Designing a New Corporate Manufacturing Facility - Essay Example

Here Your Teacher Here Your School Here Here Project Development: Designing a New Corporate Manufacturing Facility Introduction ABC Manufacturing Company, a business which creates clothing and other fabric textiles for a variety of well-known clothiers, is currently developing new global strategies for expansion into the international marketplace. However, in order to fully cater to the new, higher levels of global demand, the company has decided to create a new domestic manufacturing facility to improve export volume and boost revenues. To develop this project, several key operational activities must be identified including an assessment of project budget, assessment of various commercial properties for construction and development, as well as identifying the operations steps required to ensure adequate staffing levels as related to payroll. Further, as part of this expansion initiative, ABC will conduct a strategic assessment of the competitive environment to determine a series of potential best practices for cost reduction and efficiency in this project. There will, of course, be fixed expenditures and variable costs which the new manufacturing facility will incur during its first operational year, however initial budget assessment can determine future methodology in relation to specific areas of cost which might require adjusting. However, the scope of this project is to get the new ABC manufacturing facility up-and-running to full manufacturing capacity, from the ground up, in the period of two years. This proposal highlights the expected operational activities and costs during this project and will provide a review of how progress will be measured and adjusted based on corporate expectations. Identifying capital investments and process Identifying a suitable property for development, as Phase One of the project, involves assessing opportunities to seize valuable assets for ABC. The new facility must be within the established budget guidelines and also be sustainable so as not to incur losses in the first series of operating years. However, current trends in the commercial real estate industry have driven prices to, in some instances, record lows (Jones, 28), allowing the company to capitalize on low cost retail property that is market driven. Phase One will also consist of utilizing human capital for the project, which is identified as the labor available at the company’s disposal to ensure productive and efficient operations (Mathis & Jackson, 117). Tangible construction efforts will be handled by external suppliers and professional builders based on a bidding process. As previously mentioned, all supply and purchasing costs can be delivered to the appropriate spending account based on budgetary guidelines. Tangible construction efforts will require the addition of an internal building surveyor and external architect to oversee the facility construction. As the business is not equipped with its own dedicated construction personnel, these efforts will need to be coordinated by several members of the senior leadership team to ensure that the construction management group is conducting the project according to corporate expectations. Upon facility construction and design, internal competencies will be tested. Because the company is currently designed with a manual inventory management system utilizing the Kan-Ban system, dedicated staff members from the corporate headquarters will require allocation of several staff members to the facility to oversee its launch phase. As the leadership group is likely familiar with, ABC Kan-Ban efforts are being phased out in 2009 in favor of a new ERP system and e-procurement system. However, until these technologies are implemented and tested, ABC will require the manual labor and absorb the costs as a temporary, but necessary variable expense in relation to payroll expenditures. Assets (machinery, production devices, etc.) will require a testing scenario to ensure that all devices function properly and can handle the workload without sudden interruption to capacity management. For instance, textile machinery and various weaving devices will require a thorough series of R&D approvals and testing scenarios to ensure that the output of product will be in-line with the other corporate manufacturing facilities. This testing phase is expected to consist of two to three months of dedicated staff performance to make this goal a reality for ABC. This will either require a change in job responsibility for several subordinate work groups or a temporary increase in staff manpower through corporate HR and hiring channels as a burden to the corporate payroll budget. These can be decided at the senior level and dictated according to operational budget expectations. To ensure that these research and development activities are within corporate standards, several members of the corporate headquarters R&D group will frequently travel to provide best practice guidelines based on tried-and-true research procedures. The new facility cannot sustain a launch with any margin for error as sales revenues will be the fundamental method of recovering the costs for this new project facility. R&D experts from headquarters will be expected to identify areas of improvement on behalf of the dedicated in-house R&D group and provide detailed floor layout and design so as to prepare the team for process improvements and new technologies. The visiting team will report back to the operational leader on a routine basis to discuss progress and identify any strengths or weaknesses in the research and development group. A series of change initiatives will be instituted as mandated by the suggestions from the visiting HQ R&D group as this area of the new facility must be the priority for 100% operational capacity at launch. Top business professionals agree that a firm’s main ability to remain competitive is the size of its R&D budget (Sheridan, 86). This is highly applicable to ABC which must realize that a competent operational team must be applied to this development cycle, adding a larger strain on the short-term payroll budget. R&D must be in-line with the best practice model utilized by headquarters and all other domestic manufacturing facilities. Once the new facility is deemed ready to run sample production textiles, the business can utilize this opportunity for advanced training for pre-existing employees at ABC to brush up their skills on new product guidelines and other best practice methodology. As many of the items purchased for the new manufacturing site are new technologies, likely to be the benchmark for ABC, this will provide a rather low-cost and non-interruptible element for diversity in training. In the event of sales declines or other losses, having diverse staff members capable of multi-tasking on the production floor could keep operational budgets low in the event of staff reduction necessity. This training can be provided by in-house experts from production and manufacturing process areas, coordinated through the proper HR channel, to develop a new 2009 best practice guide for internal manufacturing. This would ensure that a new training and development system becomes implemented, thus modernizing operations as a standard expectation corporate-wide, ABC creates a positive public image as a company worthy of being benchmarked for its focus on quality. Dow Chemical Company and other large-scale companies have been working on new methods to fight rising energy costs (Katz, 2008). As part of the operational budget, there is going to be a strong demand for natural gas and electricity at this new facility. During the first year, there is likely going to be a variable element to the costing efforts to sustain production until a firm manufacturing forecast can be developed based on the new service demand. However, many of these costs can be offset by higher sales volumes if this launch is within corporate expectations for both quality and manufacturing output. Once the facility has been approved for a genuine batch output, the business will require the development of a shop floor diagram which illustrates the entire process flow from start to finish. “Simple changes in manufacturing processes and inventory control can quickly start generating value” (Robinson, 1998). This phrase is built for ABC’s new manufacturing facility as it must strive to be the leader in manufacturing process. This phase will require the efforts of production experts, receiving and shipping warehouse management, research and development, and all other areas connected with shop floor process to work interdependently to develop a picture of their target area and responsibility. This element of Phase One should be completed within no more than a four week period with proper group leadership and a firm timeline for completion. Staffing Demographic trends in the work environment indicate that today’s business schools are beginning to offer programs which offer specialized student knowledge in manufacturing operations (Hammonds, 64). This works as a tremendous advantage to ABC’s new manufacturing facility as having a larger pool of trained professionals can avoid the cost of excessive process and technology training (as the candidates have already been provided this training at reputable business schools). In addition, having a motivated set of business professionals who are excited and adaptable in manufacturing will give the business a larger competitive advantage in relation to operations process and controls. Today’s top leaders recognize the strategic importance of developing and retaining top talent (Organ, 1), thus it is highly crucial to the operations at the new facility that the business maintain a dedicated team of professionals who are flexible and motivated by the operations management and facilities management aspects of the manufacturing environment. During the tangible manufacturing process, individuals on the production floor must be handled utilizing a wide variety of motivational and psychological methodology. For instance, a renowned psychologist, Abraham Maslow, created what is referred to as the Hierarchy of Needs. This hierarchy suggests that all individuals first require their basic physiological needs to be met in order to advance into higher needs, such as belonging or self-esteem development (Morris & Maisto, 2005). Understanding this, to improve operational efficiency, it must be determined how the staff members will be coordinated to ensure adequate motivation to perform their assigned tasks. This should be accomplished by various departmental leadership who will coordinate these activities from a human relations but operational improvement standpoint. Because the necessity to be in-line with existing manufacturing facilities is paramount, this cannot be an underlooked aspect of operational development. Labor quality is often considered the determinant of productivity (Boyes & Melvin, 412). Increased education and a talented labor pool will likely drive the firm’s long-term competitive advantage by utilizing the skills and abilities provided by operations level education to improve the business’ longevity on the textile production market. Opportunities for technological and process improvement Marketing efforts in this manufacturing environment will be tied directly with the operational sustainability of the production floor. As marketing efforts become more enhanced and sales volumes increase, the demands on the production environment will be substantial. With this in mind, it is important to identify the areas of marketing which will require development so as to provide a sustainable production schedule. As Phase Two of the project, a database-driven Web site will be paramount, but is recognized as no simple task (Kania, 35). Textile manufacturing is no longer held captive to high cost transportation, as competitive third-party product delivery is available, thus driving down supply chain prices (Donovan, 28). This manufacturing facility will be equipped to take orders from external vendors for direct delivery, thus bypassing the corporate headquarters and eliminating the strain of excess in-house payroll costs at the same time. However, the database-driven website will need to be coordinated by a series of external and internal information technology support teams to ensure a smooth launch. ABC will lose the majority of functional control over the installation process of the new software due to the firm’s limited technical staff. However these elements will require periodic intervention on behalf of senior executive leadership to participate in test scenarios to determine whether the software has been written appropriately for the needs of the production floor and other floor supervisors. This process is proposed within the timeframe of Phase One, but will be completed between 6 and 8 months. In addition, during the launch phase, SAP will be installed, a software program designed to coordinate electronic inventories, supply chain functions, purchasing, and all other operational activities (Britton, 105). A major problem in today’s business environment is that workers are frustrated as they are asked to perform more tasks in highly streamlined, corporate environments (Hill, 18). SAP maintains the ability to coordinate all business functions into a singular, user friendly software package that keeps instant track of all movements of raw materials through the final distribution from a logistics perspective. SAP is fully upgradable in the event of radical process changes (Van Arnum, 21). This provides a further competitive edge for the operational environment as a long-term investment in sustainable internal operations and process functions. This software development phase will also require the efforts of various department heads who will coordinate efforts with the external IT support team to develop a virtual model of their job responsibilities. These models will be incorporated into the final version of SAP to ensure a smooth launch of the facility. For optimal operations, the new manufacturing facility must understand the volume of technology which should be brought into the internal production system (Bowon, 14). Thus, there are elements of the new ABC facility that can be left to manual entry or monitoring, such as the current Kan Ban system, until these technologies are fully developed and ready to launch on full-scale operational capacity. Electronic procurement, the process of gathering raw materials via virtual channels, is now a standard technology at most manufacturing facilities today (Atkinson, 12). Because of this, ABC is behind the industry norm in terms of regulating and monitoring the movement of materials in favor of manual controls. SAP will eliminate the need for excess laborers in this area of the new project, thus recovering some of the costs associated with developing ABC’s new manufacturing site. Large-scale software implementations generally require the selection or recruitment of an internal manager of production operations in order to ensure that the project is progressing and developing as required of corporate leadership (Nickels, McHugh & McHugh, 307). As such, ABC will be appointing several leadership and production experts, from each manufacturing division, who will act as the SAP software champions. These individuals will work directly, over a period of 6 to 8 months, with external software developers and report findings and progress to senior leadership. Regulations and unforeseen costs It is a reality of modern business that various city and local regulations will either provide incentives to the company or create minor hindrances. At the same time, various environmental conditions will require adaptations to best practice in relation to the supply chain or logistics. However, in order to ensure 100% compliance to these efforts, the business will require the efforts of an internal legal consultant who will work with the city and regional bodies. All of these potential risks to the new facility must be identified to ensure that there is no unforeseen stoppage of production due to legal oversight. The efforts of the legal agent will be overseen by junior leadership as part of the operational budget who will inquire as to progress on a routine, weekly basis. All aspects of permits must be coordinated with this legal agent who will report daily to the production site to update construction managers and internal production contractors at to progress on permit generation and large-scale project approvals. Issues of manufacturing integrity must also be considered which can have a direct impact on the operations budget at the new facility. As such, corporate social responsibility from the viewpoint of the production floor associate must be considered. In what method is ABC utilizing their human capital to give back to the environment? Are employees contented workers satisfied with the opportunities presented them at ABC’s new manufacturing facility? Diminished staff motivation is something that the business cannot afford at launch time if it is to stay a stable textile brand with an image for quality. It is recommended to avoid any interruption or inefficiency in production that a public relations expert is assigned to monitor the launch phases and identify any opportunities to capitalize on public image. ABC wants to launch with the reputation of its pre-existing textile producers as one of quality and efficiency worthy of benchmarking. The company can utilize the talents and capabilities of this PR agent to create a variety of press releases or recommend internal strategies to boost employee motivation and provide the firm with an excellent regional image for corporate social responsibility. This could theoretically prevent future grievances from workers, community protest for wage policies, or any number of unforeseen events. The PR agent becomes a long-term-minded risk agent to prevent an inefficient production system. Conclusion Establishing a new manufacturing facility is certainly not a simplistic task from an operational perspective. During the initial construction and testing phases, there are sure to be a variety of unforeseen hindrances to budget expectations. However if the project team remains focused on keeping costs low in all aspects of the project, from the initial capital investment through the initial launch phase ABC can recover those costs by a dedicated team of professionals. As certain operational costs fluctuate between variable and fixed, such as during time of high energy consumption, budget must allow for these project variables during the initial phases of new facility development. It is clear that new technologies such as SAP will greatly enhance the new facility during the launch phase of this project and will likely mean a wide variety of cost savings across the entire corporate landscape due to diminished operational costs at the new facility. Further, the checks and balances system provided by this project, with various department heads taking the lead on training and reporting of progress, will provide this project with the expertise necessary to get the facility running to full capacity within two years. Quality and compliance are the two highest priorities for this new facility and these must be measured to ensure that there are no disruptions to the operations after the end of the launch phase of the project. ABC Manufacturing will emerge a leader in its industry with its state-of-the-art, well-developed new facility ready to tackle the challenges of the 21st Century. Bibliography Atkinson, Bill. How to get the most value from e-procurement tools. Manufacturing Business Technology. 25(11), 2007. Britton, A.C. Understanding ERP and SAP Applications. Blackwell Publishing, 2005. Bowon, Kim. Optimal development of production technology when autonomous and induced learning are present. 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