Manufacturing footprint decisions and network designs have always been important. But in recent years, a rapidly changing competitive environment has made the choice of the right network design even more critical. As networks become more complex, identifying and implementing the right solution becomes increasingly difficult. Manufacturing footprint design capability is indispensable in the contemporary competitive and economic environment, and requires a thorough understanding of underlying economics and relevant trade-offs. Currency and political risks, safety and supply risks of sourcing critical components from third parties, intellectual property risks, and regulatory and tax risks all enter the cost-benefit equation.
Manufacturing footprint design is more complicated than it used to be; however, it is a challenge no company can afford to ignore. Balancing brand considerations against labor and logistical costs takes analytical acumen and may demand skills and expertise that many companies lack. But there is no acceptable alternative to meeting the challenge and developing the skills. The days when a company could build a manufacturing network and leave it alone have slipped into history. Manufacturing footprint design is the next capability for winning.
Dermot Shorten ([email protected]) is a vice president with Booz Allen Hamilton in Boston. Mr. Shorten focuses on value stream restructuring, with specific expertise in supply chain management, supply base configuration, and manufacturing strategy.
Michael Pfitzmann ([email protected]) is a principal with Booz Allen Hamilton in Chicago. He serves automotive, energy, and other industrial clients and specializes in manufacturing strategy, competitive cost analysis, sourcing, and operations management.
Curt Mueller ([email protected]) is an associate with Booz Allen Hamilton in Chicago. He focuses on operating and manufacturing efficiency across industries and functional groups to drive value creation and improve supply chain performance.
This article is adapted from The Missing Link: Designing Supply Chains for Growth, Profitability, and Resilience, edited by Jeffrey Rothfeder with an introduction by Tim Laseter and Keith Oliver (strategy+business Books, 2005). To order a copy, click here.