The key task in the context of global manufacturing footprint projects is the optimal orientation of production and logistics networks. Supporting the growth strategy, increase the utilisation of individual locations, the reduction of ‘parts tourism’, supply chain costs and delivery periods, increasing of delivery speed, fulfilment of political obligations as well as higher resilience to currency and market fluctuations are among the most important project goals. The success of footprint initiatives depends on a number of factors that need to be brought into balance for every individual company:
- Appropriate Value creation depth and make or buy
- Global approach to technology and manufacturing Standards
- Distribution of roles and responsibilities at the sites
- Global capacity and investment planning
- Balance between global and local sourcing
- Use of country-typical flexibility tools
- Organisational approach with a clear central/decentral role assignment
- Homogeneous and slim dimensioning of the organisational units
- Global training and qualification programmes
ROI has developed a modular approach for designing a successful global footprint whose success has been demonstrated in numerous successful projects.
Phase 1: Network requirements:
To properly scale the project objectives, the requirements must be summarised in a structured fashion on the basis of the inputs from different functional levels of the company. This process is also suitable for a general sharpening of production strategy. The first phase of the project includes an analysis of the following factors:
- Strategic business objectives and growth and sales targets for regions and products
- Market and customer requirements, and differentiation from competitors
- Delivery times, response capabilities and cost targets
- Portfolio and service development
Phase 2: ACTUAL and TARGET performance
To bridge the gap between the ACTUAL and TARGET performance in the network, it is necessary, on the one hand, to consider potential which can already be reached within the current structure and, on the other, the potential that results from possible structural or network changes. Therefore, a representative number of sites are examined in the context of a global assessment. In addition to standardised audits on operational performance while the entire supply chain is also evaluated and internal and external benchmarking is carried out.
Phase 3: Development of scenarios
The question as to which design guidelines will determine the future footprint needs to be answered from two perspectives. The principle possibilities – the vision – for designing the network are recorded in a greenfield approach.
In the subsequent development of brownfield scenarios, the footprint-vision will be tested against existing conditions and restrictions and adapted to fit reasonable scenarios. In the next step, the main scenarios are evaluated in terms of different aspects:
- General network model
- Depth of Value creation, core competencies, sourcing strategy and make or buy
- Structure and role of plants and suppliers and distribution of technologies and production expenses
- Organisational structure, staffing requirements in direct and indirect areas, investment and control concept
- Network management and KPIs
Phase 4: Business Case, recommendation and implementation plan
A viable business case for a redesign of the global manufacturing footprint must meet several criteria. On the one hand, it has to define the quality improvements and the strategic contribution of the project. On the other hand, the clarification of the monetary contribution and risks is required. On this basis, it is possible to answer the question as to which objectives and implementation strategy offer the best cost-to-income ratio, whereby the following factors need to be considered:
- Evaluation of all cost items and currency dependencies influenced by the footprint
- Impact on the network and the individual locations
- Investment and implementation costs
- Quality of the solution/contribution to strategic positioning
- Feasibility and implementation risks
Quality improvement in the automotive industry
A leading global automotive manufacturer wanted to mobilize and accelerate its entire network of nine factories in terms of costs and quality.
With ROI, the Group established a completely new football-inspired practice of competing for championship leadership. The project team thus dynamised rigid plant structures and work routines.