Candy-maker Hershey announced today plans for a significant reconfiguration of its supply chain network, which will involve shuttering up to one third of its existing production lines, sending more production to co-packers, and constructing of a new manufacturing facility to Mexico.

The moves are part of a three-year plan that Hershey says will ultimately reduce its supply chain costs by $170-190 million by 2010. Hershey also emphasized the plans would improve manufacturing line utilization. It says 1500 supply chain jobs will be cut, most it would appear in manufacturing, as plants are closed.

Hersheys says that in addition to cutting costs, the supply chain configuration will result in finished products being sourced from fewer facilities, with each one a center of excellence specializing in Hershey's proprietary product technologies.

The statements seem to mean that Hershey is going to focus own production capabilities in areas where it relies on unique production expertise or advantage, and will send more of its production of items for which it enjoys less manufacturing advantage or which require less proprietary processes to contract manufacturers, typically called "co-packers" in the consumer goods industry.

Hershey, which has not had much of a presence outside of North America, had previously announced a manufacturing joint venture in China with Lotte Confectionery Company, to enabe  it to reach the Chinese market.

The full press release from the company announcing the supply chain restructuring is available here: Hershey Announces Global Supply Chain Transformation