Network Optimization Case Study
Network optimization
Identified and
quantified deal
synergies
Analyzed operational
network
Oversaw closure of
one plant
Evaluated proposal to
close another plant
Analyzed entire
supply chain (e.g.
route optimization)
Recommended
additional plant
closures
Provided
implementation
support
Identified and executed
other operational
initiatives (e.g. SKU
rationalization)
Immediate value
opportunities
Supply chain
initiatives
Other operational
initiatives
Synergy
identification
We provided a wide range of operations and
implementation support over many years
Y
r
.
1
Y
r
.
1
Y
r
.
2
–
Y
r
.
4
Y
r
.
4
–
Y
r
.
7
M
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g
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r
R
e
m
a
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n
e
d
e
n
g
a
g
e
d
a
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a
t
r
u
s
t
e
d
a
d
v
i
s
o
r
t
o
l
e
a
d
e
r
s
We evaluated our client’s
existing operational footprint
C
o
m
p
a
n
y
n
e
t
w
o
r
k
C
u
s
t
o
m
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r
d
e
m
a
n
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Concentrated in
the Midwest
post-acquisition
We benchmarked our client’s
operational footprint vs. competitors
5.0
1.2
Production by region
% OF PRODUCTION BY
GEOGRAPHY
Company
Competitor
Southeast
West
Northeast
Midwest
We modelled production scenarios with
different network configurations
Plant C capacity utilization after Plant A closure
PRODUCTION IN MILLIONS OF POUNDS
10%
90%
50%
100%
70%
60%
40%
30%
80%
0%
20%
37
Product #2
Product #5
3 by 6
Product #10
Product #1
40
Product #9
Product #8
Product #7
3 by 5
Product #3
Product #6
Product #4
68
47
47
47
37
37
20
4
Projected
380M capacity
317M capacity
127M lbs
Packaged
P
r
o
p
o
s
e
d
S
h
i
f
t
s
Both capacity and
compatibility of product
lines had to assessed
We quantified financial benefits of plant closures
We helped plan and execute plant closures
Jun
Jun
Jun
Jul
Jul
Jul
Aug
Aug
Aug
Sep
Sep
Sep
Oct
Oct
Oct
Nov
Nov
Nov
Dec
Dec
Dec
Jan
Jan
Jan
Feb
Feb
Feb
Mar
Mar
Mar
Apr
Apr
Apr
Build additional inventory capacity
C
l
o
s
u
r
e
o
f
P
l
a
n
t
A
Announce plant closure
Start new production crews at Plant C
Line up other NA plans
ERP
Stop work at Plant A
M
a
i
n
t
e
n
a
n
c
e
o
f
P
l
a
n
t
B
Immediate capital infusion
Delayed capital infusion
We developed a delivery model
that improved efficiency
Current Bulk Delivery Model
Logistic Tool Proposed Model
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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Presentation Transcript
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
