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Essay about Hilti – Gearing the Supply Chain for the Future

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Case Study SCMMS II – Hilti – Gearing the Supply Chain for the Future

1. Evaluate the three scenarios proposed by the project team along the lines of the criteria presented in the case

2. What would be your recommendation to the board in the current situation of world economy in December 2011

1. The project team has proposed three scenarios for Hilti’s management board which all have the potential to help the company compete in an ever more competitive and cost-driven environment. Hilti has still the competitive advantage over most other important industry players, because it has a very high-quality approach and is able to charge 30% premiums for their products. The first approach the project team has …show more content…

The one-time cost would be relatively high since relocation of machines and production lines is a costly effort. The company need to find a way of transferring the human capital for the necessary steps in a way that it socially acceptable but producing the plastic parts doesn’t involve a huge amount of specialized workers so it would be possible to do that in a socially acceptable way which is one of the premises on which decision’s at Hilti are build. Another important question is if the plants can source the materials necessary to produce the plastic parts in a high enough quality locally. The supply chains in china and Hungary have been established for a long time but just for the parts needed at that time and now that the plants need to produce small plastic parts first in order to assemble them a flexible and high quality sourcing chain has to be designed that delivers the same quality and quantity that the German plant sources now in the “existing system structure”.

The third scenario is the most drastic and most cost-effective alternative. It doesn’t at all take existing structures into account but clears out most of the existing system of plants and moves all Western European production to Hungary. “Greenfield” impacts 45% of COGS but in order to do that the facilities in Mauren (Liechtenstein), Kaufering & Strass (Germany) and Thüringen (Austria) would have to be closed. This would be a big change for the local company Hilti and a step it

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