Case Study: Lift and Shift to LCC

Optimizing Costs and Streamlining Operations through Efficient Manufacturing Transfer

Overview

SMC Ltd. successfully executed a “lift-and-shift” strategy for an OEM client, transferring the production of 140 SKUs and managing complex supply chain challenges from the OEM’s closing facility to SMC’s Costa Rica plant. This strategic move not only stabilized the product but also significantly reduced costs while optimizing inventory management and streamlining the supply chain.

The Challenge

The client faced multiple hurdles, including the closure of their manufacturing facility, and the need for a seamless transition while managing complex supply chain dynamics. The challenges included:

  • Full transfer of manufacturing responsibility for the OEM’s acquired asset
  • Stabilizing the product and managing inventory during the transition
  • Managing dynamic, fluctuating requirements from the OEM
  • Consolidating the supply chain and reducing reliance on OEM resources
  • Minimizing total costs while optimizing long-term production

Key specifics included:

  • 140 SKUs to be transferred
  • Management of 500 buy-outs and 100 different global suppliers
  • 3,900 documents transferred from OEM
  • Coordination of 15 different manufacturing processes

The Solution

SMC applied its expertise in supply chain management and efficient process transfer to execute a seamless transition.

Key solutions included:

  • Full manufacturing transfer to SMC’s Costa Rica facility, following the OEM’s facility closure
  • Stabilization of products while managing dynamic requirements and customer inventory
  • Consolidation of the OEM’s supply chain to reduce overhead and improve efficiency
  • Implementation of a low-cost long-term production roadmap to drive future cost reductions
  • Efficient management of multiple suppliers, buy-outs, and extensive documentation

The Results

SMC’s lift-and-shift process successfully met the client’s needs while delivering substantial operational benefits:

  • Reduction of total overall costs through supply chain optimization and resource minimization
  • Streamlined manufacturing with a full transfer to the Costa Rica facility
  • Stabilized product lines and consistent inventory management
  • A long-term roadmap for low-cost production to ensure continued cost reduction and efficiency improvements
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