Production Network and Supply Chain Management
Supply Chain Management: Preventing Supply Bottlenecks and Proactively Managing Regulatory Risks
Supply chain management provides the strategic foundation for managing supply chain risks, such as volatile markets, trade restrictions, and regulatory requirements. Optimizing your production network is a key success factor and determines your company’s working capital, carbon footprint, and long-term responsiveness.
To achieve a stable production network, we combine manufacturing footprint optimization approaches with integrated business planning (IBP). This approach merges data silos and synchronizes financial, distribution, and operational supply chain planning to create a standardized model, supported by advanced planning & scheduling (APS) and AI supply chain planning.
Not only will this enable you to take proactive steps to prevent supply bottlenecks, but it will also help you sustainably reduce your fixed costs and maintain long-term delivery capability.
Global Production Networks
Balancing Cost Efficiency and Supply Security
When optimizing supply chains, cost efficiency and just-in-time logistics were the primary considerations for a long time, but business conditions have undergone fundamental changes in the meantime. Today, businesses face growing pressure from geopolitical instability, rising freight and energy costs, and increasingly stringent regulatory and sustainability requirements.
These external stressors expose internal weaknesses in companies’ supply chains and make potential vulnerabilities visible.
The good news is problems like these are preventable, but first, you have to regain strategic control over your operations. Instead of just reacting to external disruptions on a case-by-case basis, supply chains must be systematically checked for flexibility and resilience.
The foundation for this is a systemic realignment of your production network that aligns strategic objectives with operational levers. This gives you the responsiveness you need to gain a decisive competitive advantage in global competition.
If you recognize any of these challenges in your business, it is time to take action:
- The inventory paradox
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Despite high inventory levels in warehouses, you are repeatedly missing parts, causing production to come to a halt.
- Rigid structures and processes
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Networks that have evolved over time cannot respond quickly enough to short-term market changes or new trade restrictions.
- Lack of end-to-end transparency
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Information is scattered across fragmented systems, which is why supply chain risks are often only identified once they have impacted operations.
- Supply risks and production stops
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Unstable supply chains and a misaligned network result in unplanned production stops that reduce OEE and jeopardize delivery capability.
- Rising costs of complexity
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Individual customer requests and smaller batch sizes drive up the cost of managing production networks.
Integrated Business Planning:
Finding the Optimal Operating Point in Your Production Network
Many companies make the mistake of considering sites and processes in isolation. Local optimization, however, can weaken the overall system, result in unnecessary inventory shifts, and increase operational complexity.
Strategic supply chain management, on the other hand, avoids a silo mentality and instead manages the network as a whole. By optimizing your global production strategy, we resolve the tension between costs, resilience, and sustainability along every level of your supply chain. The goal is to identify the ideal balance that keeps your network stable while enabling profitable growth.
A holistic supply chain strategy lays the foundation for optimizing your production network. The goal is to structure the network in a way that makes it capable of adapting to geopolitical changes and regulatory risks. This summary shows our approach in detail:
How can a production network be optimized?
Production networks are optimized through integrated business planning, with the process generally comprising four key areas:
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Footprint analysis
Data-based analysis of locations and capacities.
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Inventory optimization
Reduction of working capital in the supply chain while maintaining delivery capability.
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Vertical integration
Definition of the optimal level of vertical integration within the production network (make-or-buy decision).
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Digital synchronization
End-to-end transparency to prevent supply bottlenecks caused by supplier constraints.
Green Supply Chain
How We Combine Sustainability and Cost Effectiveness in Your Supply Chain
When developing effective supply chain management systems, ESG (environmental, social, governance) is no longer just a purely compliance-related issue. A sustainable supply chain reduces regulatory risk (e.g. through compliance with the LkSG (German Supply Chain Due Diligence Act)) and enhances competitiveness through resource efficiency.
For us, strategic supply chain management means reconciling profitability with ecology. This helps us create a sustainable supply chain that strengthens your resilience and offers long-term investment security.
We enable a sustainable supply chain using integrated manufacturing footprint optimization and developing a circular supply chain:
- Global production strategy
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We integrate environmental factors and carbon dioxide targets directly into your global production network, thus combining operational excellence with environmental responsibility.
- Manufacturing footprint strategy
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New sites and any necessary site relocations are assessed not solely based on labor costs, but also on the long-term availability of renewable energy and the stability of local supply chains (circular supply chain).
- Data-driven decision-making:
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We use predictive supply chain analytics and holistic TCO models to present facts for your global supply chain strategy. We perform objective assessments of specific risk profiles and ESG criteria to determine whether your company's best option is a production relocation abroad (best-cost countries) or a regional procurement strategy.
From Crisis Management to Efficient Supply Chain Performance
Why Your Supply Chain Needs a Redesign
Optimizing a supply chain solely based on rigid calculations will inevitably cause
it to break whenever disruptive market changes arise (such as multiple crises, for example). This causes businesses to enter a constant state of crisis management that not only ties up valuable resources, but also incurs unplanned extraordinary costs that weigh on the operating margin.
These changing conditions require a realignment of your supply chain management approach. We align your value chain’s operational levers so they no longer just respond to disruptions, but proactively manage them.
What this means for your company: Maximum performance and cost-effectiveness without unnecessarily tying up capital.
Our Six Core Competencies
to Boost Your Supply Chain Performance
Efficiency and Resilience
The 6 Phases of Your Supply Chain Transformation
A critical success factor in supply chain management is system harmonization and the creation of end-to-end transparency across the entire value chain. During implementation, we use a reliable step-by-step plan that consists of six phases:
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Phase 1: Diagnosis & baseline
Perform a data-based analysis of the status quo, identify your specific pain points and prepare the existing database.
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Phase 2: Vision & guardrails
Define your target state using the operations strategy as a guiding principle for all other decisions.
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Phase 3: Scenarios & design
Develop and assess network options (footprint), inventory strategies, supplier scenarios and planning models.
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Phase 4: Business & value case
Quantify potential and draft a detailed roadmap to maximize return on investment.
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Phase 5: Implementation & enablement
Set up the operating model and governance framework, provide support for change management, and implement a KPI dashboard.
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Phase 6: Sustain & continuous improvement
Safeguard ongoing performance and apply best practices to the entire production network.
What does end-to-end transparency mean?
End-to-end transparency describes the seamless visibility of all flows of material and information, from the upstream supplier (n-tier) to the company’s own production to the end customer. To obtain reliable information, existing data silos between purchasing, logistics, and production need to be broken down. This creates transparency, which in turn forms the basis for a digital twin of your production network that is then used to instantaneously assess local disruptions in terms of their supply chain impact.
Measurable Results: Benefits of Supply Chain Management
We transform your supply chain from a cost center into a strategic value driver. Our end-to-end approach combines reliable data with precise simulations to transform your production network into a high-performing overall system.
In addition to scoring some quick wins, such as inventory reductions of up to 20%, this approach also helps us achieve a long-term increase in enterprise value, through better delivery reliability (OTIF), a significant reduction in working capital, and greater resilience against supply bottlenecks.
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Capital Investment & Inventory Optimization
- Up to 20% reduction in inventory
- Days inventory outstanding optimized by 50%
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Service & Reputation
- Delivery capability (OTIF): Increase of +10 to 20 percentage points
- 20-30% reduction in supplier delays
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Productivity & Planning
- Plan adherence: Improvement of +15 percentage points
- Throughput times: Reduction of at least -25 %
- System utilization: Increase from <60% to >80%
We achieve these results using advanced simulation tools that create a reliable decision-making foundation for your supply chain transformation. This is how we identify the optimal operating point across more than 30 DoE (design of experiments) scenarios. In practice, this approach helped us reduce necessary expansion investments by up to 60% on average.
What this means for you: You focus your investments on the areas where your capital delivers the greatest measurable impact.
Further Information about Supply Chain Management and Production Networks
Digital Production & New Technologies
How digital technologies are becoming enablers of transparency, control, and effectiveness.
Holistic Factory Planning & Production Systems
How to ensure the long-term sustainability of your production sites through strategy, production systems, and operational processes.
Operational Excellence
How strategic goals are transformed into sustainable, high-performance production processes.
Operations Strategy
How to develop a viable vision for your operations based on your corporate strategy.
Industrialization
How companies can stabilize series production and production ramp-up more qickly.
Risk & Resilience
Act Now to Leverage Potential: Your Path to a Resilient Supply Chain
Don’t wait until the next supply bottleneck brings production to a halt. With our free risk & resilience check, you’ll quickly receive a comprehensive assessment of your current network’s stability, enabling you to identify specific levers to optimize your inventories and cut costs.
FAQ: Supply Chain Management & Production Networks
How can I achieve end-to-end transparency throughout my entire supply chain?
End-to-end transparency is the result of process harmonization and technological enablement. We help you break down data silos between purchasing, logistics and production. Through digital supply chain planning (digital twin; supply chain control tower), we create a data ecosystem that makes material and information flows visible and controllable in real time.
What role does standardization play in digital supply chain transformation?
Standardization is an enabler for global scalability. By standardizing processes and data formats company-wide, we create a basis for cost-efficient technology rollouts, manufacturer-independent interoperability, and valid data for your predictive supply chain analytics.
Nearshoring vs. global sourcing – how do we make the right site selection decision?
Labor costs should not be the sole factor when deciding between regional market proximity and best-cost countries. We develop data-driven business cases for your site selection process that take a holistic approach to the total cost of ownership (TCO). For this, we incorporate not only logistics costs but also specific risk factors and ESG criteria. Click here for more information: Global operations footprint.
Why are our inventories rising while our delivery capability declines?
This phenomenon can be attributed to an inventory paradox and is usually due to obsolete or rigid inventory control parameters in the ERP system. A lack of synchronization between planning and the operational shop floor allows high levels of safety stock to accumulate in the wrong places, while critical components are missing at other sites. We use dynamic inventory optimization to resolve this dilemma.
What role does sustainability in the supply chain (LkSG/CSRD) play with respect to network design?
Sustainability in the supply chain is a key site factor and integral component of risk management. Regulatory requirements such as ESG reporting or the Carbon Border Adjustment Mechanism (CBAM) can have a major impact on the cost-effectiveness of delivery routes (regulatory risks). We incorporate sustainability aspects directly into your operations strategy to ensure not only that your supply chain is green, but that it also remains legally compliant and profitable.