Asia sourcing reorganization increases business capability and profit margin for major Scandinavian retailer
Business was growing quickly for the Scandinavian client and their sourcing operation from low-cost countries based in Shanghai was not able to keep up with the increasing demands of the growing operations.
To address this issue, management decided to reorganize and expand the team with a Sourcing Director Asia position and opening several sourcing operation offices closer to the supplier’s locations.
This organization was expected to improve capacity to handle the increasing volumes and workload, strengthening working relationships with suppliers and reducing operation costs.
A Scandinavian retailer, after several years of running a sourcing office in Shanghai, decided it was time to rethink its sourcing mapping and strategy due to growth with increased sourcing volumes, expanding number of categories and rising operation costs from the Shanghai office. After careful evaluation, they reached the final decision to do a re-organization which led to the closing down of the existing operation in Shanghai and the establishment of 4 new operations in South East Asia, Hong Kong, Zhejiang and Guangdong Provinces of China.
ARC Consulting was chosen to be their partner to lead and coordinate the project. In the end, the transition was executed on time, on budget without any supply interruptions during the entire process.
ARC Consulting was contracted to lead and coordinate the entire Asia sourcing team reorganization project. In this role, ARC Consulting managed the project plan, timeline, executed the implementation, kept costs within budget and handled all coordination with external resources such as labor lawyers, company registration agents, government officials, and accountants.
The approach to the project was split into 4 steps:
- Step 1: Preparation and Data Collection
- Gather information about the Shanghai company’s legal status, employee information and understand what were headquarter’s expectations from the project.
- Engage and communicate with external partners, including labor lawyer, accountants, registration agencies and recruitment agencies
- Gather information about the legal obligations for the company during the whole reorganization process and the time needed for implementation
- Step 2: Project Plan Development
- Outline tasks, timeline and milestones with a Gantt Chart
- Develop a project reporting template
- Step 3: Implementation and Regular Project Review
- Develop employee severance plans with the management team from the customer and the labor lawyer
- Lead negotiations with employees about severance packages and finalize the agreements with them
- Manage the resignation handover of the employees
- Complete the liquidation and cancellation of the legal certificates of the Shanghai company
- Search for locations for the new offices and assist with lease contract negotiations and signing
- Legal registrations for the representative offices in South-East Asia, holding company in Hong Kong and subsidiaries in China
- Open bank accounts for the new legal entities
- Apply for the necessary documents for the new legal entities, including tax account certificate, import & export license, etc.
- Assist in recruiting employees for the new offices
- Develop handbooks and process documents for the new teams
- Regularly update the project status and report to the Management of the customer
- Step 4: Project Closure and Handover
- Develop a summary report about the completed actions
- Handover all working documents to the newly established companies
The project was completed successfully with the following deliverables:
- All employees from the Shanghai operation were resettled smoothly without any legal disputes
- The operation of the Shanghai office was shut-down properly and legally
- A holding company was set-up properly in Hong Kong to manage the Asian sourcing operation
- Opened 2 new subsidiaries in the provinces of Zhejiang and Guangdong within project timelines to take over the sourcing activities in China from the Shanghai office
- Opened a new subsidiary in the Southeast Asia region to cover sourcing activities in that area
- Efficiently on-boarded key employees of the new organizational structure to start-up operations quickly avoiding any supply interruptions during the transition.