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Network Optimization

Strong internal and external factors are at play in the global manufacturing industry. They’re affecting everything from energy costs and wages to productivity and currency trends. Survival in the face of these trends requires close attention to network optimization. BCG can help organizations define and attain their future optimized network.

An optimized manufacturing network is defined across three dimensions.

  1. Economics. This dimension looks at the end-to-end operation, everything from cost efficiency to logistics and supply chain costs. It also addresses areas with more limited impact, such as severance costs, hiring and transfer costs, productivity loss, and asset changes.
  2. Markets/Consumers. Key considerations in this area are product demand profiles, innovation portfolios, customer proximity and brand positioning as it relates to specific manufacturing countries. Companies need to consider market specifics, including local content requirements, currency risks, and import tariffs and taxes.
  3. Technologies/Resources. Companies should consider manufacturing colocation of individual components, of value chain steps, and of engineering and production resources. They also need to understand the regions and industry clusters in which they operate, the engineering and production workforce availability in those areas, and the infrastructure that exists to support their business.

We work with companies to assess their business relative to these three dimensions. Then we follow a four-step approach to defining the optimal target network for future success.

Laying the Groundwork

Conducting a Cost-Driver Analysis

Taking a Scenario Tour

Refining the Focus

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