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Downstream Organization Archetypes

To help better understand the organizational changes crafted in recent months throughout the downstream sector. This perspective outlines the results of our analysis - and suggests that downstream companies may have properly armed themselves with organizational structures that will be well suited for the realities of the a post ‘export ban’ environment that is less susceptible to economic and regulatory externalities. There are three principal organizational models (each differentiated as to degree of vertical integration along the downstream supply chain (refinery gate to nozzle). (In this context, we define “value chain” as a linked set of activities in the supply chain that incrementally adds value to the end product.)  Using two indices—degree of integration and degree of centralization—The Quaker Group mapped the organizational structures of the researched companies (exhibit below).  Two natural groupings emerged, with four companies demonstrating a functional orientation, and three others demonstrating an integrated orientation.

Once the organizational ‘as-is’ has been broadly defined, the elements of the new organization are developed on the basis of internal capabilities (culture) and most likely current and future relevant externalities that leverage organizational uniqueness to exploit markets where the enterprise does business.  We establish transition timelines and road maps, identify appropriate communication vehicles, and establish “change management” task forces to alert the workforce about what to expect. The end point of this process is a management structure that precisely matches a company’s strategic imperatives, competencies and unique ways of doing business, while providing the tools that can enable a downstream energy business to better meet new market and regulatory risks, manage capacity, and increase margins in a sustainable manner.