Companies around the globe are reviewing their manufacturing footprints in a higher frequency and based on more detailed analyses. This need for more frequent and detailed manufacturing footprint reviews is driven by geopolitical uncertainties, ever faster market and location changes and the introduction of new production technologies. Elements that are reviewed include the number, size and functionality of the manufacturing plants, their locations and the production technology within the plants.
Because of the increasing uncertainties companies often choose to conduct scenario analyses. The geographical scope of the optimization can differ: domestic (e.g. China, US), regional (e.g. Europe or South-East Asia) or global.

The importance of a thorough manufacturing process optimization process

A variety of internal and external considerations can be the driver for the need to review manufacturing footprints: cost reduction, business growth in new markets, the introduction of new production technologies, a merger or acquisition, geopolitical developments, etc. These questions are valid for large mature companies who have a focus on efficiency, but also for fast-growing companies with much more focus on facilitating further and even faster growth of the business.

Manufacturing footprint optimization through scenario analysis

The optimization of manufacturing footprints is often done through scenario analyses. Based on forecasts and assumptions about market developments, cost developments and technological innovations different scenarios are defined for the optimal network of manufacturing plants. Examples of scenarios can be consolidation versus expanding the number of manufacturing locations, off-shoring versus near-shoring, investing into new production technologies versus expanding in low labor cost locations, etc.

Trends in manufacturing footprints

BCI, based on it practical experience working with companies around the globe, observes a number of trends in manufacturing footprints:

• The continuous search for the right talent: in manufacturing hotspots around the globe there is a shortage of labor impacting potentially the optimal manufacturing footprint of companies and the optimal locations within that footprint
• Within Europe the Brexit discussion plays certainly a role and within Central and Eastern Europe companies keep looking for the lowest cost locations, e.g. driving increased interest in countries like Serbia and Macedonia
• Within China there is a clear trend of manufacturing shifting towards the Central and Western parts of the country, away from the more expensive and matured coastal regions towards lower cost locations more inland
• Besides the changes within China, there also is a clear trend of manufacturing locations shifting towards countries like Vietnam, Thailand and the Philippines

Manufacturing footprint optimization & BCI advice

BCI supports companies in optimizing their manufacturing footprint through the following services:

• Analyses of the current network of manufacturing locations
• Development of relevant scenarios
• Detailed scenario analyses based on BCI’s proven 3C model: Cost, Customer and Conditions

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