WEG is a Brazilian based, multinational manufacturer of electric motors and related electrical products. It has manufacturing units in five Countries (Argentina, Brazil, China, Mexico and Portugal) and Commercial Branches in 21, covering all five continents with sales of almost three billion US dollars in 2007. It competes worldwide with the likes of ABB and Siemens. The company has a strong presence in Europe with sales and distribution facilities in eight Countries (Belgium, France, Germany, Italy, Portugal, Spain, Sweden, and UK). The majority of the European supply is shipped from Brazil in containers, but the small manufacturing plant in Portugal supplies part of the European demand for special design motors. Goods enter Europe through a number of ports in the north and south from where they are transported to the distribution warehouses in the eight operating subsidiaries. Distribution thereafter is mainly through distributors.
The European business of WEG had grown country by country with each country having its own port of entry for containers, and all but one having its own warehouse facilities. The company had therefore decided that there was a need to evaluate and optimise the total European supply chain including the shipping, ports of entry, warehouses, road and rail transport, warehouse processes and product customisation. Each market had its special requirements in terms of product range, customisation, service levels etc. that needed to be taken into account when considering any changes to the supply chain and when developing alternative supply chain and distribution strategies.
We undertook a programme of work initially to understand the different markets and to map the current supply chain. This included visits to each of the operating companies in Europe in order to gather specific data on customers, demand and local requirements as well as the collation of total logistics data for current volumes and shipments. From this we were able develop a cost and service model for the whole supply chain and to look at the pros and cons of various options for change, based on forecast growth in demand and other factors. We identified a number of options for development ranging from changes to the existing facilities through to a much more centralised distribution network. We analysed the potential benefits in terms of supply chain costs and customer service levels and took other factors into account in relation to the impact on local markets. We worked with the WEG team to consider the options and thus developed a fully costed proposal for European development which was presented to the Board in Brazil.