A Practical Methodology for Restructuring Supply Chains

Over the years we have been asked to support a variety of projects aimed at evaluating and restructuring supply chains.

Virtually all of these requests are triggered by either an acquisition or a corporate cost reduction initiative focused on identifying and rooting out
redundant costs spread across multiple divisions.

The core trade offs are typically associated with the degree to which a company should consolidate supply chains that serve multiple business units or territories and the processes for eliminating variability and waste for each level of consolidation.

While it is intuitive that the overall cost of operating consolidated supply chains is less, it does not necessarily follow that the best strategy for a multi-division company is a single supply chain that supports all divisions.

Customer service requirements, competitive practices, sales policies, geography, freight profiles, technology requirements and many other considerations must be weighed to determine the most appropriate supply chain strategy.

The following concepts for how to best tackle projects of this nature is the result of having supported this type of project dozens of times across multiple industry segments.

The methodology we share in this document is intended to serve as an initial framework for companies contemplating such projects.