Impressive results through nearshoring

Challenge

A Swedish multinational company handling seasonal items with production in China and a central warehouse in Sweden had issues with supply chain efficiency. The move to China was made a couple of years ago, due to expectation of a lower cost. MYSIGMA was assigned to evaluate different sourcing options to validate this and/or to suggest a better set-up.

Solution

By moving final assembly to Europe and changing some supply chain rules the following was achived:

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Higher resource utilization lead to a cost saving of the transferred components with 20%
Increased inventory turnover from 2,5 to nearly 9
Reduced cost of damaged goods and poor quality
Reduced lead time, from 16 to 3 weeks, and increased flexibility

Impact

The decision was taken to move assembly operations to Europe in order to achieve higher responsiveness while retaining the cost benefits of production in China. Both the analysis and majority of the implementation was carried out by MYSIGMA.