Beiersdorf shakes up its supply chain

By Simon Pitman

- Last updated on GMT

Related tags Supply chain Supply chain management

A major supply chain re-organisation at German cosmetics giant
Beiersdorf has led to a shake-up in production at its western
European production facilities, as part of plans to save the
company €100 million per year.

The plan is part of a new consumer orientated supply chain re-organisation that was first announced back in November 2005 as part of aims to increase efficiencies in the tough Western European market and reinvest in new product development as well as brand development in new markets.

These first initiatives will see 85 people working on the wound care products line in the company's Hamburg-Hausbruch factory, offered alternative employment at the company's skin care produciton line at Hamburg-Elmsbüttel.

The company says it is transferring production of its wound care products to Argentona in Spain, where the majority of its European wound care products have been produced for some years.

"Such production transfers are common industry practice. They serve to improve efficiency and to specialise in new technologies, but often also to ensure the supply and the continuous development of the production and logistics network,"​ the company said in a press statement.

It is also likely to be the first in a number of restructuring schemes that will help to tighten the productivity of the company's operations throughout Western European.

"This initiative demonstrates how the whole process is going to evolve over the next few years",​ said Markus Pinger, responsible for the company's supply chain management. "We will focus on fewer, larger production sites as well as distribution centres."

In a move that is likely to lead to other job cuts amongst the company's 16,000 global workforce, Beiersdorf said that it would continue to attempt to find new jobs within the same or other company locations, offer retraining or else compensate employees accordingly.

Beiersdorf is investing huge sums in upgrading its supply chain, in an effort to fall in line with demands from European retail giants as well as further improving its supply chain efficiencies and ultimately to expedite the entire flow goods.

They are based on the networking of computers, from the tills in individual stores to the central administration of the retail operators, to the producers' distribution centres, from there to the production sites and the raw material suppliers, and on the same way back to the shelves in the stores,"​ the company statement added.

Further to this the company also says that larger scale production sites and warehouses will be 'prerequisite' to leveraging this technology, a goal that is also likely to see further consolidation of the company's existing production facilities in order to reduce capital employed to maintain the supply chain.

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