The Company
- A global manufacturer and supplier of high value broadcast and industrial electronic goods.
- Supply chain had developed based on the company's consumer electronics model.
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The Project
- To optimise the European distribution network.
- To reduce costs.
- To reduce inventory.
- To improve service levels.
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The Approach
Analysis of the product range was undertaken to ascertain the degree of diversity in the product range. Based on this analysis, the need for supply chain segmentation was considered along with the necessary projects required to optimise each segment.
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Initial Analysis
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From the initial analysis in Chart 1, it was clear that the products in segments A and B were so diverse that they should not be handled in the same supply channels. It was also clear that the product range was generally of very high value and that a network of European DCs was too expensive in terms of inventory costs. |
Segmented Supply Chain Strategy
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The company therefore adopted the segmented supply chain outlined in Chart 2 and initiated the following projects:
- Fourteen national warehouses replaced by a single European Distribution Centre
- Increased the use of airfreight for imports from Asia.
- The creation of a global distribution hub for the highest value products in segment B from Chart One
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The Results
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These projects realised a decrease in total supply chain costs of 50% and a reduction in the inventory to sales ratio of 90%.
For further information on this project, please download the available conference presentation, commercial paper, or academic paper. |
To discuss how we can help you with supply chain segmentation as part of an effective supply chain strategy, please contact us.
