16 October 2012

Kitron to establish distribution centre in Lithuania

16 October 2012 - Kitron has decided to establish a distribution centre to streamline the logistics process and drive down inventory. Combined with other initiatives within logistics and supply chain process, Kitron is targeting to reduce inventory by at least NOK 100 million from the current level. 

"This will fund future growth and strategic investments. We will benefit from both having less capital tied to inventory and from cost savings," says Kitron CFO Björn Wigström. 

A significant portion of the working capital is tied up in inventory. Inventory today represents about 30 per cent of the total assets in the company, and was NOK 377.1 million at 30 June 2012. 

"Kitron has become a global company. In 2011 we opened new factories in the US and China, and we are now streamlining the supply chain and the logistics process", says Wigström, and explains that the global growth has entailed increased inventory levels over the past few years. 

"Channelling inbound standard components through one central hub will lead to pooling of inventory and will free more than NOK 50 million in inventory," continues Wigström. 

The establishment of a distribution centre is also expected to lead to operational improvements and cost savings. Larger order quantities and fewer interfaces between Kitron and its suppliers will reduce the workload related to order processing. The inbound material and components will also be optimized for Kitron's manufacturing process, which will lead to increased productivity and less waste. 

The investment required to establish a distribution centre in Lithuania at the factory in Kaunas is estimated to about NOK 10 million. The investment will partly be funded by the Lithuanian government. The plan is to have the distribution centre fully operational by the end of 2013. 

Kitron is one of Scandinavia's leading electronics manufacturing services companies for the Defence, Energy/Telecoms, Industry, Medical equipment and Offshore/Marine sectors. The company is located in Norway, Sweden, Lithuania, Germany, China and the United States. Kitron had revenues of about NOK 1.7 billion in 2011 and has about 1,200 employees. 

Source: Kitron