Manufacturing

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Insights: The Manager, the Project and the Globe

30 Jun, 2010

By: John F. Sisson
Fable of a Failed Location Decision

Once upon a time, there was a very smart and experienced operations manager who had the responsibility of developing a new project for his company. And this was a major project with corporate-wide visibility.

The manager put his best people on the job. These were folks who had experience in running this type of facility; folks who had the best intentions; folks who had day jobs.

After months of study, a recommendation was made to the board: a site in Pleasantville in the county of Utopia was perfect for their new facility. The board approved, and shortly thereafter construction was begun.

It wasn’t long, however, before chinks in the armor began to appear. Rock was discovered on site, and site prep was halted because of the presence of endangered fairy bats. Permitting didn’t go as smoothly as planned and suddenly the evil lord of the kingdom changed the air quality standards so that the Utopia was now air quality non-attainment.

When the facility was finally complete, one year behind schedule and millions of gold coins over budget, there were problems with the commissioning and operations. The people of Pleasantville were hardworking, but had not been trained in the skills required by the company, and local educators we at a loss to develop needed programs.

After a year of operation, the facility was below productivity and costs were way over budget and the very smart and experienced operations manager’s feet were being held to the fire by the board. “How could this happen?” they asked.

The manager was perplexed. He had put his best people in charge of finding the best location. How could this have gone so wrong?

This may sound like a fairytale or, more accurately, a nightmare. But a version of this is reality for many managers that are tasked with determining the best location for a new facility. After 25 years as a site location consultant, I have encountered many horror stories related to choosing an inappropriate location, and I can tell you first hand that operational success begins with making the right location decision.

So, how does one avoid these mistakes? If you just abide by these three morals, your site selection effort stands a much higher likelihood of success.

An ounce of planning is worth a pound of backtracking.
Detailed planning prior to the initiation of the site selection process is the most important step to insure a good location decision. Begin with an alignment of all the stakeholders in the project. All company disciplines from finance to marketing, from environmental to operations, from engineering to human resources have input in determining the critical aspects of the project. As a result, they have buy-in and will more likely support the ultimate recommendation.

Rome was not built in a part-time day.
Be sure to allocate adequate time and resources to your project. Consider whether or not the employees tasked with guiding the site selection process have the expertise and the time to invest in ciphering through all the options and data that are a necessary part of the process. Just because someone has experience operating or even building a plant, does not mean that they have the tools, methodology or skill set to lead a site selection effort.

If you don’t have qualified resources in-house that can be dedicated to the site selection effort, consider hiring a professional. The cost of purchasing years of experience and a tried and true methodology is a cheap insurance policy for your multi-million dollar investment.

Don’t put all your eggs in one basket.
Many companies make the mistake of focusing exclusively on one location and not developing other options. You want to be sure to leave your options open not only in case a fatal flaw is uncovered at your primary site but also to give you leverage when negotiating incentives and property acquisition in all locations.

So, when you are next tasked with finding a new location, remember the morals of the story - plan thoroughly, allocate the proper focus and people to the effort, and keep your options open – if you do, then your project will be successful and you can live happily ever after.

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