The Rebirth of US Manufacturing
BCG's Hal Sirkin challenges the conventional view that manufacturing in the United States is in decline.Watch the video
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.
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.
During this phase, we work with clients to collect data about their production portfolios and volumes by location. Target data includes cost breakdown per value step for each product, plant performance analysis, and logistics. The goal in this step is to create data transparency and align every part of the organization on where things stand and where they may need to go in the future.
To build on the groundwork established in step one, our teams analyze network constraints, from technology and operations to markets and customer segments. What are the drivers behind production cost differences, and what is the impact on each cost type? How do these findings play out at a plant level as well as a network level? What are specific logistics costs that are positively or negatively affecting network efficiency?
Step three is an opportunity to model various options for network optimization. How can the organization improve its cost position by product? Can it adjust capacities or eliminate losses by site to be more efficient? Is there an opportunity to improve the flow of inbound, outbound, and interplant logistics? We can model the required investments, the projected savings, and the one-time costs per scenario to help companies arrive at an optimal solution.
The final step in the network optimization process is to evaluate all available options, create a short list of preferred scenarios, and conduct tests on those scenarios to see how they fit with a company’s long-term strategies. The end result of this process is a high-level implementation plan that can deliver a step change on network costs.