Locating a new manufacturing plant

Challenge

A rapidly-expanding frozen food manufacturer had previously worked with us to decide on a second manufacturing plant location, as it was outgrowing its single West Coast facility. With the new Southeast plant running successfully and approaching capacity, the client wished to decide whether to expand it or build a third facility in the Midwest.

Approach

• Demand: Examined current demand and future sales forecasts by customer and region for a 5-year planning horizon.
• Analysis: Used a network optimization tool to consider nine possible new locations
  • Modeled key input costs for raw materials, production (capital, management, and labor), cold storage, and transportation.
  • Developed detailed operating cost estimates for alternative sites and production expansion scenarios.
  • Estimated service metrics, including inter-facility and outbound miles per case.
• Sensitivity: Considered various risks and sensitivities, including changes to the growth scenarios.

Results

• Identified and recommended optimal location for third plant.
• Recommended adding a new third-party warehouse location, which offered both cost savings and service enhancement.
• Positioned the manufacturer to launch detailed site evaluations and negotiations with state and local governments.