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ManageMent
www.us-tech.com
Tips for Successful Operation and Product Transfers
By Laurie Hume, Business Unit Manager, Vitronics Soltec T
hinking about moving opera- tions from one location to an- other? Maybe the move is with-
in the same state, within the United States or to and from different coun- tries or continents. Regardless of the geographic locations, transferring products is a major undertaking. While there are many great proj-
ect management tools available on the market from software to books and templates, Vitronics Soltec has selec- tively taken a combination of these tools and our own experiences to cre- ate a project management process that has proven to be effective.
Market Data Before deciding to transfer
products from one facility to another, regardless of geographic location, the decision to do so must be based on good research and market data. Or- ganizations choose to do this for a wide variety of reasons such as mov- ing to a region that brings them clos- er to their customer base or to have
lower operational costs. A thorough analysis should be completed to come to the proposed solution.
Financial Analysis Once a solution has been pro-
posed, the next step is to conduct a detailed financial analysis taking in- to account all potential outcomes from the move and its impact on the bottom line. This is a critical step — validating the proposed solution and if the solution is accepted it will serve as a baseline for measurement of suc- cess of the project during the process and upon completion.
Financial Model
Expected revenue and margin increase. Depending on the reasons for making the transfer it is possible that you may experience an increase in revenue and margin due to gain- ing new customers or increasing business with the current customer base. An increase in margin may also occur with reduced transportation
costs, reduced costs of material, labor and general expenses including over- head depending on the chosen geo- graphic region.
Expected revenue and margin decrease. While an organization may experience an increase in rev- enue and margins, it is also possible
Manager an effective cross-function- al team will require a high level member from the materials and pro- curement area and a high level oper- ations member. While all team mem- bers are valuable, many of the criti- cal functions will fall into these two functional areas.
Vitronics Soltec has had
experience with transferring products between manufac- turing locations within the US and internationally, each move critical to the success of our business.
to experience a reduction based on customer loss, increased shipping costs and an expectation of a reduced end product cost depending on the chosen geographic region.
New facility set up. These expens- es will vary considerably based on whether or not a facility currently ex- ists or if a new one must be con- structed.
Human Resources. If moving to a new location, it is important to deter- mine the number of personnel re- quired to support the business and all associated expenses. If your proj- ect includes closing a business where new products will not replace the product moving then, severance packages should be included in the fi- nancial model.
Exit of current facility. These ex- penses should be carefully analyzed if your product transfer includes exit- ing an existing manufacturing facili- ty. The expense will vary widely de- pending on the type of manufactur- ing done in the facility but may in- clude costly removal of equipment, reversal of leasehold improvements, canceling existing maintenance con- tracts and environmental liabilities. If the current facility is rented, the lease should provide the basis for the extent of the exit requirements. If the facility is owned, preparing it for sale will likely require additional work and related expenses.
Travel. Travel expenses can be sig- nificant depending on the end loca- tion of the product being transferred. Travel is often required for those managing the transfer and for train- ing purposes.
Naming Product Manager and Establishing Project Team. If the result from the market study and the financial analysis of the proposed de- cision validates that the project will begin, the next step is to assign a Project Manager and establish a cross functional team. Although team members will vary for organi- zations based on the type of business and available resources, there are a few key positions for all product transfers. In addition to the Project
Project Charter. Once the Product Manager and team are established the first task for the team to produce a Project Charter. There are tem- plates available that can be quite de- tailed. We have taken a simple ap- proach that includes the project ob- jective or goal, a brief description of the business case for the project to include a completion date, assign- ment of the Project Manager and sig- nature of the Project Sponsor on the document. For Vitronics Soltec this is a one-page document and the Project Sponsor is the person who is ulti- mately responsible for the success of the project.
Project Plan The next step in our process is to
create the project plan, this includes five major steps; determine the major milestones and completion date, de- termine required resources and de- pendencies, back fill to the major milestones with all activities required to achieve them, from this create the Work Breakdown Structure by func- tional area and lastly determine how the project process will work.
Major Milestones and Comple- tion Date. Keeping the completion date in mind, major milestones should be established for all specific activities needed to complete the project. In a product transfer some major mile- stones include locating and setting up of a new facility, hiring resources, training for new resources, establish- ing a supply chain, building proto- types, determining if a beta site is re- quired, ramping up production in the new facility and ramping down pro- duction in the old facility.
Determine Resources and De- pendencies. Many of the milestones will require that specific tasks be com- pleted before others which must be identified and scheduled accordingly.
Create Work Breakdown Struc- ture (WBS). With the major mile- stones, completion date, required re- sources and dependencies identified the team is now ready to determine the detailed tasks that must be done to complete the project. Vitronics
Continued on page 31
July, 2012
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