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Waypost Case Study: Start-Up Capex Requirement Reduction

A leading food company specializing in innovative plant-based meat products faced significant capex requirements while building a new facility for a new product line. The necessity of refrigerated storage for both raw materials and finished goods was a critical factor driving the capital expenditures needed to commission the plant. Initially, the company relied on rough estimates to determine refrigeration size. As storage requirements increased, costs surged. This raised concerns about high capital expenditures for potentially unnecessary space. This Company hired Waypost Advisors.

The Approach:

Waypost conducted thorough interviews with key stakeholders to gain a comprehensive understanding of the company's end-to-end supply chain and production requirements.  By leveraging this insight, Waypost developed models for demand and supply scenario planning. The team created data-driven analytics tools to accurately assess inventory needs, considering projected demand, production capacity constraints, and potential variability in production. They also assigned a level-of-service requirement, enabling detailed scenario modeling to identify system constraints, such as shelf-life, and predict storage spikes.

Through various demand and supply scenarios, Waypost illuminated the true inventory requirements. They suggested practical alternatives for exceptional yet plausible scenarios where additional storage was necessary. One innovative solution was the temporary rental of refrigerated trailers to manage overflow product economically.

The Results:

The company's adoption of Waypost's data-driven scenario modeling led to a significant increase in confidence regarding their inventory planning. This newfound confidence allowed them to reduce the size of the refrigerators and, consequently, the capex requirements. Instead of planning for 14 days of inventory on-hand, they realized that only 10 days were necessary. This 4-day reduction enabled the company to downsize the refrigeration units, resulting in a $900,000 reduction in capex requirements. Over a five-year period, the cost of temporarily renting refrigerated trailers for supplementary storage proved to be much lower than the initial $900,000 investment, if it was ever even necessary.

Our discussions with Waypost prompted our thinking in the right direction, which subsequently led to a 45-50% reduction in cost for the final design assumption vs the proposed design

-Engineering Project Manager