Relocating Your Manufacturing Plant: 6 decisive factors

Most companies, at some point, are faced with the task of expanding or relocation of their plant. Perhaps warehouses or logistics have outgrown their existing space and simply need more room. Perhaps a site analysis has revealed a need to be closer to key customers or a distribution center. The current location may no longer have the necessary infrastructure, transport costs may be too high, intralogistics and warehouse technology may be suboptimal, or other qualitative location factors may no longer be met.

Unless you deal with these issues on a daily basis, the process of relocating to a new site can be particularly challenging or even frustrating. Whatever your specific reasons for in-house site planning, the following factors will help solve the site planning task.

top view factory site planning

Where does the impetus for choosing and designing the new site come from?

There are many reasons to change a factory or logistics site. Already knowing the trigger implies ideas and questions for factory planning, especially if you are looking for external advice. Which business points does the current location not fulfill, which criteria do you consider necessary? Do impulses come from the customer, from the company management or from the supply chain management? Are you familiar with examples from industry, reference books or universities? Is there already a pre-selection of optimal locations, or do you strive for a selection by calculating location factors and which are these?

What goals does management pursue with relocation to a new site?

Here, factory planners and consultants often speak of a north star to which internal site planning should be aligned. Give great importance to these overarching goals when evaluating the optimal solution. Only those who have this objective in mind can develop a concept for logistics, warehousing and production, make decisions and evaluate the location factors. Measurable objectives influence solution approaches and results. They should be ambitious, offer opportunities for creativity, be comprehensible to all involved and be verifiable at any time. No two companies are exactly alike; every management pursues different goals. Weight these goals by using KPIs that you can then feed into a cost-utility analysis, for example.

Give structure to your relocation project

Whenever factories, logistics, warehouses and production are to be optimized in an internal site planning project, complex change projects result. To make these projects successful, to give the site an optimal layout or to make logistics planning manageable, the project should be structured in phases. One can orient oneself here at general procedure models of factory planning. Many examples can be found at universities and in the literature.

“Just plan a new hall with 7,000 m². When the building is in place, we’ll take care of the necessary production layout.”

No project manager will be satisfied with such an approach. Either the hall is oversized and expensive, or the floor plan design does not meet the goals of the relocation project. Experience shows that a concept describes 80% of the total life cycle costs of the production facility. Roughly, site planning projects can be divided into the following phases:

  • Idea
  • Concept
  • Planning
  • Realization
  • Evaluation

Decisions in upstream project planning phases determine the procurement of new automated production facilities and machinery or the selection of a new logistics center. Therefore, these early phases are of great importance. No one, not even a consultant, has the possibility to play through all solution variants. Business managers make decisions based on upstream work, their goals, KPIs, and by approval of all stakeholders.

Relocating your manufacturing plant is teamwork

The quality of the solution is very much dependent on the competence and experience of the team members. Only when competencies and experience are lacking should they be acquired outside of one’s own company.

Tools tailored for site planning and optimization also help to build competencies and close knowledge gaps. You don’t need an expert in every area right from the start. Ideally, tools help a company’s employees develop into experts as their tasks grow. Also, give your teams the freedom to learn.

In smaller teams, discussions about requirements, framework conditions, opportunities, risks, cost, and benefit assessments for warehouses, logistics, and transport costs for the site run more clearly. The conclusion of each phase of internal site planning is the decision, which is made by the team.

Choose an approach that can be implemented by your teams

It is demotivating for team members to work on details while the master plan is not yet in place. Also, it is even more problematic if there is no possibility for the team to get a common picture of this master plan. Match the required accuracy and tolerance of goals, facts, and figures to each phase of the project. There is no one ideal solution for any of the tasks, but a multitude of solution options.

“I’m supposed to plan out the distribution center, but our colleagues in production can’t show us a rough production layout yet.”

Give your team the opportunity to create a common understanding. Often this is a layout. Sketch, evaluate, compare and select alternatives for further detail. The approach should be from coarse to fine. Your tools should be up to the task and not require highly detailed data at early stages that may not be available at that level of detail at those times. In the concept phase, balancing the workload of production lines to the very least second is not advisable, if the transport effort is still 50% too high elsewhere.

Who makes the decisions for the company?

As trivial as it may sound, site planning involves making choices over and over again in each phase. Multiple solution options emerge in each of the phases. From a business perspective, it does not make sense to plan through all options across all project phases of site planning. It must be possible to change decisions made as knowledge and data improve. In complex layout planning, this is perfectly normal and strengthens the project team.

The basis for this is the procedure described above and the use of suitable tools that make this diversity of variants manageable. Involve those affected in these decisions, establish change management. Site planning always leads to change. Change is a management responsibility.

Conclusion

Relocation your manufacturing plant to a new site can be one of the most time-consuming processes because it affects a very large number — if not all — areas of the company. Each department has different concerns, requirements and established workflows that they have perfected over time. Redesigning an optimal site is an opportunity to improve these processes and structures sustainably. Therefore, don’t just put together a ready-made plan in a boardroom and assume it will work. Site planning is one of those tasks where you should work closely with those people on the ground who add value to their production and logistics processes.

“There’s only one thing potentially more frustrating than an unstructured relocation to a new facility: having to set everything up a second time in your new site because you hadn’t worked out a solid concept beforehand or hadn’t bothered to communicate with your team about it.”

The success of your site planning are impetus, goal setting, structure, teamwork, approach, decision-making. They make the process controllable and minimize risks.

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André Heller
André Heller

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