Designing your Manufacturing Footprint
When designing your manufacturing operations, there are several alternative structures to choose from. Here is an overview of some of the more common manufacturing footprint designs, each of which makes different trade-offs between production volume, logistics, time and energy consumption.
The main premise of manufacturing footprints is to distribute your manufacturing and production closer to your target markets in such a manner as to reduce costs. Cost reductions usually begin with savings from shipping and transporting goods, and the rest follows. The footprints typically bring a small increase in profits, but this increase either remains steady or slowly grows over the years, proving the effectivity of a factory footprint.
Key Design Alternatives
Production remains integrated
Manufacturing, production, or assembly remains with a prime or central facility. This is because the main factory still needs to service target markets near its location. In some cases, integration is done when some components are specifically produced in the main facility and then shipped to the regional plants to complete the assembly of prime products.
Some or all product manufacturing/assembly takes place in regional or feeder plants. These regional plants are closer to specific target markets and also take into consideration the lower labour costs and lower raw material costs in running the said plant. Overhead and logistics costs are also lower.
Another integration to consider is to manufacture all main components at the main plant, ship them to target markets with lower labour and logistics costs, but outsource the assembly. Outsourcing to other companies and plants means saving a lot on infrastructure and maintenance.
Exploring risk and flexibility
Companies need to assess the risks involved with costs and demand. Some stakes are more localised, such as local GDP growth that influences local industry demand and local labour rates directly. Other risks may be more challenging, such as rising energy prices, local transportation costs, and currency fluctuations. When it comes to flexibility, the largest consideration goes to the maintenance of manufacturing and production equipment.
Considering cost and flexibility factors for different manufacturing footprint options will significantly depend on the basic concept of supply and demand on the local level.
Are your manufacturing operations configured for the future?
ONJ Services are an experienced team of industrial electricians and mechanical engineers. Through our range of services, including design, installation, and ongoing maintenance, we focus on reducing costs and improving operations by optimising your manufacturing footprint. We ensure your equipment and machines run more productively, while being able to quickly respond to emergency breakdowns and parts replacements. We are ready to listen to your needs. Call us at 1300 000 ONJ.