Nearshoring in the consumer goods industry

Relocation to Eastern Europe minimizes supply risks

Our client is a leading manufacturer of gas, charcoal and electric grills. The European sales market has become increasingly relevant for the company in recent years.

Objective: Establishment of supply chains in Europe

Until now, the entire production of the grills was carried out in China. But the Corona crisis led to significant increases in logistics costs and delayed deliveries. In addition, grills are very cost-intensive to transport due to their weight. This prompted the company to question its previous supply chains and work with us to identi-fy alternative options.

Objective: Establishment of supply chains in Europe

With the aim of finding new suppliers for production in Europe, we first conducted a comprehensive market screening to find out which suppliers could be relevant at all. This is because the market for equipment of this type in Europe is rather limited and traditionally located in the high-end sector (kitchen manufacturers). During our intensive research, however, we were able to locate suppliers in Italy, Eastern Europe and Turkey, such as manufacturers of kitchens, special grills and kebab grills. By means of an initial call for tenders, we had the opportunity to request price components in order to subsequently enter into detailed cost calculations.

Together with one of our cooperation partners, our consultants carried out should costing analyses in which selected articles were completely disassembled and analyzed in order to draw conclusions about the total costs including production and delivery. Using various indicators, we compared the costs of European production with the previous production in China. The calculation of logistics costs alone revealed considerable savings potential, which meant that the total costs for production in Europe were comparable with Chinese production.

However, since a European supply chain makes sense for our client not only in terms of costs but above all in terms of risk, our clear recommendation was to establish a new supply chain. In the next step, the procurement department of our client will define the technical specifications and quantities and establish the processes with the new suppliers.

Result: long-term relocation to Europe initiated

  • Supplier Screening and RFQ
  • Detailed Should Costing Analysis
  • Nearshoring Decision Submission

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Cristian Costiou

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