BCG Medium Cost Reduction Operations Capacity Optimization

Steel Co.

ProHub Comment

This case tests capacity optimization and operational logistics by requiring candidates to analyze multiple transportation modes and identify underutilized capacity as a cost-saving opportunity. The case progresses logically from comparative analysis of transport modes to deeper investigation into why trucks are heavily used despite higher costs, leading to inventory management insights.

Estimated Time 26 minutes
Difficulty Medium
Source NYU
48 / 100

Our client is a steel manufacturing company in the Netherlands. They are considering investing in an advanced analytics tool that will help them better predict inventory schedule. They are also looking at immediate methods to save costs and would like your help with the following:

A) Steel coils are currently transported from the factory to customers via Railways, Trucks, Vessels and Barges. They would like us to analyze these four methods, and suggest any opportunities for cost saving B) Suggest any alternative techniques to save cost in the immediate future

Clarifying Information

  1. Operates internationally in 100+ countries (the candidate should realize this given use of vessels and barges)
  2. Customers are predominantly large B2B manufacturers who the company enjoys both short and long-term contracts with
  3. For this case, assume steel is only manufactured as coils
  4. Objective is to identify cost saving with no particular target
Mock Interview
Interviewer

Our client is a steel manufacturing company in the Netherlands. They are considering investing in an advanced analytics tool that will help them better predict inventory schedule. They are also looking at immediate methods to save costs and would like your help with the following: A) Steel coils are currently transported from the factory to customers via Railways, Trucks, Vessels and Barges. They would like us to analyze these four methods, and suggest any opportunities for cost saving B) Suggest any alternative techniques to save cost in the immediate future

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

A Dutch steel manufacturing company seeks to reduce transportation costs for steel coils across four modes (rail, truck, barge, vessel). By analyzing utilization rates and weekly volumes, candidates identify $7.3M in savings through better capacity optimization and an additional $540K through inventory management improvements.

Key Insights:

  1. Utilization rate analysis reveals that vessels at 100% utilization create a bottleneck, forcing cheaper-per-ton goods to be shipped via more expensive trucks
  2. Inventory management and KPI constraints drive operational inefficiency—changing vessel KPIs from 100% to 95% utilization could free capacity and reduce truck dependency
  3. Cost-per-ton metrics alone are insufficient; total weekly cost analysis (volume × cost × utilization) reveals the true economics of each transport mode
  4. The chart in Exhibit 2 demonstrates that demand concentration in weeks 1-2 creates temporary logistical constraints that better inventory scheduling can eliminate