Reduce Costs Case #1

MDP to Re-design Supply Chain for Metal Processing Factory

Case Type: reduce costs; operations strategy.
Consulting Firm: AlixPartners second round job interview.
Industry Coverage: Freight Delivery, Shipping Services; Transportation.
Case Interview Question #00520: Our client Madison Dearborn Partners (MDP) is a private equity firm specializing in leveraged buyouts of privately held or publicly traded companies, or divisions of larger companies; recapitalizations of family owned or closely held companies; balance sheet restructurings; acquisition financings; and growth capital investments in mature companies. The firm was founded in 1992 and is based in Chicago, Illinois, United States.
Madison Dearborn Partners has recently bought a metal processing company in Chicago. You have been hired as a consultant by MDP and they want you to re-design the supply chain system for the finished goods produced by this Chicago metal processing company. How will you proceed?
Additional Information:
The client MDP has three specific objectives.
1. They are concerned only about the outbound finished goods
2. Minimize Cost
3. Reliable product delivery

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 case from:
http://www.consultingcase101.com/mdp-to-re-design-supply-chain-for-metal-processing-factory/
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 SUGGESTED ANSWER:

me: first i would like to see if the company has any other objectives other than redesigning the supply chain system.

I: the client has three objectives, they are concerned only about the outbound finished goods; minimize costs; reliable product delivery.

me: i would like to look at the following key components:

• the company
• the products
• the customers/market
• and the costs to re-design the facility

I: fair enough. 

me: first of all, i would like to know where are we positioned in the market?

I: the company is a major palyer on the market.

me: where are we in the life cycle, growth? mature? declining?

I: mature.

me: the company then should have sufficient srources of funding and resources to support its activities.

I: yes.

me: may I know who are the target market, the customers?

I: we target primarily companies in the greater chicago area and the great lakes area.

me: how do we reach the market now?

I: we have trucks services that transport the material to these area.

me: I would imagine transporting the material to chicago area is okay, but to other areas that are further from us with trucks may not be a good idea. do we have data on the costs associated with these transportations?

I: yes, the costs can be high. how do you suggest we go about this?

me: well, we have several options. we could outsource the service to professional logistics companies that use trucks and railroad and other means to transport large bulk materials. or we could acquire a firm that has the existing supply chain and try to build it into our system. Do we have competitors?

I: there are 2 other major firms and several small firms.

me: I would look into acquiring the small firms if they have good supply chain.

I: good.