Distribution and manufacturing location strategy development for a leading pharma company

Anonymous


Assigment

Determine the optimal distribution and light manufacturing center strategy for a leading consumer goods company.

Project summary

BCI assessed several scenarios for this company to determine the optimal location strategy for their significant European distribution and light-manufacturing operations. Scenarios included expansion of the current location in Western Europe, adding a new site in a lower cost location in Central and Eastern Europe to the existing locations and consolidating all activities in a new site in Central and Eastern Europe.

Method
  • BCI mapped the current situation in terms of costs, service to the customers (lead times, reliability) and risk profile as a reference point for the future location scenarios
  • BCI defined together with the client three key scenarios
    • Expanding at the current location in Western Europe
    • Adding a new site in Central and Eastern Europe and keeping the existing operations also in place
    • Consolidating all activities into a new site in a lower cost location in Central and Eastern Europe
  • BCI assessed the scenarios in detail. Different perspectives were included. Of course costs were a major driver for including Central and Eastern Europe into the scope. However, due to the size of the operation (>750 FTEs), labor availability was the key decisive factor. Therefore, the assessment was done at detailed location level assessing the feasibility of locating this operation in specific candidate locations from a labor availability perspective, now as well as in the longer-term future
  • Based on the total cost, quality and risk assessment the preferred scenario was selected and a business case was presented to management
Results

Based on the risks from a labor availability perspective the company’s management chose for a scenario in which part of the activities would still remain in the existing locations utilizing the existing workforce. The new location in Central and Eastern Europe will be realized to accommodate further business growth and to take advantage of lower labor costs.


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