From Supply Chain Chaos to Operational Excellence: A Manufacturing Expansion Success Story
Problem
Company Overview: The company, a global leader in the construction materials sector, faced significant challenges in securing a reliable supply of core specialised products. The key issues included:
1. Supply Chain Disruptions: The company experienced severe supply chain issues with its current international suppliers leading to frequent stock outages and customer dissatisfaction.
2. Operational Risks: The unreliable supply chains posed a substantial risk to maintaining the company’s market leadership position and its reputation for high-quality products.
3. Market Demands: The increasing market demand for the specialised products required a more reliable and efficient production strategy.
Solutions
Evaluation of Sourcing Options: Stoke Consulting was engaged to evaluate and recommend the optimal sourcing strategy for the specialised products. The following options were considered:
1. Do Nothing:
- Continue sourcing all products from existing international suppliers;
2. Switch Suppliers:
- Consolidate all sourcing to one of the existing suppliers;
3. Local Manufacturing:
- Build a new manufacturing facility at the existing plant in Australia.
Recommended Solution: After a comprehensive market and financial evaluation, the recommended solution was to build a new manufacturing facility in Australia. This option was selected based on its superior financial returns, operational efficiency, and the ability to maintain product quality and supply reliability.
Risk Mitigation Strategies: A detailed risk analysis was conducted to address potential challenges such as supply chain disruptions, customer dissatisfaction, and operational inefficiencies. Mitigation measures included:
- Establishing local manufacturing capabilities to reduce dependency on international supply chains.
- Developing a detailed project plan with conservative timing estimates and strong supplier relationships.
- Installation and commissioning planned to ensure minimal disruption to ongoing operations.
Outcomes
The business case was presented to the company’s Global Board by the Regional Managing Director and was approved. There was strong supportive feedback.
Key Benefits:
1. Enhanced Supply Chain Reliability: Local manufacturing significantly improved the reliability of the supply chain, ensuring timely delivery of high-quality specialised products to customers.
2. Operational Efficiency: The new facility reduced operational risks and increased efficiency, allowing the company to meet growing market demand and maintain its competitive edge.
3. Financial Gains: The investment delivered robust financial returns, with strong internal rate of return (IRR), substantial net present value (NPV), ensuring long-term profitability and operational stability.
Conclusion: This case study highlights Stoke Consulting’s expertise in crafting effective business cases and recommending strategic manufacturing expansion solutions that secure the company’s growth and operational stability, reinforcing its leadership position in the competitive construction materials market.
Could your company benefit from expert assistance in evaluating the best options to overcome a difficult business decision? Stoke Consulting can help. Contact us today.
Chris Read
Stoke Consulting
Leveraging his extensive leadership and entrepreneurial background, Chris consistently leads high-performing teams of leaders to outstanding business achievements. He excels in unravelling the intricacies of challenging business scenarios, crafting strategic plans and business cases while fostering deep trust including during executive coaching. This comprehensive and high integrity approach significantly elevates business performance for his clients, helping them to exceed expectations. Chris’ experience includes successfully leading multiple $1B+pa businesses with full P&L responsibility across nine countries and 800 reports to starting, building and selling his own e-commerce business, all the while building high performing teams of leaders.
