Tag Archives: Organizations

Reducing Overhead by Consolidating Field Regions

Large utilities have many multiple regions in their territory, with each region having multiple field depots. This structure leads to a great amount of duplication and overlap of responsibilities as key business functions such as work planning, work scheduling, project management and customer relationships are duplicated across regions. This also causes deviations and lack of uniformity in the way the work is executed in regions and depots.

There is a clear trend in the industry to consolidate regions and depots, flattening the organisation. Talking to utility managers having gone through consolidation of field regions, I concluded that one can expect a 20% reduction in overhead in a 2:1 consolidation – and this can be compounded many times, i.e. a 4:1 consolidation leads to almost 40% overhead reduction.

Why was this not done earlier? Implementation of Enterprise Resource Management (ERP) systems, which forces standardization of process, is one key driver. Furthermore, an ERP can effect consolidation without requiring centralization of roles – consolidation without centralization has less organizational resistance from middle management than pure centralization.