT

Industry Oil, Gas & Power

Revenues Various

Employees All Sizes

Location Global

BSI Service or Solution Organization Design

Key Challenges• Large, complex projects requiring extensive coordination

among multiple parties • Pressure to complete projects in short timeframes • Significant potential for damages and lawsuits • High cost of failure

Why BSI was Selected• Supply chain expertise and authority• Best practice analytic frameworks• Unbiased and independent

Project Scope• Oil & gas, power, industrial, and consumer goods

companies• Small, medium, and large companies• Leading companies and lagging companies• PMO, E&P, Downstream• Engineering, Procurement, and Construction• HSE, quality, safety, marketing, sales, customer service,

logistics, transportation and order fulfillment functions

Project Approach• Benchmarked organizational structures• Analyzed differences by industry, segment, and size• Explained pros, cons, and suitability of alternative

configurations by industry and stage of growth and maturity

Financial Benefits Realized• Accountability and effective coordination reduces the

incidence and cost of failures

Operational Benefits Realized• Improved coordination and communication• Reduction of delays and rework• Reduced risk

CASESTUDY 107

ORGANIZATION STRUCTURE EVOLUTION ROADMAP

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Key Challenges

• A series of acquisitions generated a multitude of divergent operational practices and procedures

• Emerging competitors threatened the client’s leadership position, increasing the need for high customer service levels


• Deep operational experience with industry leading competitors

• Experience implementing the most robust transportation management system in the industry

• Highly structured approach that was well-suited to a pilot program and subsequent nationwide roll-out

Project Scope

• Transportation

• Warehousing

• Order management

• Field sales

• 5 pilot cities

• 23 major metropolitan areas

Project Approach

• Reorganized reporting relationships to centralize shared and efficiency-based functions while decentralizing customer-facing roles.

• Wrote detailed job descriptions for all operations staff including prerequisite qualifications, supervision, hours, and time allowances.

• Defined compensation and incentive bonus structures.

• Developed standardized work methods based on best practice in the industry.

• Developed standard activities, tasks, and sub-tasks, including optimal sequencing and timing using work sampling based on tens of thousands of onsite observations.


• 25% savings identified in the planning stage and realized in the first pilot implementation


• Standardized work enabled continued national and international growth

ABOUT THE CLIENT

Industry Logistics Services

Revenues $2 billion

Employees 9,000


BSI Service or Solution Operations Improvement

ORGANIZATION DEFINITION & ROLL-OUT

CASESTUDY 430

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Key Challenges

• Operational failures highlighted deficiencies in the maintenance organization and processes

• Labor issues complicated the relationship with maintenance staff

• Management wanted to consider outsourcing the jet engine maintenance in order to definitively resolve the problems


• Consultant identified a major impending operational problem before it occurred

• Outside support helpful due to a politically charged situation

Project Scope

• All aircraft and engine types in the fleet

• Preventive maintenance

• Unplanned repairs

• Heavy overhauls and light maintenance

• Global operations

• 5-point program

• Reorganization

• Process optimization

• Variability reduction

• Outsourcing

• Vendor management

Project Approach

• Articulated key business processes

• Applied a decision tree flowchart to decide which processes should be retained based on strategic and operational criticality

• Designed and implemented kitting templates

• Compared the current situation with an optimized scenario and an outsourcing scenario

• Prepared a tender to outsource the function in part and/or in whole

• Sent the bid to market, evaluated and chose a vendor

• Developed vendor management integration and evaluation processes


• $3 million annual savings

• $2 million per year reduction in labor costs


• 20% reduction in lead time

• Risk offloading to suppliers

• Simplified labor relations

ABOUT THE CLIENT

Industry Airline

Revenues $35 billion

Employees 100,000


BSI Service or Solution Outsourcing

OUTSOURCING EVALUATION, PLANNING, AND IMPLEMENTATION

CASESTUDY 19

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