SUPPLY CHAIN PROCESS

RESTRCTURING
BY
A.SUJITH
 SUPPLY CHAIN RESTRUCTURING
• Supply chains are becoming more global by the day. It is very important to
maintain a nimble supply chain that differentiates brands from being “order
qualifiers” to “order winners”. Companies expand and shrink, which require
streamlined manufacturing and supply chain footprints, resulting in massive
restructuring programs.
• Restructuring programs deal with major “lift & shift” activities involving
manufacturing, tooling, transportation and warehousing assets. Programs of
such scale need tremendous amounts of planning, starting from contingency
sourcing, facility readiness, finding new suppliers, buffer planning,
manufacturing process and production readiness
Supply Chain Restructuring Programs
 Reasons to Initiate Restructuring Programs

• Cost Savings
• Outsource non-core products and services
• Improve supply chain network efficiency
• Facilitate growth strategies
• Mergers and acquisitions
• Operations consolidation
• Getting closer to customers
 Key Challenges & Considerations
• Defining program scope and make vs. buy decisions in the restructuring
programs go hand in hand. Costs, competency, core/non-core and future
constraints are a few important aspects to consider.
• Changes in economic policies also affect restructuring programs. Close
monitoring of new policies and macroeconomic factors drive sourcing and
other supply chain decisions.
• Integration of new products, production operations, logistics and
distribution are critical to restructuring programs. It also includes integration
of I.T. and accounting systems, people coordination, and ensuring a cultural
fit.
• Cost inflation in outsourced products and services impacts the overall
program. Therefore, probable process and raw material cost inflation
should be taken in to consideration while designing a program.
Transformation program cost includes the cost of additional resources,
planning costs & costs associated with unknown risks
• Closure Dates for facilities is another crucial area of concern. For all
restructuring projects, it is important to plan and execute the phase-in
& phase-out of facilities. Often, they result in delayed closure, due to
ramp-up issues and the ability to maintain a stable workforce at the
closing facilities, during the transition phase.
• Reducing waste, during transformation, is a challenge in front of
stakeholders. It is important to have a burn off plan for all inventory in the
pipeline, especially for supply chains with long lead times. Sometimes, it
comes down to scrapping certain inventory to complete the transition. In
many cases, transition dates could be pushed out, while all inventory in the
supply chain is consumed
• Capital investment and budget allocation for inventory ensures a
smooth transition of products, from one facility to another.
Transformation inventory requires budget allocation for capital cost.
Efficient inventory planning ensures uninterrupted supply, during the
transition phase. It is important to design a strategy, which is responsive to
changes in required transformation inventory. Transformation inventory is
based on product development at the new facility, exit date for the current
facility and demand, during the transition time. All of these factors can
change in the middle of execution, requiring a flexible and responsive
inventory planning process.
THANK YOU