When Solar World needed to rapidly expand its production capacity, MGC developed a new supply chain that saved the company €5,000,000.
With the rising worldwide interest in renewable energy, the Solar World Group had to significantly increase their production capacity. The company had one panel factory and an external warehouse supplier located in the same area. A second factory with a small warehouse attached to it was being built on a different industrial estate 5 miles away from the first. Solar World Group was planning to build a second warehouse on the site to give them three times the capacity of their current production. However, the cost of building the new warehouse, keeping it stocked, and running it were enormous.
What we did
MGC’s starting point was to figure out what supplies were necessary to run both factories on full capacity. We found that the cost of keeping the warehouses full would be huge, and this was on top of the millions they had to spend building it.
We modelled different delivery methods and negotiated with suppliers to improve costs. We thought it was possible that the new warehouse may not have to be built at all.
With changes to the way storage worked, we could reduce the amount and type of storage needed, so some materials (like glue) could still be stored in the old way while frames or silicon could be stored in bulk and not sorted into shelves. Other materials, like glass, could be delivered Just in Time (JIT).
After close analysis, a solution was found: to use the existing smaller warehouse and use the warehouse near the first panel factory as back-up. We worked out that restructuring the shelving system would make it possible to store enough material to run the factories for four days. This meant that even in a worst case scenario, management would still have half a week to address any issues.
MGC’s services had a substantial impact on the actual running of the warehouse, saving on staff time and effort.
Financially, Solar World Group saved on building, insuring and running the new warehouse. But it was improvements to cash flow that brought the biggest operational benefits. Changes to the invoicing and logistics system meant that Solar World Group could invoice their own clients earlier than in the previous system. This created a faster flow of materials and shortened the entire process of buying supplies and invoicing the client by 50 per cent.
All in all, the total savings achieved amounted to 5 million Euros in year one, with follow-on savings to the tune of several million Euros thereafter.
The Solar World Group specialises in producing high quality Photovoltaic Solar Panels from start to finish, with factories in Germany, South Korea and the US. The turnover is £1.3 billion and they employ around 3600 people worldwide.