The problem is all too common. An expensive capital investment, which looked like the smartest thing you ever did a few years ago, no longer meets your company's needs. It could be computer systems, manufacturing equipment, fleets of vehicles or material handling systems, but the problem remains the same. Material handling is my field, but you should be able to take the following suggestions and apply them to your own situation.
If your material-handling system no longer meets your needs, there is a very good chance that you are a victim of inappropriately long-term goals. Unfortunately, and much to your surprise, those goals have changed. It's still a good system; it's just not the right system for you now.
It would be nice if you could anticipate exactly where you are going to be in 10 years, then build an expensive, custom designed system to help you get there - nice, but almost impossible. That's why I, contrary to many in my industry, recommend short-term planning. For reasons too complex to go into here, the optimum lift of material handling systems is about four years. In the first year, if you are careful, the system pays for itself. For the next two years you can enjoy the profitability of a paid-for, still efficient system. The last year should see you back in the planning stage, looking ahead to the next system.
But there's more to the concept of short-term planning than simply planning for a shorter period of time. It also involves positive preparation for the necessity of constant change.
Looking for change
First of all, recognize that change is inevitable. It will come, and if you can't foresee the details, you can at least anticipate general trends. For example:
Business is better or worse than expected. This can be because of changes in the economy as a while, your specific market or the success of a particular product. The designed capacity of your material-handling system is now either too much or too little.
A major change in the way you do business: Your regional business has gone national and you need to open new distribution centers. OR you decide to consolidate several distribution centers, to lower costs of integrate operations of an acquired company. OR employee demands cause a rise in labor costs and you are forced to rethink any number of labor-intensive operations. OR you have decided to eliminate the middle man and sell directly to customers rather than a few dozen dealers.
News from the outside world: Changing conditions of war and peace cause fluctuations in the defense market. Terrorism brings new government regulations and big changes in specific markets like import/export and cargo handling. Even something like a new road or the closing of a railroad line can cause you to re-examine your material handling situation.
Run like hell, then totally change directions
A dog is chasing a rabbit. The dog is bigger, stronger, and faster on the straight-away. More often than not, however, the rabbit survives because it is able to change directions while the dog skids into a tree or off a cliff. In business, you're either leading the pack or falling behind, and staying ahead has at least as much to do with being able to change directions as with raw speed and power.
This is not the place to discuss keeping your entire organization flexible, but if you need 19 vice presidents' signatures on a requisition, your current business plan does not allow you to change direction fast enough to compete today.
Flexibility can be designed into a system in two ways:
Planning never stops.
The evaluation and planning process should be ongoing. Your personnel should constantly be evaluating the performance of the current system as well as reviewing new equipment on the market and changing factors in the marketplace and the world at large. The earlier the change in direction is begun, the less drastic is has to be.
Design a changeable system.
Some systems are easier and less expensive to change than others, and this flexibility can be built in from the beginning. An investment in excess capacity may cost a little, but it is less expensive and disruptive to your business than not having enough capacity down the line. Modular systems such as stackable shelving units or scalable software that allows for the addition of workstations can facilitate growth or redesign as needed. Finally, the use of refurbished rather than new equipment in certain parts of the system can shorten payback periods and make frequent change more economical.
You can't always plan for specific changes, but you can plan on this: Change will be necessary, and sooner than you think.
Stafford Sterner is President of SJF Material Handling, Inc. Sterner has more than twenty years experience in the material handling industry and sales and marketing management. In business for over 20 years, SJF Material Handling, Inc. is a Winsted, Minnesota-based full service provider of new, used and renewed material handling equipment. They also provide complete design, layout, engineering, profiling, set up, installation and testing for entire facilities. Visit SJF's website at http://www.SJF.com
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