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Is Planning Your
New Facility Turning You Inside-Out?
Have Peace of Mind
- Design It That Way
By:
Dave
Smith
Overview
Beads of sweat are forming on your forehead as you walk
out of the boardroom. You can be the hero or the goat.
Your company has been growing at an astounding rate. If
even the most conservative of estimates play out, two
short years from now operations at the facility will
grind to a painful halt. Over the course of the past few
years, several issues have popped up due to
over-congestion and the inability to maintain enough
organization to get the proper orders shipped in a
timely fashion. Everyone knows it is only going to get
worse. You’ve been charged by the leadership team to
manage the design and transition into a new facility.
Where do you start? Who do you
call first? The clock is ticking…
Your operation is unique. Well…kind of.
Over the course of our collective careers at Operations
Associates, we have been involved with several hundred
facility design projects. These projects have ranged
from relatively compact 10,000-square-foot light
manufacturing operations to one million-square- foot
distribution centers. Clients have asked for assistance
handling everything from microchips to 300-ton
engine-generator sets. All projects and clients have
their own nuances, but let’s face it, we’re really only
doing a few basic things. We either: provide a service,
process material, manufacture goods, assemble products,
store products or materials, or distribute products or
materials.
Ask
yourself if your company falls into one of those
categories; if it does, there are right and wrong ways
to approach designing a new facility. To be the hero of
your company, not the goat, the following areas should
be addressed to give you and your company the best
chance for success.
Where do you start? Who do you call
first?
We’ve seen it all. Some companies call after they have
nearly all of their plans in place (facility, process
layouts, storage, and ancillary areas). Others call
after their architect has finished designing the bricks
and mortar. Still others call as soon as they determine
they need a new facility.
The
single biggest mistake a company can make when designing
a new facility is to design the bricks and mortar first.
If you answered the question, “Who do you call first?”
with “Architect,” you very well may be leaving
significant dollars on the table — not only the
construction dollars associated with the new facility,
but cumulative future dollars due to operational
inefficiencies. Do not make your operation fit into a
building. Design your optimal operation first, and then
work with the architect to design the building to fit
around your operation.
Golden Opportunities
Over the course of an average career, a person may see
their company change facilities only one to two times.
These are not times for experimenting; you have to get
it right on the first try. When designing a new
facility, it may be your only chance to take advantage
of opportunities for improvement with a “clean slate”
for design. This is the perfect time — a new facility, a
new start. Don’t miss out. Ask yourself the following
basic questions to get started:
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What will be the primary function
of the facility?
Keep in mind that what your company does is what
pays the bills. Design your new facility to have
the capabilities of best serving its primary
function.
-
Can we improve our processes?
Companies who are cramped in their current
facilities didn’t design their processes to be
inefficient. They are simply adapting as necessary
to growth over time, usually with the mindset of,
“We are doing what ever it takes to get our product
out the door!” When designing a new facility, do not
plan on taking your current processes in an “as-is”
state to the new facility. Audit those processes.
Apply lean techniques to those processes. Determine
how you would perform them if starting with a
completely blank page. There is no better time to
refine your processes than the transition to a new
facility.
-
Can we improve our facility
utilization?
With a similar mindset to improving processes, take
a fresh look at your entire facility layout. Are you
using the correct storage media? Can you utilize
more efficient material handling equipment? Are your
production lines designed to be most efficient? Have
you considered flexibility and growth? Are
functional adjacencies most efficient? Use the
transition to your new facility to put things where
they should be in relation to each other, not where
they are now. Use the transition to optimize your
entire operation and reduce your capital outlay.
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Is my new facility the correct
size?
A “back-of-the-napkin” calculation of current
operational square footage factoring in growth will
get you a “number.” That “number” could cost your
company millions of dollars over the life of the
facility. Too large or too small, both can be
problems. Most people err on the side of “too large”
when designing a building. Increase the accuracy of
your new facility square footage by taking into
account the questions asked above. “Right size”
your facility by designing “inside out” to reduce
both operational costs and capital requirements.
Real Example
Operations Associates was called to evaluate the design
of a highly automated 500,000 SF distribution center for
pharmaceuticals. We worked with the client to identify
the customer requirements, redefine the processes to
support the requirements, and apply new technology to
make the operation more efficient. The final design
increased the company’s throughput by 300% and required
building 370,000 SF. The space reduction gained by
designing the building from the “inside out” saved the
company over $10 million in capital costs.
Summary
Operations Associates has worked with clients on these
projects at all levels of design, schedule planning,
architect/contractor and site selection, process design,
facility layout, and implementation management. To use
an analogy, you wouldn’t buy a microwave to make toast,
you would get a toaster. On the flip side, you wouldn’t
cook a turkey in a cereal bowl, you would use a roaster.
Don’t fall into the trap of shoe-horning your operation
into any facility. Ensure you are designing the building
to fit around your optimal functions and processes. Do
this and you’ll definitely be the hero.
Design from the inside-out.
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Key Mistakes to Avoid in Manufacturing
Facility Design
By:
Steve Smith
Editor's Note:
The following article is an excerpt from Operations
Associates' newest white paper,
10 Mistakes to Avoid in
Manufacturing Facility
Planning.
We would like to share
the first of these mistakes
with you. In subsequent newsletters, we will focus on
each of the other nine mistakes to
avoid. Please contact us for a free pamphlet to
view all ten of the lessons.
Incomplete Supply Chain Strategy
Manufacturing
facilities are often judged by their ability to meet
a target Cost per Manufactured Unit ($/MU) at a
target throughput. Unfortunately, just meeting Cost
per Manufactured Unit targets may not be enough to
keep the company in business. It is possible, and
all too often probable, that a company fails even if
the manufacturing facility meets its target cost per
unit. This can happen if the total landed cost as
delivered to the customer is too high because other
costs outside of the manufacturing process are not
considered as part of a total supply chain
strategy. For example, we must consider the costs
of getting the manufactured product to the end user
through the distribution network as well as the
inventory carrying costs associated with having to
store the result of large run or batch sizes in an
attempt to drive down $/MU.
A company may
reduce the $/MU by locating a labor intensive
process in a low wage area, or by locating an energy
intensive process in an area with low utility rates.
But, either of these savings may be offset by the
costs of having our manufacturing point too far away
from our suppliers and customers. In order to
maintain an acceptable up-time of our manufacturing
processes, we may have to carry large raw material
inventories to buffer against supply disruptions
from long supply lines. In order to maintain a
service level acceptable to our customers, we may
incur high costs for expedited transportation and
delivery, or high carrying and handling costs for
keeping large product inventories between our
manufacturing facility and our customers. Unless we
have a unique, highly sought after product, we will
not be able to dictate the product price or service
level, so we must plan our supply chain accordingly.
One of our
clients called us to help them design a new
manufacturing facility. They believed that the
facility should be the same size as their five
existing facilities, and that it should be located
somewhere in Texas. We helped them develop their
total supply chain strategy by analyzing their
supplier base, customer ship locations and service
requirements, and regional demand growth
projections. We discovered that they could meet all
their strategic supply chain requirements by adding
capacity in Alabama, not Texas. Unfortunately they
had not called us to develop the strategy a year
earlier - the optimum location for the additional
capacity was within fifty miles of a facility they
had closed the previous year.
Upcoming Events
21 - 23 February,
2008
Society for Health Systems Conference
and Expo
Orlando, FL – Rosen Plaza Hotel
-
Operations
Associates will be exhibiting in
Booth
305
-
Operations
Associates President
Mike Rigg
will be making a presentation on Fast Lean
Implementation during a session on Friday, 22
February at 4:10 PM
25
- 27 February 2008
South Carolina Manufacturer’s Alliance
Lean Best Practices Conference
Columbia, SC – Radisson Hotel
-
Event sponsored
in part by Operations Associates
-
Operations
Associates will be exhibiting
-
Operations
Associates President Mike Rigg will be making a
presentation on Fast Lean Implementation during a
session on Tuesday, 26 February at 1:15 PM
5 – 7 May 2008
BDO Seidman Alliance Conference
Las Vegas, NV – Caesar’s Palace
Partner Spotlight
With over 25 years of
operations and labor experience, specializing in shift
work and scheduling, the consultants at
Core Practice
Partners LLC have run successful projects in every
industry that works beyond a Monday to Friday 9-to-5
timeframe. Their varied expertise includes projects in
the manufacturing, utilities (power generation and
distribution), food processing, contact centers,
telecommunications, distribution operations, and mining
industries.
Operations
Associates White Papers
Operations associates
provides complimentary copies of several of our industry
best-practices white papers. The available titles are:
-
Hiring a
Consultant: 10 Lessons from the Trade
-
Project
Management: 10 Steps to Avoid Project Failure
-
10 Mistakes to
Avoid in Distribution Center Planning
And our newest white
paper:
Any or all of these
white papers or the Operations Associates Overview
Brochure can be requested using the contact information
listed below.
Contact Us
If you have any
upcoming project needs please contact us for assistance.
We have extensive experience in areas including, but not limited to:
Distribution
Manufacturing
Supply Chain Strategy
Supply Chain
Management
Michael Townes
Marketing Director
michaeltownes@operationsassociates.com
864.752.2332
800.864.4729
(toll-free)
Mike Rigg
President
mikerigg@operationsassociates.com
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