I.B.C. to cut 215 positions in restructuring initiative

by Eric Schroeder
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KANSAS CITY — Interstate Bakeries Corp. on Wednesday said it has realigned its organization, a move the company believes will help it focus "more clearly on its customers, drive sustainable results, and lower its cost structure."

As part of the restructuring, I.B.C. said it will organize operations in a new "cross-functional, matrix structure" in which eight business units have been created replacing the 10 profit centers around which the company had been organized since 2004.

"The old I.B.C. organization served us well at one time, but, it also resulted in duplicate work among organizations, too many layers for quick and effective decision-making and unnecessary complexity," said Craig Jung, chief executive officer. "Our new matrix organization will focus I.B.C. more clearly on our customers and on improving product quality, enhancing service-to-sales, and lowering costs. It will result in improved communication, better planning, and an increased focus on results. All of which will help I.B.C. win in the market place."

According to I.B.C., the change will include the removal of two layers of sales management, resulting in the elimination of approximately 215 sales management positions, or approximately 5% of its non-union workforce.

Mr. Jung said that reshaping the organization and streamlining its sales management structure was a key element of I.B.C.’s new business plan, adding that the new organization "will look vastly different than the previous structure and operate more effectively."

Part of the effectiveness will stem from cross-functional business teams that will report to a business unit general manager. In addition, business unit directors of operations, finance, and human resources will report to a functional executive at headquarters, as well, Mr. Jung explained.

"This matrix creates a shared focus between headquarters and the field on product quality, service-to-sales, our customers, and results," Mr. Jung said.

I.B.C., which recorded a loss of $3,655,493 in the four-week period ended July 28, said the preliminary estimate of charges to be incurred in connection with the organizational realignment is approximately $4.7 million, including approximately $4.2 million of employee-related cash charges and $500,000 of other cash charges. In addition, the company said it intends to spend approximately $900,000 for accrued expenses to effect the realignment.

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