International operations, international logistics, internal transportation, cost, Total Cost of Ownership, Overall Supply Chain Management, overall supply chain management assessment, Germany, India, factories delivery performances, recommendations, supply chain types, lean manufacturing, business modeling, centralized buying strategy, supplier, Indian factory, transportation plan
Alpha, the explosion protection solutions manufacturer, recently faced financial pressure due to some external specific situations, mostly the global downturn in the oil and gas industry. Therefore, the company has had to imagine a new supply chain's strategy aiming at improving its global profitability and particularly its «lighting» business unit (BU), which, with its 4,500 customers, is at the moment specifically performing badly.
The crucial point and goal is to reach some new performance rates by using some production cost reductions.
As a consequence, the Chief Operations Officer's task is to assess and analyze the global and current supply chain process through a detailed report. This way, the main problems will appear as clearly as outstanding, offering new potential solutions to valuate. Balancing the pros and cons of each solution, the COO will then be able to offer a new strategy along with some useful tracks to follow to the Management Board in order to reach the new defined standards.
[...] International operations and logistics - Supply chain management Alpha, the explosion protection solutions' manufacturer, recently faced financial pressure due to some external specific situations, mostly about the global downturn in the oil and gas industry. Therefore, the company has had to imagine a new supply chain's strategy aiming at improving its global profitability and particularly its « lighting » business unit process, which with its 4,500 customers, is at the moment specifically performing badly. The crucial point and goal is to reach some new performance rates by using some production cost reductions. [...]
[...] The final quantity produced would be only 1,304.1 kg. Given the tiny amount required for each final unit (F.U),we may consider that such a disruption will lead to a fully damaged manufacturing organization. Rubber quantity required per Unit Total quantity required Final Unit disruption Percentage 35 g 145,000 g 4,142/48,100 lamps 9 % We need to observe that such a disruption would lead to a lost in F.U produced, which is a significant figure. However, if the price dobbles, then the final material cost would be 15,252.16 which represents a huge increase in the whole production cost of the company. [...]
[...] On top of that, all the intermediate dealers have been recently erased from the buying-selling process to enable the company to generate higher margins with its 11,500 customers worldwide. This last step appears as an improvement to create a shorter global circuit. The main problem arisen by this global strategy is the lack of consideration of the production cost and therefore of the whole cost efficiency of the process. Another problem lies into the long-term supply continuity especially in case of raw material disruption. [...]
[...] Lean manufacturing principles In order to fully benefit the build-to-order type of organization, it will be helpful to plan and draw a fixed production and transportation plan based on a regular global demand. As a result, we need to consider the two plants production specificities and their different suppliers. Therefore, a strategical route will be defined to help picking up the different materials within one travel from the Indian factory to the German one, given that one is mainly aimed at producing while the other one is mostly dedicated to assemble. This way, some transportation waste will be avoided. [...]
[...] Therefore, it has reinforced the position of the Russian hub, which role appears strategical as on an economical view as on a political scale since the Crimea crisis and put the Southern one in the work. Moreover, due to the international activity of the company, we have obviously had to carefully analyze some potential raw material disruption cases or economical worsening situation in order to fully assert the steadiness and regularity of the company's industrial activity. To make it short, this supply chain cleaning-up helped streamlining a compound and sometimes confused specific process, considering the positive and regular balance to maintain between supply and demand to make all the different actors definitely satisfied. [...]
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