Reducing operating expenditure through supply chain analysis
Background: Tractus was commissioned by a large global animal feed manufacturing company to assist with an investment in 30,000 m2 animal feed mill. The client came to Tractus with almost 100 years of experience in the animal feed mill industry and manufacturing operations around the world, including in Asia.
Project: The client had been trading into Myanmar successfully for two years and had established an existing sales warehouse and analyzed and made a decision to invest. Tractus was asked to help the company decide between locating in Yangon or Mandalay on a supply chain and industrial asset leasing cost basis. With more than 85% of the client’s raw materials sourced locally, domestic supply chain efficiency would be paramount to the industrial site selection decision of the company.
Breaking down the gross production schedule by product and respective raw material requirement, Tractus built a detailed supply chain analysis model factoring in the raw material supply chain costs by location, volume and transport mode availability. Our model generated a user-friendly supply chain management dashboard providing the client with instant feedback based on changing production demands, seasonal transport mode availability and the lowest-cost integrated supply chain transport options across dozens of different routes for in-bound and out-bound shipments to and from planned production facility locations and sales warehouses in Yangon, Mandalay and Nay Pyi Taw.
On this engagement, Tractus’ in-house supply chain optimization modeling was dovetailed with a robust on-the-ground presence in Myanmar feeding in data and insights not immediately available to outsiders involved in operations planning at client offices. The underdeveloped status of infrastructure in Myanmar and decades of economic isolation has created a marketplace that often performs in unique and counterintuitive ways.
Solution: Our analysis and recommendations led to a reversal on the client’s original thinking, a forecasted supply chain cost savings of US$4.3 million and subsequent engagements to identify industrial site selection options in the redefined search area and coordinate the regulatory investment approval of the company’s planned production facility.
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