Technology

Concurrent redesign: production footprint & logistic network

In continuous pursuit of the ideal production footprint, many technology companies consider shifting their production locations. There could be many reasons for this – to cut production costs, reduce customer lead times, or move closer to suppliers – and sometimes it is because of product line changes. Whatever the underlying reasons, any redesign of the production footprint requires concurrent redesign of the logistics network.

Lowering logistics cost by 5%

To reduce production costs and move closer to strategic suppliers, a leading global technology company decided to diversify its production and distribution footprint in the APAC region. Before taking a final decision, the company asked DHL Consulting to develop a logistics network strategy for this shift that would support projected 2021 demand.

We developed and compared various to-be logistics networks and the customer shortlisted six out of initially ten scenarios. We then undertook detailed assessment of these six scenarios based on multiple criteria including cost efficiency, minimization of backflows, and stock proximity to markets. For each scenario, we also defined implementation roadmaps and OPEX/CAPEX requirements.

The customer selected our recommended scenario, setting up a new Regional Distribution Center in the same country as its key production plant. This investment decision was justified by a 5% cut in logistics costs, reduced backflows, and stock holding closer to key markets.

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