A privately held consumer packaged goods company specializing in massage products (cushion and handheld devices), footbaths and niche categories such as sensory therapy, sought assistance in establishing a global supply chain organization, demand planning/forecasting process and logistics metrics coupled with appropriate systems support.
The client manufactured most of its products in China with distribution centralized in Michigan, and regional locations throughout the US. The client was experiencing more allocation of product than “normal”, high expedited freight costs and lack of focused responsibility for corporate inventory/information management.
We held a series of focused leadership meetings to understand the organizational structure and quickly assembled a core of supply chain expertise (reporting to the CFO) and built a case for a COO/VP position dedicated to leading this discipline. The senior management team approved this as a first step and, with the CFO’s agreement, appointed an interim lead for operations.
We implemented the aggregate planning module of their forecasting system, allowing for consistent forecasting accuracy through corporate involvement with global/regional demographics driving the distribution locations
With management assistance, we looked at low cost country sourcing holistically, including lead times and air freight requirements needed to satisfy demand.
Our client subsequently established a formal supply chain organization, installed JD Edwards One World technology to manage their global sourcing, and transferred manufacturing of certain highly seasonal, high margin products from China to the US (Indianapolis).
During this 14 month engagement, we helped reduce air freight costs by 75% (from $3 million annually to $750K annually) and established a sustainable organization and systems support program for our client. The resulting gains in productivity and profits (+17% vs. estimated +10%) assisted the client in the acquisition of several diverse product lines over the next three years. Additionally, two separate capital projects were eliminated at $150 million each in favor of a $50 million renovation at the Indianapolis facility.