LONDON Molex has implemented the first part of its restructuring announced in August 2006 with a major change to its sales and marketing organization. In the company's 2006 annual report it said it would “transition to a global organizational structure that consists of market-focussed divisions during the 2007 financial year”.
The company is also restructuring its manufacturing operations and plans to release more details with its financial results on August 1.
Until now Molex (Lisle, IL) used a structure with regional presidents responsible for a combined manufacturing, sales and marketing profit and loss center. This approach was increasingly be becoming a barrier, in the last five years the proportion of the company's business that involves two or more regions has risen from 36 to over 70 percent.
Graham Brock, (left) previously president of the European region, has become president sales & marketing in charge of the global sales operation. Brock said it had become increasingly difficult to work with customers when their business involves more than one region with complex internal negotiations having to take place to provide a common set of terms and condition for a global contract. “Business dynamics have changed considerably in the last five or six years. Increasingly design is being done at multiple design centers,” added Brock.
“Eighteen months ago we started top debate internally how we could get a front end to our customers that we can execute quicker, we can provide more value and bring business opportunities in to our company quicker and more effectively. I was tasked with coming up with a new approach,” said Brock.
Four core industry segments – mobile, consumer, datacom and automotive – were identified and global groups set up to work with customers in these sectors. A global electronic manufacturing services (EMS) team, will also focus on the top six EMS provides providing a single point of contact for the customers. Regional sales operations will continue to work with local customers and distributors. The heads of these regional teams as well as the vice presidents running the global groups will report to Brock.
According to Brock, previously sales staff tended to be parochial selling products that were manufactured and used in their region and were not incentivized for sales outside their region. “In sales and marketing we have become region and division agnostic. The sales force is now incentivized on selling all of our products. We also have introduced a new commission scheme that rewards them for any products sold, through any channels including distribution and EMS. Globally we have all the sales force on the same design registration system. A new global commission scheme completed its roll out last week and it has cost us over $1million to develop.”
“This provides us with a tool for tracking global sales which enables use to reward a sales person in the U.K. even if the part if used in the Philippines. It also enables us to look and types of products and designs more efficiently on a global basis. This will help us with new products and concepts.”
Next week the separate sales and manufacturing divisions are meeting in Chicago to look jointly look at key products, new designs and volume requirements for capacity requirements for the coming year.
In April Molex said said that a charge related to head-count reductions, realignment of manufacturing capacity and plant closures will be $100 to $125 million. Brock confirmed that this includes the closure of one of its two Irish manufacturing sites with equipment being moved from the Millstreet facility in Cork to its larger plant in Shannon. Brock said the closure involves around 85 people leaving the company and a few transferring to Shannon where a expansion costing between up to €3 million (about $4million) should be completed in the next couple of months. The Shannon facility currently employs around 450 and is one of 54 manufacturing facilities in 18 countries. Molex also has 27 development centers in 14 countries.