Supply Chain Network Design

Redeveloping a supply chain network for a European industrial products company.

Assignment

One of the Business groups of a European industrial products company is growing rapidly and has changing requirements to the supply chain. The current manufacturing, warehouse and logistics footprint cannot accommodate the scale of activity nor the changes in the requirements. The company needs to redevelop its supply chain network. Key questions are:

What is the best manufacture footprint(how many factories, where, tipping points, allocation of products to plants)
What is the best logistics network and routing of product? (which manufacturing and/or warehouse locations can be co-used for this business group?)
What number and role for DC’s? Optimal inventory positioning and routing? Impact to duties, and sustainability?
Furthermore the company seeks a model development that they can re-use to develop own strategy design scenarios.

Project summary

Client is a world leader in the design and manufacture of cutting-edge technologies, software and services for the professional construction industry, building maintenance, energy and manufacturing industries. Equipment, software, and aftermarket parts and consumables are provided around the world.

Clients strategic targets for strong growth, and aspiration to improve the customer experience drives the review of the global manufacturing and supply chain set-up. The integration of the Manufacturing and Distribution network of a recent acquisition is another driver to review the footprint now for the related Business Unit.

Our approach

BCI’s methodology in manufacturing footprint and distribution network design was built around five key steps to support the Client in defining the target production and warehousing & logistics footprint.
Step A aims to develop a modeling concept, based on the analysis of the current manufacturing and distribution structure and its key drivers in terms of cost, capabilities, and performance.
In Step B a fact based baseline is created. BCI guides the client in data collection and cleansing. From the data the baseline is developed by BCI and growth expectations are applied to arrive at the future baseline.
Step C & D; Step C focuses at the manufacturing footprint design, where step D looks at the logistics footprint design. In both steps the approach is to develop alternative network structures (scenarios), and quantify the cost and performance related to that structure with the model and data from steps A and B. Followed by assessment of location, quality, and risk factors. Sensitivities are assessed to understand the robustness of a network scenario.
In Step E the most preferred network was identified and the recommendations developed with the mutual project teams. As part of the report-out, a high level roadmap for implementation is delivered. As closing step, the re-usable model is handed over and the client team trained, for future revisions of their network(s).

Result

The re-usable Future Plant Network Dynamic Model is delivered and the client team trained. It enables the client team to adapt network structures and simulate output (landed cost, lead time, utilizations, etc.). The model also allows to adapt input factors according to business reality (pipeline, project outlook, duties, etc.).

The recommendation was to dedicate a single steel factory in Europe then top up Europe, plus top up Americas. The improvements compared to today’s structure:

Lead time reduced by 1 day for first fill and 3 days for top ups in average

15% lowered landed cost compared baseline 2022 – no improvement of 'add on' Americas

Resilient network to provide flexibility with an average utilization of 75% across all plants

Sensitivity testing confirms stability of scenario and top-ranked position remains for the recommended network.