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Client Background

An American food manufacturer wanted to reduce costs by moving inventoried raw/packaging material out of contracted warehouse space, by either constructing a new warehouse or expanding their plant footprint with additional warehouse space. 

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The Problem

The cost of constructing a new warehouse would take years to pay out.  The client requested we look at the factory to see if we could fit the materials stored in the current outside warehouse in the existing plant footprint. 

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The Approach

The plant layout was analyzed to determine if areas of unused production space could be repurposed as warehouse space.  Storage conditions, ordering patterns, and pallet configurations of the materials were analyzed to determine rough storage requirements. 

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The Solution

  • Over 50% of the materials inventoried in outside storage came from two suppliers

  • Suppliers were within 50 miles of the client’s plant and typically made two truckload deliveries per day

  • By building the suppliers’ capability to conduct and document packaging inspections, shipments did not need to arrive early for the client to test and release

  • The suppliers were willing to move to a Supplier Managed and Owned Inventory model, thereby making daily deliveries for the client’s next-day production

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CASE STUDY:  SUPPLY CHAIN

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A plan was devised for the client, utilizing unused or inefficiently used space to house roughly half of the materials to be brought in from outside storage.  To avoid an expensive plant expansion, it was recommended that an integrated supply chain be developed with suppliers to eliminate the inventory of the remaining half of materials, specifically:

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