Our client was a global steel manufacturer with a history of mergers and acquisitions. The company had a complex supply chain, with over 35 interlinked assets spread over six countries. They had a product funnel that expanded rapidly after initial slab casting, and used a Make To Order process to manage the supply chain. A new strategy involved three key improvements which were (partly) at odds with each other: better service, lower cost and reduced inventories. The client asked us to redesign their supply chain network and optimise their working capital.
We analysed the end-customer demand profile, which we translated through the supply chain to identify potential decoupling points between the different assets. We then designed differentiated fulfilment strategies with semi-finished inventory to allow customer requirements in combination with optimized manufacturing. To ensure service and capital efficiency, we calculated optimal locations and levels for steel inventories. For decision-making purposes, we made the trade-off between inventories and service transparent.
What we accomplished
We implemented a new concept for a rationalized European supply chain. We also significantly improved service levels and reliability towards customers. At the same time, the new concept resulted in an important reduction of working capital while reducing cost per ton by making better use of lowest cost routes.