With its deepest manufacturing roots in Asia, the mobile device provider needed to diversify its production footprint. Supply chain disruptions, longer ocean transport times, region-specific trade restrictions and frequent unexpected delays were pushing leaders to consider adding manufacturing sites closer to the US – the location of their corporate headquarters and most of their customer base.
Research from EY teams shows that 64% of companies have re-shored some elements to improve sustainability. In addition, 42% of companies said that ensuring sustainable and diverse sourcing was a priority. With data such as these in mind, the company turned to an EY cross-practice team for a strategy to augment core operations in more accessible and stable locations, reducing its overall supply chain risk while maintaining existing operations in Asia and elsewhere. Faced with a daunting and costly business decision, leaders needed assurance they could diversify their manufacturing and still procure the right materials, maintain quality standards, and deliver reliable products to meet urgent user needs.
The EY team assessed and designed a more diverse supply chain network with the company’s global business in mind.
Supply chain optimization was done based on a computerized model to assess the global supply chain, mapping raw materials to flow of goods, to distribution centers and finally to customer locations. The model evaluated current networks against future state options, assessing millions of site variables rapidly to provide leadership with the informed perspective they needed. The EY digital model brought an integrated view of the tax considerations inherent in ramping up manufacturing in new sites and countries, including customs duties, direct and indirect tax implications and country-specific regulations. The EY Geostrategic Business Group provided clarity around government labor, trade policies and local laws to further optimize recommendations, blending speed and cost to enable on-demand inventory.
"With recent supply chain disruption, trade wars and geopolitical uncertainty, this global electronics leader needed an integrated supply chain model so they could successfully diversify their manufacturing portfolio, avoid production delays, and address country-specific issues,” said Morton. “The EY supply chain optimization model helped them make more informed decisions and select their new manufacturing site in North America.”
End-to-end supply chain analysis was conducted by tracking the company’s highest-priority devices. Validated data inputs were primed and transitioned from a flow-constrained model to a demand-driven model. The analysis evaluated economic value added with the future state footprint, insourcing vs. outsourcing manufacturing operations, tax considerations, skilled labor availability, geopolitical factors, ESG and carbon footprint impact, and the reduction of supply chain complexity.
A supply chain scorecard was created by the EY team to help leaders evaluate manufacturing sites more critically, assessing six key supply chain factors: