The client is a leading manufacturer of interior rolling stock components for major European rolling stock manufacturers. After years of successful growth, the company was acquired by private equity. Pacellico was engaged to assess its supply chain and operations capabilities and requirements to execute the next phases of growth.
Client situation
The company developed from scratch over two decades from a designer of components into a full-fledged manufacturer. The new owners faced strategic supply chain questions which needed to be answered. What capital investments into equipment were required? How fit for purpose were the current manufacturing processes and which activities should be outsourced and which ones carried out in-house?
- Over $3.4M in first-year cash benefits identified
- Lead time reduction and working capital improvement of 35 to 50%
- Development and modelling of an optimized outsourcing strategy to bring reduced cost and improved customer service
Our approach
Pacellico held a series of onsite workshops analyzing the following key areas and strategic supply chain dimensions:
- Make vs Buy analysis to determine efficiency and effectiveness of cost and customer service
- Sales Force Effectiveness to develop, execute and realize revenue potential over next 3 to 5 years
- Value Stream Mapping to reduce lead time, increase productivity, and optimize working capital
Solution and outcome
- $1.8M–$3.6M in additional profit identified from implementing a new pipeline management and sales execution system
- $1.1M–$1.6M in annual cost savings identified through optimal use of outsourcing and improved manufacturing
- $1.4M reduction in inventory (35%) driven by significant reduction in lead time (30 days = 50%)