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Manufacturing Footprint Rationalisation

PIP has the unique blend of strategic insight and practical implementation skills necessary to deliver rapid and sustainable benefits from footprint rationalisation. PIP’s approach involves three elements:

• Identifying value
• Securing commitment
• Realising value

Rationalisation is not an everyday task

Rationalising manufacturing sites can deliver significant bottom line benefits but can also be a daunting task, requiring complex economic decisions while dealing with tough people issues.

Decisions require a detailed cross-functional review of the performance and future requirements of a business, using tools that are typically not part of everyday decision making. This is where PIP can help.

Identifying Value

The value of closing assets is a balance of cost, revenue and capital implications.

Agree the Decision Criteria in Advance

A restructuring decision can be emotionally charged and can easily get bogged down in detail unless the key decision criteria are agreed in advance. Some of the most important criteria include the discount rate, ranges for external variables such as exchange rates and market growth, definition of strategic markets and customers, and the treatment of restructuring charges.

Build the Financial Model

The financial model to support a decision must include the key variables and ensure that important assumptions are not hidden in the detail.

• Annual cost impact on non-manufacturing locations such as head office
• Revenue impact through changes in volumes, price and servicing costs
• One-off impact on capital costs
• Network level impacts at other plants such as purchasing scale and transport
• Option value of future events considered via sensitivity analysis.

Securing Commitment

PIP focuses on three elements in facilitating decision making and enrolling key stakeholders:

• Raise issues and adopt a fact based approach, ensuring that key assumptions are visible and accepted across the business.
• Recognise the human side of the decision by paying attention to the emotional issues that emerge and ensuring that the team is adequately supported.
• Ensure stakeholders accept accountability for the KPIs underpinning the decision to close (or retain) a site.

Realising Value

Value can easily be lost in the implementation through delays and cost escalations. Successful implementations are characterised by strong communication plans, tight management of variance to timelines and targets, and a continuous effort to identify opportunities to further increase value.

Key elements of PIP’s approach include:

• Drive a culture of accountability through weekly reviews of priority tasks.
• Track agreed KPIs to ensure outcomes are in line with expectations and provide early warning of variances.
• Ensure that issues are addressed as they emerge.
• Support staff morale and productivity through effective corporate communications.
• Maintain open communications between departments in order to resolve cross-functional tensions.
• Identify additional opportunities to further streamline operations and enhance value in parallel with the rationalisation process.

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