Align Phase part two: Preparing for capacity consolidation
July 9, 2020
Our first article showcasing the Seraph Relocation and Consolidation MOVE methodology, focused on the high-level alignment required for a successful outcome. These included:
- Defining and Assessing Overall Scope
- Aligning on Expected Benefits
- Understanding the Financial Goals and Objectives
- Understanding and Mitigating Risks
Addressing these points creates a foundational framework to complete the strategic alignment process. The remaining steps will encompass the remainder of the Align Phase.
The next step in the alignment process is to conduct a thorough feasibility study for each of the possible scenarios. There will likely be many options available. For a relocation project, options could address the extent of the relocation:
- Does it make sense to completely close a facility, relocating all products to another facility?
- Should the products be relocated to a single facility, or several different locations?
- What is the financial impact on the customers and suppliers if we decided to relocate?
The feasibility should also take into consideration logistical and legal constraints, licensing, supply chains, and labor risks. Through a thorough feasibility study, many options could be ruled out, leading to the best possible outcome.
High-Level Project Plan
At this point in the project, the team should develop a high-level project plan. The plan is not intended to be used to execute day-to-day activities. Rather, this is the project plan that is used to communicate at the highest levels of the stake holders. This plan contains the key milestones for the project and shows the major dates for each of the larger phases of the projects. These can include dates for:
- Bank Build Completions
- Equipment Moves
- End of Production at Sending Site
- Start of Production at Sending Site
- Required Customer Approvals
Process and Product Transfer Strategies
Relocation and Consolidation is much more than just shutting down at the sending location, moving the equipment, and starting up in the receiving location. Transfers require processes to be clearly identified, documented, and setup at the new location. Training must be done. Many times, these topics are overlooked. Does the new location have the expertise necessary and the systems to execute the various processes required? Effective plans address HR and IT needs in addition to production processes.
After the move, before normal shipments can resume, today’s customer will almost always require products produced at the new location to be prequalified. This could lead to significant increases in lead-times. Timing for testing, validation, run at rates and approval must be considered in the overall high-level project plan.
Supply Chain Transfer Strategy
Moving production locations can have a significant impact on the supply chain. Several questions should be asked, including:
- Impact on Lead-times
- Changes in Minimum Inventory Levels and Carrying Costs
- Barriers Caused by Regulations
- Cost Impacts of Tariffs and Trade Requirements
The strategic alignment process should be done with care to ensure the best possible outcome for your project. A well-done strategic alignment will answer many of the input questions needed for the next step in the MOVE Method: Detailed Planning.
Seraph's team of operational managers and senior consultants intercede on our client's' behalf to fix a crisis that is putting the business at immediate risk, turnaround a situation that is damaging the bottom line or restructuring to improve the balance sheet. Seraph has successfully delivered projects in the following regions: The Americas, Europe, China, and India. Seraph's Industry Expertise Includes Aerospace, Automotive, Energy Infrastructure, Healthcare, and Medical Devices. Through our other operating companies, we are continually looking for distressed situations where we can put our expertise and capital to work to create value.