Successful production transfers can bring significant cost savings and customer service improvements, but they can quickly unravel without proper planning, stakeholder engagement, and a deep understanding of project complexity and timing.
Once you’ve done your due diligence, including optimizing your current operation and building a compelling business case for transferring production, several factors can help make your transfer successful.
1. Take an active lead
Senior management must actively participate in the project, guiding the project team and the entire organization through the process. Be sure to involve plant and operations management as well, since they will be communicating with your workforce. Alignment and messaging must start at the top, since a production transfer impacts your employees, your customers, your community, and your business future.
2. Develop a realistic project plan
You’ll need to ensure your initial project plan is feasible. Consider the following questions, among many others, to help keep it real when planning:
- Are you transferring production to an existing plant or new facility?
- Is the new facility in an existing building, or is a new building required?
- Is the facility in a region (especially, a country) you haven’t operated in before?
- Are the existing lines that must transfer already operating at or near capacity?
- How many different types of production lines are transferring?
- Will your vintage equipment survive the move? Will the receiving team embrace it? Will they be able to support it?
- What’s the backlog/lead-time for the installation of new equipment?
- What is labor availability, both direct and indirect support, at the destination region?
- How much training/testing/customer validation will be required?
- Do customer testing requirements and scheduled new product launches affect your timing?
The more realistic your project plan, the greater chance of success.
3. Clarify and communicate drivers for the transfer
Clarity around the drivers for the production transfer and leadership expectations of the outcome should come from the top and be communicated to the project team as they create and execute the plan.
4. Move expeditiously
At its simplest, a production transfer to an existing plant with capacity on a similar line — that is, no production equipment needs to be transferred — may only require a few months’ time to order duplicate tooling, build an inventory buffer, and train employees. As you add size, scale, and geographic distance between locations, the timing can extend to two years or more.
Once the decision to transfer production is made, it’s in the best interest of the company, employees at the existing plant, and your customers to complete the shift as reasonably fast as possible; delays only make it harder to realize the benefits.
5. Communicate before initiating each phase and activity
As you build out your plan and begin implementing it, you’ll want to lay the foundation for project success by discussing each activity and phase before the project begins. Additionally, before starting each new phase, reassess activities, timing, and resource needs, and then communicate updated plans widely.
6. Use your business case to prioritize work efforts
Referring back to the business case also helps you make the inevitable trade-off decisions you’ll face. Once trade-off decisions are made, update the business case accordingly.
7. Pay special attention to high-risk areas
These include but aren’t limited to reliance on third parties and cross-functional and customer-facing activities, such as building inventory or startup readiness testing. You have little control over freight and duty costs, so be sure to monitor the accuracy of your assumptions and changing market and political environments.
8. Get your supplier base in place
Ensure you have a capable supplier base for production materials and fixed asset support. Can you transition supply to suppliers near your new facility? Do your equipment technical support vendors offer support in the region you’re transferring the equipment to? If not, will you need to buy new equipment?
9. Test
Develop a startup testing strategy and testing plan early in the project to ensure your product meets all customer and regulatory requirements. Don’t compromise on testing. (We repeat: Do not compromise on testing.) Build in adequate time.
10. Engage with your customers throughout the process
Improving customer service is a key driver of most production transfers and maintaining high service levels throughout the transfer is critically important — you can’t miss deliveries or stop selling product. You’ll need to plan accordingly so service isn’t disrupted. This means ensuring adequate raw material inventory, safety stock, and shipping methods are in place. Customers will also want to take a piece of your cost savings — developing a strong fact-based negotiation strategy will be critical to maximize your total profit improvement.
11. Recognize change management is more than communication
Managing change takes respectful consideration of all stakeholders, including customers, the community you’re operating in today as well as the one you’re moving to, suppliers, and your employees. When it comes to staff, identify and incentivize key employees so you don’t lose critical product and manufacturing knowledge.
12. Manage deliberately
Manage the production transfer in weekly increments. Hold formal status checkpoints every week. Projects don’t fall a month behind in one week. Early visibility into progress and issues allows leadership to optimize project results.
Here’s one final thought: Don’t wait to celebrate. Moved a line? Celebrate. Completed testing? Celebrate. Production up and running? Celebrate. It can be a pizza party, a newsletter article that highlights the recent work of the project team, or other “small” way of marking interim milestones and successes. This helps keep visibility, engagement, and motivation high.
Under the easiest of circumstances, production transfers can be complex. Realistic planning, deliberate project management, stakeholder engagement, and strong communications can all help make the process smoother and faster and, most importantly, deliver the results you’re aiming for.
As always, if you have any questions, feel free to reach out to our experts in production transfer — we’re happy to help.
