Manufacturing Footprint Optimization: hearing aid manufacturer

The need to revise the manufacturing footprint strategy of a manufacturer of hearing aids.

Assignment

Our client, one of the leading manufacturers of hearing aids around the globe, had a historically grown manufacturing network. This network included sites in different parts of the globe and with significant capacity in North America and Europe and a lighter presence in Asia.

The company’s management expressed the need to revise the manufacturing footprint strategy in order to: 1) remove historically grown inefficiencies 2) reduce the risk in the footprint and 3) add capacity to facilitate further expected business growth.

Project summary

The client company is  one of the leading hearing aid manufacturers, operating on a global level and focusing heavily on product / technology innovation.

The company has a wide portfolio of products ranging from more traditional hearing aids to very personalized high tech hearing aids.

The different types of products require different manufacturing processes and therefore the company has a mix of fairly manual manufacturing and high tech manufacturing including 3D printing, advanced materials production, etc.

Our approach

Our project with this client was conducted in a step-wise approach:

  1. AS-IS analysis; detailed quantitative data collection and analysis as well as strategic input gathering through management interviews and workshops. A detailed mapping of the current footprint was the result of this first step
  2. Scenario development; based on peer company benchmarking, our global manufacturing footprint experience and the client team’s own experience and ideas a set of 6 scenarios was defined and detailed out. The scenarios as defined ranged from full global consolidation to regionalization to a hybrid of regionalization and localization for very specific product groups
  3. Scenario analysis; a very detailed and flexible footprint (software) model was developed, allowing for fast scenario analysis and sensitivity testing. Besides the quantitative modelling, in this step also the qualitative assessment per scenario was conducted. In this assessment factors were included such as labor availability, proximity to market and logistics connectivity, and also different types of supply chain and location risks.
  4. Roadmap development; based on the outcomes of step 3 the preferred scenario was selected and a roadmap was built together with the client team: when to make which shift in the footprint, when to do what capital investment and insight into how the landed cost per product group will evolve over time given these optimizations

Result

The results of the analysis was that the company selected a regionalized footprint, with one main production site per global region, as the optimal future solution. In the transition roadmap the company prioritized the different regions as it did not want to make a “big bang” change globally.

Therefore the implementation process was divided into phases of 3 years each, partly planned in parallel. The very first action that was started was to conduct a detailed location study for a new manufacturing plant in Europe.

“We never looked at our global footprint as one global system. By taking this approach with BCI we were able to unlock potential that we never had been able to make visible before”