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Case - Global supply network design
Challenge
A leading telecommunications equipment maker asked Norbridge to assist with the transformation of its global manufacturing and distribution system. Business unit heads had become increasingly critical of supply chain performance, which had cost the company substantially in terms of revenue, cost and customer goodwill.

Specific presenting issues included:
  • Regional imbalances of supply and demand causing high freight and duty costs
  • Poor product availability due to degraded performance of a key contract manufacturer
  • Difficulties linked to a move of the central North American distribution center
  • Fragmented supply base tied to historical reasons rather than rational optimization

    The broad objective: Develop a compelling, analytically-based supply network attuned to worldwide customer needs, balancing service, cost, working capital and risk.

Approach
  • Global manufacturing strategy and network design was developed
    • "Landed value" model constructed, including bill of materials, manufacturing value added, transportation, warehousing and duties - as well as risk of expedited freight
    • Manufacturing strategy was set for products classified by volume and demand variability
    • Packages of key products were developed for re-sourcing in order to align actual global contract manufacturing footprint with optimal design
    • Opportunities for new in-country manufacturing were explored for key import-served markets
    • Positive business case was prepared
  • Inbound component strategy (a key driver of product availability problems) was developed and impact quantified
    • Long lead-time components were identified for key product types and impact on complete system orders was determined
    • Cascading set of component assurance strategies was developed, focusing most expensive measures on limited set of high-impact items
    • Business case was made for investment in component-level supply assurance strategies to drive finished goods availability at minimal inventory levels
  • Global distribution network was redesigned to improve customer service while reducing operating cost and working capital
    • Models were built and utilized to select optimal distribution center locations and stocking strategies
    • Business cases were developed for changes affecting distribution in the US, Asia-Pacific and Latin America
Value Added
  • Business units are onboard with major supply chain changes
  • Re-sourcing of manufacturing and implementation of recommended distribution system changes is well underway
  • Client's performance has improved significantly since Norbridge's assistance began:
    • On-time delivery to promise: 15 percentage point improvement
    • E to R ratio: 0.1 percentage point improvement
    • Inventory turns: 0.2 turns improvement
    • Deferred revenue: $50M improvement
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