Establishing a new manufacturing facility is one of the biggest challenges a company can take on. It is a clear sign of a company's intentions to grow, to invest, and to be confident in its future. Planning and managing such a facility, however, can be a massive challenge for the people involved, as they have to deal with an array of decisions, needs, regulations, and investments. People involved in such a project will often find themselves lying awake at 2 am, staring at the ceiling.
Whether an organization is looking to expand its physical operations to a new location or to move to a new factory to be more productive, the key to success is planning the new facility in great detail before commencing the project.
So what does it take to plan a new factory?
The planning of a new factory involves a variety of factors that a leadership team must consider in order to minimize risks and keep costs under control, creating a base for future growth and success of a company.
1. Defining Objectives and Operational Scope
Since designing a factory from scratch can be a very complex task, it is very important to lay out the basic objectives of the future plant before starting to examine possible sites. In fact, the basic objectives of a future factory must be clearly outlined from the very onset of a project to avoid going awry. And that means avoiding a simple, innocent-looking budget 'overrun' early on in a project.
Key questions to answer include:
- What specific products will be manufactured?
- What is the expected production volume at launch, and how is that expected to grow over five years?
- What level of automation will be integrated into the daily workflows?
- What utility requirements does your process require?
- What are the environmental expectations for your process?
- How will waste be managed for your process?
By defining the scope of your project at the outset, you can prevent the potential for scope creep and focus your engineers on designing a facility that can meet your goals for your new manufacturing facility.
2. Strategic Site Selection and Feasibility
The choice of location must take into account more than just a suitable price for a plot of land. The new factory will influence the daily work of employees and also the supply chain. In the long term, it will also affect operating expenses.
Key site criteria when selecting production locations for industrial goods manufacturers include:
- Logistics and Transportation: Is there close proximity to interstates, railroads, seaports, or airports? How will raw materials as well as finished products move through the distribution process?
- Utilities and Infrastructure: Factories consume lots of power, water, and gas in their day-to-day operations and therefore require that local utilities and supporting infrastructure are in place and able to supply high demand without failure.
- Zoning and Local Regulations: The property must be zoned for industrial use. The company must understand local environmental laws and how they apply to the facility, as well as noise restrictions and waste disposal.
- Labor: It is critical to have sufficient qualified labor available in the proposed location to support plant operations over the short and long-term.
How do the staffing decisions made in the early phases of a project influence the completion of the planning phase and the commencement of the build phase?
Securing the right partner before your labor needs are fully solidified gives you room to negotiate favorable terms and ensures you have access to reliable industrial construction staffing solutions once the build phase begins.
3. Layout, Design, and Workflow Optimization
When designing a production line, the path materials take throughout the plant should be logical to promote efficiency. It is also important to note that a well-designed plant will promote safety and minimize potential downtime brought on by ergonomics-related injuries.
There are two main types of factory layouts: linear (like an assembly line) or cellular (a more flexible modular production arrangement), depending on volume and variety of products.
- Safety and Ergonomics: Allow for wide aisles and a safe working environment, including adequate emergency exit routes and proper ventilation. Design a facility that incorporates the most up-to-date ergonomic workstations.
- Future Expansion: The smart facility is designed to grow. Therefore, there should be sufficient space for future expansion, e.g., for additional production lines and machines, which can be added at a later date without becoming too costly.
It is also really important to strike a good balance between short-term needs and long-term ambitions, and allow great design to shine through.
Working with an architect and industrial engineer to design your new factory can also be of great value in ensuring your building will fit your needs as well as your processes and equipment.
4. Regulatory Compliance, Permits, and Environmental Impact
Regulatory approval and obtaining all necessary permits is a complex process that can take months or even years to obtain and is best to commence as early as possible. Approval is required to commence construction of the factory building as well as to bring the factory online and commence production.
Why wait until the last minute to ensure compliance?
Key regulatory considerations include:
- Building Codes and Safety Standards: Compliance with local building codes, fire safety guidelines, and general structural standards.
- Environmental Permits: Approvals from regional environmental protection agencies for air quality permits, wastewater treatment plans, and the handling of hazardous materials are required.
- Occupational Safety: Include design considerations that ensure the new facility can operate safely to protect employees and assets and avoid future liability.
Also, consider hiring lawyers and environmental consultants early on in the planning phase to verify that all the necessary permits and approvals have been obtained before you start building the facility. Better to check all the required paperwork now than risk a facility shutdown due to lack of compliance with environmental, health and/or safety regulations later on.
5. Equipment Selection and Technological Integration
Choices with respect to equipment have a large impact on the initial investment as well as future maintenance costs. Thus, choice of technology has to be based not only on current needs but also on how well it can integrate with the company's existing operations.
Off-the-shelf or custom engineered? Will standard equipment integrate with your existing systems and processes? Modern facilities are utilizing a host of digital tools such as sensors, inventory management systems, and real-time monitoring software to get the most out of existing plant and maximize overall equipment effectiveness.
Timing matters just as much as technology.
The scheduling of deliveries of production equipment also must be planned carefully. Long lead times for key specialized equipment typically mean that orders will be placed prior to the completion of the basic building structure.
6. Budgeting, Financing, and Risk Management
The financial planning for building a factory also needs to factor in the costs for unexpected events as well as for the period of time needed to bring the operations up to full speed.
A comprehensive factory budget includes:
- Land acquisition and site preparation
- Architectural, engineering, and legal fees
- Building construction and material costs
- Machinery purchasing, shipping, and installation
- Utility connections and infrastructure upgrades
- Contingency funds (typically 10% to 15% of total budget)
Additionally, a plan for potential risks such as supply chain disruption, weather disruptions, planning permits, and labor force disruptions must be set up to deal with the inevitable events that will occur and disrupt the project to some extent.
7. Execution, Commissioning, and Handoff
The last phase of the planning for the new factory consists of the construction of the new factory and the commissioning of all systems. This so-called commissioning is the testing of all systems, machines, and processes to check if they are working properly and safely to operate the new factory in production.
What steps need to be taken in order to transition smoothly from the testing phase to full production?
The handover to full production can be smoothly executed by having the new operations, maintenance, and safety teams fully in control of the newly completed facility.
Final Thoughts
Creating a new factory is complex and requires strategic planning, effective communication, and a multi-disciplinary approach. It may seem too complex to tackle at first, but breaking it down into the key stages (selecting a site, designing the workflows, ensuring all necessary approvals have been obtained, and setting a realistic budget) turns a new factory into a powerful engine for future growth and success.