Maintaining an organized product inventory can be one of the most essential aspects of running a successful business. It’s essential to ensure the availability of items while also avoiding the accumulation of excess stock. Product organization can also help businesses save costs through accurate forecasting of supplier needs, avoiding overstocking and reducing the amount of time spent searching for items. In this blog post, we will explore how product organization can help businesses become more efficient, cost-effective, and ultimately successful. We will discuss the benefits of product organization, the tools needed to create an effective system, and strategies for staying organized. With this information, businesses can create a product organization system that works for them and helps to take their business to the next level.
Product Organization Structure
What is a product-based organizational structure?
Instead of separating teams and employees based on the tasks they perform, a product-based organizational structure groups them according to the product or service they are developing. Here’s an illustration of how the difference might actually appear:
The division where all marketers work in a pharmaceutical company with a function-based organizational structure. Smaller teams of marketers within the division work on advertisements for various pharmaceuticals. Instead of working with researchers or accountants, they collaborate with other marketing colleagues.
Employees working on a single medication in a product-based organizational structure collaborate. To build a campaign and create its budget, marketers would speak with researchers and accountants directly. They would work less with marketers in other divisions.
What is product organization?
The framework a business employs to create, oversee, and market a good or service it offers is known as product organization. Companies must decide how to separate employees assigned to one line of products from those assigned to others, especially when producing a variety of goods. Some decisions a company might make include:
How are product teams organized?
There might be a single product lead or several managers reporting to an executive, depending on the size of your product team. Here are some common organizations of product teams:
Why is product organization important?
The ability for employees to specialize their skill sets in support of a clearly defined product makes product organization important. It can lessen challenges a business might encounter with marketing, product development, and sales. Employee focus across functions can be coordinated to increase productivity and collaboration.
For instance, marketers can speak directly with the product developers who are already part of their team to share consumer insights that could enhance a product. Otherwise, the staff would need to communicate insights through additional staff members and across divisions.
Types of product organization structures
Certain organizational structures might make more sense than others depending on the nature of your product. Following are typical product organization structures that cater to various business requirements you may have:
By product or product line
This is the most common product organization structure. Products are managed independently by divisions, and product managers are accountable to the relevant chief officer or vice president. This model enables a business to efficiently scale up and to quickly decide which specific products or product lines to focus on.
Example
Teams working on distinct models are organized within a car manufacturer’s organization because the models’ varying designs, features, and manufacturing needs. Product managers are in charge of each model and answer to the chief product officer of the manufacturer.
By feature
It may make sense to organize teams around complex individual features in your company’s product if they require collaboration, or you may have different products that each use the same feature as a key selling point.
Example
The car maker only offers a few models, but they all have cutting-edge electric technologies and valuable infotainment systems. For these two unique features, the business may require an entire research, development, and marketing team. Even though the business doesn’t sell either feature separately in this instance, the manufacturer is better off prioritizing their inclusion in the product’s design.
By market segment
Larger businesses frequently satisfy the requirements of clients with various income levels or motivations. Your company may produce a variety of goods targeted at distinct segments of the market, and you may decide that your product organization should reflect this.
Example
A car manufacturer may offer both luxury and affordable models of their vehicles. It might produce two different sedans and two different SUVs. Although producing an economy sedan is similar to producing a luxury sedan, the manufacturer may organize according to market segment rather than vehicle type. This would enable teams from research, design, and marketing to concentrate on a single type of customer.
How to establish a product organization structure
The actions you could take to create a product organization structure for your business are as follows:
1. Decide type of structure
Examine the advantages and disadvantages of each product organization structure and decide which model suits your company the best. You might think about:
2. Define roles and responsibilities
Your organization’s size could affect how you manage your product structure. Calculate the number of managers your company needs to maintain effective communication without compromising the leadership required to realize the full potential of each department. One manager could oversee multiple departments on a product team, but keep in mind the individual managers’ areas of expertise. The success of your product managers depends on their capacity to make informed decisions and deliver valuable feedback.
3. Place employees
Determine which employees belong on which projects after you determine your structure and its leadership assignments. Your objective is to put the team members together whose cooperation could be the most fruitful. You might consider these factors:
4. Assess results
It’s crucial to have systems in place to assess results, especially when implementing a new product organization structure. Managers need to consistently produce reports and set up key metrics that show whether your product is reaching more customers and offering them more value. Additionally, you might want to conduct internal research to learn how staff members have adjusted.
FAQ
What is product organization?
The framework a business employs to create, oversee, and market a good or service it offers is known as product organization. Companies must decide how to separate employees assigned to one line of products from those assigned to others, especially when producing a variety of goods.
What is the role of product organization?
Each product group reports to a specific executive, who is in charge of managing all matters pertaining to that specific product line. For instance, a manager of Kraft products would be in charge of all the items sold under that brand, including dressings, meats, sauces, etc.
