New Asia Sourcing Strategy Brings Increased Efficiency & Profitability for Consumer Retailer
While the client had already established purchasing offices in China, the increasing cost level was forcing them to improve efficiency and to decrease costs in order to remain profitable.
ARC Consulting was contacted by the client to assist in reviewing the supply chain and in setting up a new sourcing strategy in Asia.
The recommendations put forward by ARC Consulting helped the client in improving efficiency of operations and in reducing costs through the new sourcing strategy as well as to increase the profitability of the company.
The client had already established a presence in China but was facing increasing pressure due to the rising cost level in the country.
In order to remain profitable and competitive, the client needed to improve efficiency and lower costs through a new sourcing strategy in Asia.
As a result, ARC Consulting was contacted to assist the client in reviewing the current supply chain and in developing a new sourcing strategy. As part of the project, ARC Consulting also assisted in benchmarking the client´s operational functions with industry peers.
This enabled us to re-adjust and optimize the sourcing setup to better cope with the local market requirements and thus increase the efficiency.
The project was carried out in three steps: As-is Analysis, External Analysis and Benchmarking and Recommendations.
Several sources were used in order to gather data for the project, including in-depth interviews, internal work documents collected from the client, as well as external data for benchmarking with industry peers in China and in other Asian countries.
ARC Consulting’s evaluation and analysis of the client’s operations followed the SPRO framework comprising Strategy, Processes, Resources and Organization.
ARC Consulting also assisted in the set-up of a new legal structure with 4 entities, and in developing all required administrative and financial processes and routines for the new legal entities.
The work provided by ARC Consulting helped the client achieve the necessary costs reductions in order to remain competitive in the industry. By adopting the model proposed by ARC Consulting, the client realized operational cost savings of 24% per month compared to the previous set-up.
Based on the new sourcing strategy, the client was also better prepared to cope with the company’s expected growth, as well as any unforeseen challenges. By utilizing the newly implemented geographical strategy and hybrid organizational model, the entire organization became aligned towards the same goal. The changes of internal processes further ensured high quality standards for the client’s products and set CSR targets that were duly met.