Right-shoring manufacturing

Challenge

A U.S. based household small appliance company with operations in China, Europe and the U.S. acquired a new brand and sought to identify the best sourcing and manufacturing strategy as part of its business acquisition integration plan.

Approach

• Sourcing strategy: Examined the products’ bill of materials and identified the make vs. buy options within the feasible sourcing regions, primarily China and Mexico.
• Multi-site/multi-vendor sourcing and manufacturing modeling: Factored in the manufacturing costs within the regions, along with sourcing costs and lead times, with consideration for the availability of skilled labor and transport infrastructure into the consumer markets.
• Net landed cost comparisons: Comparison of the options indicated the strong financial and lead-time/responsiveness advantage of Mexico-based manufacturing, combined with selected sourcing of China-sourced sub-assemblies.
• Risk assessment: Consideration of supply interruption, lead-time variances, labor, and trade compliance risks also favored the Mexico solution.

Results

• Expected 25 percent reduction in net landed product cost as compared to the status quo China-based sourcing and manufacturing, with improved lead times and reduced supply chain risk.