Ten common errors when relocating a plant
Keep the move on target and on budget by managing the process and the people
Everyone has made a move at sometime in his or her life. They have moved their families, their relatives and maybe even their friends and/or neighbors. Some people have even moved a manufacturing plant, a large facility or parts thereof. However, it is rare that manufacturers or distributors, in using only their‘already-stretched' staff and attempting to run and relocate their operations, have pulled it off smoothly. Too much happening, too little time and too much at risk.
In most operational facilities there is just too much at stake to try to expect a fully employed operations team to handle both jobs simultaneously. There are many significant issues that must be considered and having the right internal people in the same room at the same time long enough to plan adequately is almost impossible.
This article is the product of observing and participating in plant and facility relocations or consolidations and does not include all, but rather some of the most common mistakes that we have seen.
1. Failure to accurately assess the physical requirements required to support the operations/processes in the new location.
It is amazing how many people assume that the new location has everything you need to support the plant & facility operations - electrical, mechanical, water, air, environmental, etc. You not only have to find out what is really available, but that it does really work. Hopefully this primarily applies to businesses that are moving into a previously used building, but there are a lot of assumptions made about new facilities that can come back to haunt you. The key here is to make a detailed analysis of your entire processes and then, after a new layout is established, ensure that all the process requirements are available to the appropriate locations in the new facility. Also, do not forget how long it will take to get the new location physically ready to accept the incoming processes - this is almost always a gotcha!
2. Failure to assess inventory and forecasts for production planning requirements.
People say: "Don't worry about building ahead. I have enough inventory to cover the relocation period." This is almost always an immediate flag to check this area as there is usually plenty of inventory but it's generally the outdated, underutilized, obsolete kind. This takes a lot of investigation by operations and sales (see Mistake #7) to adequately prepare the right kind of inventory and the right sequence of equipment moves for the operation. This also includes when and from which location the inventory will ship.
3. Failure to take advantage of the disruption period to make significant operational improvements.
Have you ever heard this? "I cannot afford the disruption of making significant improvements to my processes and/or layout." Some of the same people have been known to also say, "I just have to get this relocation over with; I will worry about the improvements later." A relocation may be a pain in the rump, but it is usually a‘once-in-a-lifetime' opportunity to make significant improvements in an operation. And many times it costs literally nothing or can be handled as an expense of the move. Think about it - do you want to repeat the 1980's layout that you have now?
4. Failure to assess the impact on the operations team of trying to run a normal production operation and plan and execute a relocation.
If you have enough people to handle this task, you have too many people for your normal operations. If your team is running very lean, what will be the impact of adding a task like a‘plant or facility relocation/consolidation' to their plate? Think shipment requirements, customer response, emergencies, resignations, etc. - you know, the everyday issues. Something has to give - will it be your career or theirs?
5. Failure to carefully and accurately estimate and plan the relocation schedule, budget and contingency.
You just cannot‘WAG' this one - too much is at stake. This takes the concentrated effort of a lot of knowledgeable people to develop accurately and it is important. This planning has to be well organized and orchestrated and it's what the boss (everybody has one) will grade you against. Contingency is not a slush fund; rather it should be an accurately estimated portion of relocation cost planning. A percentage usually is just not good enough - there has to be some rhyme or reason to this planning. When you are behind schedule on week two and your contingency is gone at week three, it is not a good sign. It probably means someone will be gone by week six.
6. Failure to assess the potential impact of old machines and equipment and start-up problems that may arise.
This does not have to be a killer; it just has to be planned. Analyzing the equipment and processes ahead of time and planning accordingly can mitigate a lot of risk in this area. For example, relocation was planned for a plant with lots of old machinery that had a history of various faults and breakdowns and the client expected like-new flawless machinery at the new location - will not happen. A little FMEA (Failure Modes Effects Analysis) type activity and knowledge of the equipment history can go a long way toward problem prevention. However, Murphy works on these projects too - just plan accordingly.
7. Failure to coordinate the move schedule with the sales force to prevent forecast/emergency requirements during the relocation period.
Did someone fail to tell you about the huge special order promised the second month of the plant/facility move? If this is a surprise now - why let it happen during the relocation? Now is when communication is critically important. "Prior planning precludes poor performance." Get them involved, hold them accountable and take away excuses.
What happens when your clients are surprised by the relocation announcement and they double their orders to protect themselves two days before the project starts? This needs to be communicated and planned for also.
8. Failure to plot the financial implications/impacts of the relocation project.
Project costs, delivery schedules, payment schedules, shipment impacts, invoicing issues and more can be planned in advance. Your CFO will love you if you will take him into consideration during the planning and execution process. Again, communication. A good relationship here during the planning phase can work wonders down the road.
9. Failure to brief the leadership team thoroughly on the relocation process and to define management, schedule and cost responsibilities among the team members.
This is no time to try to go solo. Everyone's help is needed and the more defined it is the better. Everybody is impacted by a relocation - let him or her help. This is a total team effort - be careful about delegating this project to the 3rd shift maintenance supervisor.
10. Failure to sort the good from the bad, resulting in wasted time and money relocating junk (and bad habits).
There is no better time to implement a 5S program if you do not have one already. If you do have one, step it up a notch. Now is the time to leave all that stuff you did not know what to do with behind. Have a garage sale, donate to charity or give it to your competitors - just get rid of it. Also, there is no better time to work on‘culture change' - you can relocate and leave some bad habits behind, too. New location, new way of doing things, new attitudes - what a bonanza.
Mike Brown was a managing principal with The ACCESS Group and is now a Principal with TranSystems. He has over 30 years experience in significant areas of growth and leadership during his career and has held leadership positions in manufacturing, strategic planning, consulting, staffing, marketing and full management responsibilities of several businesses and corporations. Mike served as Director of Program Management for a major international aerospace manufacturer and has significant foreign and international trade experience.
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2012 Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.