Changing supply chain initiatives for Medtech company

Identifying changing supply chain network design initiatives and enabling facilitating the right facilities.
 

Assignment

Within supply chains, the focus of improvement predominantly used to lie with cost reduction. The result in most cases was centralization and a large warehouse to service markets spread over multiple geo’s. The last years (COVID, other disruptions) proved costs are not the only driver for decisions. Resilience, business contingency, reduced carbon emissions and reliability are just as, if not more, important than costs itself. The project, sponsored by Logicor (a large logistics real estate investor), had the purpose to identify decision levers besides costs and customer satisfaction. Not with the purpose to find the cheapest or the greenest setup, but merely to balance between costs, customer satisfaction, and carbon emissions in supply chains. The main question: is there reason to decide differently if we have more perspective on non-financial decision levers?

Project summary

Green real estate in terms of BREEAM, solar panels, and electrification is not new. The context of the estate in relation to the supply chain and its total emissions on the other hand is new. Logicor wondered what decision levers changed if you add the point of view of carbon footprint. “Will we design our supply chain differently if we have other information at hand?”. As a facilitator of real estate, this project was an exploratory research to identify future strategies on location and use of warehouses.

Identifying changing supply chain network design initiatives and enabling facilitating the right facilities.

Our approach

This project started with a generalized supply chain setup of an industry vertical (medical technology in this case). The Medtech supply chain archetypes are based on manufacturing locations, warehouse locations, customer locations and transportation in between. Based on BCI costing, carbon and lead-time databases, the product flows are modelled and impacts are reflected.

Product flows are split in high and low value flows, warehouses are sized to the required capacity and the modalities are picked based on existing trade-lanes. We distinguish belly freighters and full freighters, different types of trucks and will assess if a multi-modal solution makes sense or not.

By modelling the three aspects of impact, decision making processes (not only for brand owners but strategic development corporations as well) might change in the future. The traditional approach of cost reduction is not always the best solution. The only way to figure out what’s best for you is to start modelling your supply  chain and pointing out the aspects which impact your business on a cost, customer satisfaction, as well as carbon emission point of view.

Result

The result of the project was a scenario overview with different supply chain designs (central versus decentral versus regional supply chain networks). As a result of the designs, product flows change and the associated costs, customer satisfaction and carbon emissions changes with them. The scenario’s identified origin of carbon impact and  enable the customer to ‘play around’ with different strategic scenario’s. In the end, the balance between costs, customer satisfaction, and lowering carbon footprint result in a better supply chain and will become part of your future license to operate.