Optimizing facility footprints and operations is a universally beneficial way to maximize the productive use of capital, especially for capital-intensive industries such as industrial production or foods and consumer products. The need for optimization manifests through various business situations, including mergers and acquisitions, market upturns requiring additional capacity, or market downturns requiring consolidation.
While these events can arise at any time, the COVID-19 pandemic is certainly causing dramatic swings in all directions as it continues to strain the supply chain. While certain market segments are struggling to accommodate surging demand, others have seen dramatic reductions in capacity utilization, while still others are evaluating the benefits of onshoring or near-shoring to realize greater stability in the supply chain.
Regardless of the drivers, several approaches can maximize the efficient use of facilities while making necessary adjustments to the supply chain.
Get Leaner — Before investing additional capital, look for opportunities to make the current operations more efficient. Lean Six Sigma is a process-focused improvement approach that strives to eliminate waste and improve efficiency. Armed with well-tested tools and techniques, a professional experienced in continuous improvement can uncover waste, and devise and execute a plan to enhance process efficiency. While not specifically aimed at reducing the space consumed by a process, these initiatives often reveal opportunities to reduce the footprint of certain operations while maintaining or even increasing throughput.
Evaluate Automation Opportunities — Automation optimizes the efficient use of space in several ways. Robots can routinely do the work of several people, and often within a smaller footprint because they are designed to be compact and mounted on floors, walls, ceilings and rail tracks — compressing space while increasing productivity. In terms of storage, automation generally allows a greater use of available vertical, or “cube” space, and reduces the amount of space dedicated to aisles. When customized to the unique needs of a business, automated storage solutions such as vertical lift modules, carousels, and automated storage and retrieval systems (ASRS) can reduce floor space requirements by 40% or more.
Eliminate Redundancies — Mergers and acquisitions often result in excess capacity and/or redundancies in facilities and operations. While it is conceptually simple to advise eliminating redundancy, the details can be challenging. Many factors need to be considered, including:
- Capability — Which site or location has the better technology, sufficient capacity or greatest subject matter knowledge?
- Operating cost — Which site or location is the lowest cost producer?
- Logistics cost — Which location minimizes the transportation and handling costs across the entire supply chain?
While all of these strategies may be effective for producers seeking to make the most efficient use of their facilities, determining which investments provide the right business case is a daunting task — especially during uncertain times. To help bolster confidence in a sound decision, companies like Burns & McDonnell offer pre-capital consulting services to evaluate a company’s goals, facilities and operations to fully understand what needs to be accomplished, and how to get there. This consultative exercise brings all necessary data and objectives to the table, develops options for investment and provides a sound business case analysis to help choose from the options.
Regardless of the strategies used, optimizing a company’s facility footprint and operations can offer immediate and long-lasting benefits by maximizing capital efficiency and minimizing operating costs. Even in uncertain times, the potential exists and is worth evaluating.
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