footprint
The client operates in the machinery equipment space, with sales in over 90 countries and a manufacturing footprint spanning four continents. Recently acquired by a new owner, the company aspires to become the global industry leader, achieving double-digit organic growth in both existing and new market segments over the next five years.
The company has a history of operating in a steady-state environment, devoid of major disruptive activities or occurrences, and has not undertaken significant growth efforts within short timeframes before. The industrial strategy has predominantly relied on the ‘as we’ve always done it’ approach, leveraging old cash cows and customer relationships with relatively predictable demand patterns.
A first assessment revealed that capacity would be a major bottleneck, along with the potential for significant structural cost reduction if production could be located closer to market demand.
As a starting point, a winning recipe was developed for each targeted market segment, tailored to the specific dynamics of customer characteristics and geography. From that, supply chain design criteria were derived, enabling a competitive advantage in each market and segment and outlining the performance requirements necessary to execute the strategy.
The next step involved a complete end-to-end assessment of the as-is supply chain. This process compared the current state to the supply chain requirements specified in winning recipes. The assessment covered the in- and outbound supply chain structure, the strategic fit of the manufacturing footprint, and an evaluation of each factory’s operational capacity, maturity, and improvement potential.
It revealed that capacity was misaligned with market demand and optimal cost, and several factories lacked the capacity and capabilities required, suffering from prolonged periods of underinvestment. Several areas of improvement were identified, including material planning, production flow and engineering, line balancing, work organization, and standardisation of operations.
The systemic misalignment and local pain points were holistically addressed through the formulation and evaluation of a set of supply chain design scenarios. Each solution aimed to optimise capacity, lead time, and cost efficiency while also ensuring resilience and long-termism in the footprint decisions to be made.
These scenarios underwent evaluation from a strategic, financial, implementation, and risk perspective, ultimately defining the winning combination and, as such, the new supply chain design and industrial strategy.
The chosen solution outlined a roadmap for restructuring the manufacturing footprint. This involved closing, relocating, and consolidating production from Europe to Eastern Asia, regionalising supply, and transferring production from Asia to Europe. The plan also included significant capacity expansion in current European and Asian plants, along with new routes to markets for new segments.
An operational excellence journey was initiated, delivering both a short-term action plan for quick operational wins and an implementation plan for a global Production System to ensure continuous improvement, cross-learning, and standardisation.
In summary, a supply chain strategy was developed from scratch, securing immediate and future growth capacity, and delivering significant cost reductions globally.