Network Optimization Case Study
Provided comprehensive operations and implementation support over several years, including merger support, supply chain initiatives, synergy identification, and plant closures. Evaluated existing operational footprint, benchmarked against competitors, modeled production scenarios, quantified financial benefits of plant closures, and assisted in planning and executing closures.
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CASE STUDY Network optimization
We provided a wide range of operations and implementation support over many years Merger Yr. 2 Yr. 4 Yr. 1 Yr. 1 Yr. 4 Yr. 7 Immediate value opportunities Supply chain initiatives Other operational initiatives Synergy identification Identified and quantified deal synergies Analyzed operational network Analyzed entire supply chain (e.g. route optimization) Identified and executed other operational initiatives (e.g. SKU rationalization) Oversaw closure of one plant Recommended additional plant closures Evaluated proposal to close another plant Provided implementation support Remained engaged as a trusted advisor to leaders 2
We evaluated our clients existing operational footprint Company network Customer demand Concentrated in the Midwest post-acquisition NE 20.8% MW 30.2% W 20.6% SW 6.4% SE 22% 3
We benchmarked our clients operational footprint vs. competitors 5.0 Production by region % OF PRODUCTION BY GEOGRAPHY Southeast West Northeast 1.2 Midwest Company Competitor 4
We modelled production scenarios with different network configurations Both capacity and compatibility of product lines had to assessed Plant C capacity utilization after Plant A closure PRODUCTION IN MILLIONS OF POUNDS Proposed Shifts 68 47 47 47 40 37 37 37 20 4 100% 3 by 6 380M capacity 90% 80% 70% 60% 50% 317M capacity 3 by 5 40% 30% 20% 10% 127M lbs Packaged Projected 0% Product #1 Product #2 Product #3 Product #4 Product #5 Product #8 Product #10 Product #9 Product #6 Product #7 5
We quantified financial benefits of plant closures BASE CASE Plant A Plant B Plant C Plant D Annual Savings 2,418,595 Total CapEx 2,415,821 Total One-Times 6,345,234 5 Year NPV 2,403,471 3,435,615 6,295,281 5,131,749 5 Year IRR 55.0% 5 Year IRR (2) 40.1% Annual Savings Summary Direct Labor 2,289,358 Indirect Labor 1,256,790 Overhead 1,272,957 Contract Mfg Fees (1,288,006) Logistics (300,000) Contingency/Other (812,504) Total 2,636,874 1,894,802 2,418,595 3,061,407 6
We helped plan and execute plant closures Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Closure of Plant A Build additional inventory capacity Announce plant closure Start new production crews at Plant C Stop work at Plant A Line up other NA plans ERP Maintenance of Plant B Immediate capital infusion Delayed capital infusion 7
We developed a delivery model that improved efficiency Current Bulk Delivery Model Logistic Tool Proposed Model 8
