Alfdex Manufacturing Footprint :  Future Expansion Strategy for Production 2014 - a Global Review

Abstract:

Investments in offshore manufacturing have in a historical perspective been taken as a series of separate decisions with a strong focus on cost reduction. This kind of cost is typically narrowed to the cost of purchase or manufacture. The total supply chain costs are hardly ever considered. Investments need to be reviewed within the context of a company´s total market and manufacturing requirements. This will prevent unwanted issues such as extended lead times, greater buffer stocks and excess capacity, uncoordinated strategic responses, conflicts and the failure to be profitable.

Alfdex, which is a joint venture owned by Alfa Laval and Haldex, provide the global truck and diesel engine market with its products and is for the moment market leader. The future demand will however exceed their current capacity within five years. To avoid that any decision will be made ad hoc this project will identify some essential factors that are significant for a future expansion of production. This will thereafter be adapted for Alfdex situation to recommend where they should expand their future production based on an objective perspective.

In this project seven markets will be reviewed; North America, Europe, South America, Russia, China, India, and Asia. The manufacturing footprint refers to where a company geographically locates its production. It is based on a long-term perspective and required reasonable strategic thinking and analysis.

Four essential factors have been identified which will determine Alfdex manufacturing footprint recommendations; the current situation; the market development and capacity need; the issue of costs; global and local conditions and differences together with the supply chain. In addition a scenario matrix and analysis matrix have been developed to support the analysis.

This work has shown that the most feasible solution, based on what is known today, is to make an onsite expansion in Landskrona, Sweden. By keeping the production in Sweden Alfdex will meet the most qualifications identified in the manufacturing footprint. Additionally a sales person and technical support are required in North America as well as allocating resources to monitor the Chinese market.

In this version of the report customers’ and suppliers’ names as well as some figures have been concealed. In some cases the information has been replaced by an X and in others it has been completely removed.