Our Client had made a major acquisition in dry foods manufacturing – increasing the number of European production sites to 19 and production lines to 297.
The Supply Chain infrastructure was a combination of existing and acquired assets.
Sequoia completed an initial Greenfield study – to size the prize of restructuring and give some direction. This identified potential savings of €100 million p.a. by moving to an optimal theoretical network.
Then we undertook a more detailed study, to create a financially justified restructuring plan:
- Identify specifically which sites should grow and which should go
- Be specific about the types of production facilities which should be retained / created in each site
- Identify short term opportunities to re-map production and/or relocate production facilities to gain savings
The Network was both large and complex compared to most FMCG networks:
In order to model the Network, we had to identify and characterise every packaging and process line within the Network. We also had to categorise the product range into Packaging Formats – so that we could use an optimising algorithm to match demands to production capabilities.
- 118 unique (non interchangeable) Formats across;
- 297 packaging lines; within the
- 19 Factories included in the study.
As well as splitting the product range by Format, we further subdivided it:
- By ABC category – so that we could explore the cost impacts of focusing factories on either volume or complexity; and
- By channel so that we could evaluate the benefits of focused Food Solutions factories.
After the detailed study of the Supply Chain, looking out over the next 10 years, we confirmed:
- The Supply chain is under capacity in some Technology Groups but has a significant excess of capacity, lines and sites in others;
There is a considerable need for investment, restructuring and rationalisation to:
- Rebalance the Supply Chain to better fit its future challenges; and to
- Leverage low cost sourcing opportunities to match competitors
- Hence – we developed an investment and restructuring programme which will, over the next 4 years, enable the development of a leaner, fitter supply chain with 26% lower end-to-end conversion cost.