Tried and tested is best?

Optimizing costs and capacity by redesigning the production network in the automotive industry

CONTATTO LN Ricerca
Stern Stewart & CO. GmbH
Salvatorplatz 4
80333 Monaco

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Starting situation – overcapacity and pricing pressure

Plummeting sales figures in the automotive industry have forced many market players to adopt stringent measures – savings needed to be made, especially in production. Companies have long been seeking optimization potential in adjacent areas. However, compared with cuts to the production network, such measures offered little prospect of optimizing costs. In light of this, the realization that savings targets could not be achieved without restructuring the production network formed the first important step on the road to an optimized production location portfolio. 

Project approach – adjusting capacities, eliminating redundancies, exploiting synergies

Creating transparency over both the current and future capacity and the value creation of the locations, and comparing these figures with the corporate planning results form the prerequisite for deciding on the future footprint of the production network. It was possible to use this as a basis for identifying locations that might need to be closed. Building on this, a holistic analysis of the integrated internal and external scenarios was performed, and the optimal future structure of the production network determined, taking into account the implications this would have on synergies and residual costs.

Finding – there is great savings potential in production areas, even without reducing capacity

In many companies, the perpetual discussions about overheads and how to save money in that area diverts attention from the real cost drivers in manufacturing enterprises. A limited amount of potential is often pursued by setting complicated benchmarks for external overheads – the savings achieved do not usually meet expectations. In contrast, significant savings can be achieved by making consistent use of synergies and eliminating redundancies in production processes – without necessarily having to reduce capacities.

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