Background and Challenges
A fast-growing industrials manufacturer was facing persistent supply chain disruptions that threatened its operations. Late shipments, inconsistent quality and supplier failures were creating backlogs, straining customer relationships and putting revenue at risk. At the center of the issue was a critical rotomolded plastic component ― essential for product quality ― sourced from an external supplier struggling to meet demand.
Recognizing the need for greater control, the company engaged L.E.K. Consulting to assess the feasibility of in-sourcing production. The goal was to determine operational requirements, assess financial viability and build a compelling business case for investment.
Approach
We conducted a comprehensive, data-driven assessment to ensure the transition to in-sourcing was both financially feasible and operationally sound. We worked collaboratively with the client in establishing a baseline, identifying key operational considerations, modelling implications and developing a roadmap for success:
- Baseline assessment ― Mapped out the full supply chain, quantifying costs, production delays and supplier risks. Identified revenue losses and key vulnerabilities affecting reliability and efficiency.
- Operational considerations ― Evaluated manufacturing technologies, modeled cost structures and assessed scalability to find the best-fit production solution. Designed an optimized material flow that integrated with existing operations. Developed a labor strategy that leveraged the current workforce while minimizing unnecessary hires.
- Accelerating ramp-up ― Developed production scenarios to significantly reduce implementation time. Cut ramp-up time in half by coordinating product trials and technology stabilization at the OEM site, minimizing trial costs and revenue disruptions.
- Financial modeling and business case ― Built a robust financial model comparing in-sourcing costs, incorporating efficiency gains, quality improvements and sensitivity testing for market fluctuations.
- Implementation roadmap ― Developed a clear execution plan with defined milestones, risk mitigation strategies and investment priorities, ensuring leadership alignment and a seamless transition.
Results
Our strategic guidance provided the manufacturer with the confidence and clarity to proceed. Expected results include:
- 15% reduction in operational expenses
- 25% lower one-time investment than initially projected by avoiding overbuilding unnecessary capital expenditures.
- Full executive and board approval, supported by a well-defined execution plan.
- A reduced risk profile, with stronger governance structure and supply chain resilience.
By addressing supply chain weaknesses with a structured, data-driven strategy, the manufacturer transformed a recurring challenge into a long-term competitive advantage. With greater control over production, improved efficiency and reduced risk, the company positioned itself for sustainable, cost-effective growth.
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