Balancing Risks and Benefits: Local Manufacturing in Africa Can Cut Costs and Transportation Times
A methodology to quantify the impact of regional manufacturing and warehousing on cost, lead time, emissions, and access to health care.
Local manufacturing can have various benefits. Production moves closer to demand, reducing lead times and improving planning accuracy. It contributes to value creation in the region and advances societies. However, local manufacturing also introduces various risks.
Our client was advising a large buyer of pharmaceuticals and biomedical devices for low- and middle-income countries, and asked us to develop a methodology that allows to quantify the impact of buying product from local manufacturers or store product in regional warehouses. Our analysis shows how regional manufacturing can diversify the supply base by reducing lead times, reducing carbon emissions, diversifying supply risks, and improve access to health care.
With our approach we were able to empower decision-makers to evaluate the price premium they pay to benefit from regional manufacturing, and also quantify the potential savings they can expect in the future when local manufacturing scales.