Global Supply Chain Strategy Case Study: Global Conglomerate
The senior management of a multi-billion dollar global conglomerate that produces industrial and consumer electronic and media-related products recognized that profitability levels could be significantly increased if the Supply Chains within its component operating companies were more efficient and synergies could be developed between them. However, the conglomerate’s management wanted objective, experienced help to realize their goal, so they contacted Establish for assistance.
Each of its conglomerate’s seven operating companies had:
- Many product-specific sales and marketing organizations, each with different customer bases, distribution channels and service requirements.
- Different manufacturing sites in Asia, North America and Europe.
- Independent logistics organizations that operated completely autonomous logistics networks that had different combinations of:
- Transportation modes (ocean, air, motor, etc.) and types (private, contract, etc.).
- Ports of entry/ports of loading within countries.
- Warehousing configurations and warehouse types (private, third parties, etc.).
To achieve the management’s goal of increasing the efficiency of the combined Supply Chains, Establish developed a concise project objective, a defined project scope, a detailed methodology, and a time-phased plan for completing the work. Key management personnel within the operating companies were interviewed to develop an understanding of the customer bases, distribution channels, customers’ service requirements, business objectives, and issues related to the current Supply Chains. Next, data was gathered across the operating companies and a sophisticated baseline model of the current Supply Chains was developed that would act as the benchmark for evaluating the improvements and allow management to better visualize the issues. This model clearly revealed that the key Supply Chain driver was customer demand and the related service requirements of the individual markets.
Alternative scenarios incorporating overseas consolidations, different ports, distribution center consolidations, product mixing centers, cross-dock activities, and various distribution center locations were identified and fully evaluated. This far-reaching project resulted in the development of a realistic, comprehensive three-year Supply Chain strategy that identified an 8 to 10 percent reduction in Supply Chain costs while maintaining or improving service performance levels. The project was completed on-time and within the fee estimate.