BUSINESS RELOCATION STUDY

The Philippines

Sector

Agriculture Seed Production


Issue

A multinational agricultural corporation required a 5 year strategic review of the optimal capacity and location of a future facility.


Solution

Alternative scenarios mapped and evaluated for:

  • Evaluate efficiency gains achievable in the legacy plant and warehousing operation
  • Evaluate inbound (domestic/international) suppliers, sourcing mix alternatives, transport cost mapping and raw material price vs. volume opportunities
  • Comprehend the domestic market, distributor locations, transport cost mapping, minimum order quantity policy impact
  • Develop cost driven Centre-of-Gravity scenarios within a 200km radius of the current facility
  • Evaluate Own vs Lease
  • Evaluate In-house vs Outsource

Results

  • 17 month migration road map
  • Complete offshoring of all bagging operations to another ASEAN country
  • Plant relocation 90km north of legacy location
  • Scoping of new rented facility, fitted out to meet integrated requirements for bagging and storage
  • 10% reduction in operating costs
  • Achievement of required quality uplifts in FIFO and product care

COSTS
(US$)
OPTION 1 OPTION 2 OPTION 3 OPTION 4
NET SALES 5,172,669 5,172,669 5,172,669 5,172,669
TRANSPORT 70,122 72,355 68,445 79,854
WAREHOUSE 65,089 57,037 53,805 51,754
PERSONNEL 87,571 73,297 50,307 50,307
OTHER COST 14,661 14,661 14,661 14,661
SUB TOTAL 237,443 217,350 187,218 196,576
DEPRECIATION 818 818 3,590 2,741
INTEREST 254 254 755 654
TOTAL SC COST 238,515 218,422 191,563 199,971
% OF NET SALES 4.6 4.2 3.7 3.9