Facility Relocation

 Facility Relocation


By Rodney Reddic

Whether a company is relocating to a new factory or retro-fitting an old one, decisions made during the planning and design stage have a major impact on the company’s ability to become a world class manufacturer. The greatest leverage in the war on waste elimination exists in the upfront design, location and planning process.

Move or Redesign?

Before moving forward with a plant relocation ask, “Is the move really necessary?” There are four major factors typically driving the decision to relocate to a new facility: quality, cost, delivery and capacity. There may be alternatives other than plant relocation, such as lean manufacturing. Implementing lean manufacturing for process improvement can have a dramatic effect on improving quality, reducing costs, improving process lead-time, and creating additional capacity and space in an existing facility. By improving product flow and applying basic lean principles, companies can often delay or eliminate the need to relocate.

If the decision has been made, and plant relocation is the best alternative, up front planning is crucial. From an installation standpoint, it is about as inexpensive to implement a well-planned layout as it is to put in a poorly planned one. However, once a poorly planned layout is installed, the cost of rearranging can be astronomical. Facility relocation should never be viewed as simply picking up processes from the current location and setting them down in the new facility.

By utilizing the Lean Six Sigma DMAIC (Define, Measure, Analyze, Implement, Control) principles, a systematic approach can be used that’s based on lean manufacturing principles.


Define – It’s important to establish a well-defined facility requirements document. This document defines basic quality and capacity, along with operational and performance metrics. Once the document details manufacturing requirements and processes, the related activities to produce the product should be examined. A complete analysis is necessary to determine the various value streams encompassing production. Products can be organized into value streams by grouping together products with similar downstream processes.

Site selection is critical to successful plant relocation taking into account: available labor pool, tax breaks, power availability, adequate water, geography to key suppliers, access to major transportation, plus municipal restrictions and laws.

Measure – In this phase, detailed value stream maps should be created. A value stream map is a lean-management method for analyzing the current state, and then designing a future state for taking the product or service from its beginning to the customer. Determine the interrelationships among all activities and determine the space requirements. Creating an activity relationship chart and a material flow map can prove very helpful. Detailed layout drawings of the donor facility and equipment footprint and location should be developed. Equipment utility information should be captured for power, air, and water.

Analyze – In the analysis phase, block layout alternatives should be developed for the site chosen including the product value streams and process flow alternatives. Value streams should be analyzed for future improvements, such as cellular layout and one-piece flow, material handling and storage alternatives. Use input from employees, management and engineering to generate facilities plans based on optimizing value stream flow. This process may yield multiple designs. The site plan should also provide for expansion and growth. The evaluation should include listing the positive and negative aspects of each alternative, as well as ranking the performance of each alternative against established design criteria.

Evaluation criteria should include initial investment, annual operating costs, flexibility or ease of changing or rearranging the installed system, ease of future expansion, space utilization, availability of equipment needed and supporting services required.

Implement – While implementing the facilities plan, it is important for the facilities planner to obtain buy-in to the plan from both upper management and shop floor employees. After deciding what layout alternative best fits evaluation criteria, a detailed layout should be developed. This detailed layout should include: location of equipment, storage area for raw material and WIP, shipping and receiving area, office locations, Q.C. area, restrooms, waste area(s), electrical, mechanical and lighting requirements. At this point the layout design should be finalized utilizing a licensed architect. Upon completion of the architectural layout for the facility, the design package should go out for bid to a contractor.

The development of the plan is the most important and most difficult aspect of plant relocation. The optimum move sequence should be determined by value stream based on process flow, inventory levels and demand. The schedule may require a production ramp down at the donor location, while ramping up production at the receiving facility. Proper sequencing of value stream relocation into the new facility is crucial to meeting the ongoing customer demands. If contractors are to be used to perform the relocation, work instructions should contain equipment-specific instructions for disconnection, dismantling, crating, transporting, unloading, reconnection and startup at the new facility. The plant engineer should make sure equipment is properly located and connect to utilities and functioning properly.

Control – Once the new facilities layout has been implemented, a post-installation audit should be performed to verify that the system is operating as expected.

Utilizing this DMAIC approach for the development of a new facility will help ensure production optimization and functionality for years to come.

Rodney Reddic is a business consultant at the Dallas office of TMAC. He specializes in working with manufacturers to improve process, quality, costs and delivery through the application of lean manufacturing and Six Sigma Principals.


Related posts

Executive Resource Get Your Executive Goal Setting 101 Guide

Setting goals for your company isn't a walk in the park — in fact, it can feel pretty complex and challenging. But we're here with a resource that will give you a proven process for getting it right.

Inside, you'll find:

a specific framework for writing your company goals,
exercises to generate goal ideas,
a process for aligning goals company-wide, and
full sets of sample goals and metrics for various functions.

I agree to receive emails from this website and understand I can cancel at any time.