Overview:

• The addition of an extra two plants served to diversify the supply chain, meaning that supplying to countries around the world became more convenient.

Challenge:

A global agency consulted Challenge Advisory with a concern about the supply of its ready-to-use-therapeutic food (RUTF). With there being only one supplier globally, the client was concerned about the consequences should there be an issue with the supplier pertaining to the global malnutrition of children six months and older.

The Revelation:

Challenge’s strategy team colluded with the research teams, of both Challenge and the client, in order to discern the best plan with respect to solving the supply issue. The strategy team decided to contact the supplier, a major European manufacturer, to alert the supplier to the concerns raised by the client, relating to the fallout of any kind of supply blockage.

The supplier agreed with this notion, but in order for changes to be implemented, Challenge Advisory first had to convince the supplier of the project’s practicality. This was achieved using a feasibility study, as well as an action plan in order to ensure that the changes discussed were put into place.

The feasibility study showed that while there would be a large initial outlay, the flexibility of the new arrangement would render this outlay negligent, in comparison to the medium and long term effects of maintaining the current supply chain. As a result, the supplier agreed to build two extra manufacturing plants in Asia and Africa to improve the supply channels available to various countries and to offset the original issue of supply blockage.

Outcomes:

The extra two plants served to diversify the supply chain, meaning that supplying to countries around the world became more convenient; for example, demand in Bangladesh could now be handled by the Asia plant instead of going through the European base, which saved time and money. These logistical cost minimisations meant that the supplier could spend less on exports, resulting in an increased overall profit margin