Strategy and Procurement

Research (SPR) Group Case

Study

Case Study
The client, a global FMCG company with operations in Europe, Africa, and Asia, wants to determine the optimal production
destination for home care products (laundry powder and dish wash liquid) in the future (until 2020).
This company had outsourced (subcontracted to a third party) its entire production of home care goods to China in 2013, which
were historically being manufactured in Australia. Apart from this, the company has a production facility in Indonesia, which is
mainly engaged in the production of dish wash liquid.
The company believes that China should continue to be the ideal place for production in the future, and wants your viewpoint
on China as the ideal destination after assessing possible alternatives. It wants to assess the following strategies:

Status Quo Continue dish wash liquid manufacturing in Indonesia and contracting of laundry powder to Chinese
suppliers

Complete Offshoring in China Move the Indonesian production of dish wash liquid to China

Offshoring vs. Onshoring Shift the production of home care products back to Australia to its self-owned factory

Offshoring to China vs. Offshoring to other Asian countries Move to a different Asian country, such as Vietnam,
Indonesia, or Malaysia, for future production of home care products

From initial research, we know the following:

Soda ash, sodium sulphate, LABSA, and SLES are key raw materials used in the production of home care products; China
is the production hub for all these materials and is among the largest exporters

However, an initial cost analysis denoted that Indonesia is cheaper in terms of labor, energy, packaging, transport, and
shipping costs; Thailand lies somewhere in the middle

The client has the following questions:

What all should we evaluate to arrive at this decision?

What are the pros and cons of the strategies listed above?

We want to deep-dive into the Indonesia and Thailand markets a little more. But should we be looking at Vietnam,
Malaysia, and the Philippines also?

What are our peers doing? Are they also manufacturing in China and selling to Australia?

We want to continue following the third-party subcontracting model unless there is merit in increasing the scale of the
Indonesia factory. Is that a good option?

Provide your answers in an MS PowerPoint presentation, along with a list of sources and calculations in a spreadsheet (if
needed).

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