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Comprehensive supply market research and feasibility study help leading global escalator company launch new plant in Asia
A leading global escalator manufacturer has a sole manufacturing site in China, supplying 98% of the escalators sold globally. Having a single large production site allowed the company to enjoy the economies of scale and higher production efficiency, but it also meant that they were single sourced so any operational disruption would be of great impact on their business.
ARC Consulting was contracted to conduct a feasibility study to build a second plant in the SEA region with focus countries being Malaysia, Vietnam, Indonesia, Thailand, and Philippines. The feasibility study included evaluations of the market, the local supplier base, the total cost of production (labor and materials) and considerations of any trade risks associated with the particular country.
Opportunity
The opportunity for the company is to build a second production site in SEA that can back-up the site in China, optimize their supply chain in the region, reduce costs and grow the bottom line results. The second plant in the SEA region could be strategic for the company to establish a more competitive position in the region with shorter lead time, lower raw material and labour costs and more advantageous trade conditions.
Approach
ARC Consulting used a methodical approach based on 3 steps: Research Preparation, Market Data Collection, and Analysis Reporting.
This approach resulted in fact-based data and relevant market research output for each one of the targeted countries (Malaysia, Vietnam, Indonesia, Thailand, and Philippines) that provided key information to make the right decision. Some key information elements provided were: Market characteristics, supplier mapping, local cost structures, price and quality gap analysis and assessment of trade advantages and risks. As the cost and availability of raw materials were key factors for the efficiency and sustainability of the manufacturing operation, a focused cost analysis was performed for key products like hot rolled steel, aluminum, copper, tempered glass, laminated glass, steel plates, cold rolled carbon steel, plastics for the rollers and cast iron. Competitors in the region were also benchmarked for the best practice.
At the end of the project, ARC Consulting presented a comprehensive supply market report with all the key pieces of information that allowed the company to build the business case for building a new escalator assembly factory in the Southeast Asia region.
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