Facility Consolidation

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Facility Consolidation

• Proposal
• IEM 5121
• July 21, 2003

Robert Volk
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PROPOSAL DESCRIPTION

• Describes the problem statement, measures of the
  problem, project objectives and deliverables, as
  well as the project approach and schedule.
• Listing of MSETM knowledge and tools that will be
  applied in the course of executing the proposed
  project.

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AGENDA

• Proposal Goals
• Proposal
• Problem Statement
• Measures
• Objectives
• Deliverables
• Alternatives
• Project Approach
• Project Plan
• MSETM Tools

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PROPOSAL GOALS

• To give a clear understanding of the project and
  the opportunity that exists.
• Green light to proceed with project.

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PROPOSAL

• To consolidate the Trane Macon Commercial Self
  Contained (CSC) and Compressor Products (CP)
  buildings into one building.
• This consolidated facility would house all
  product assembly lines (currently one in CSC and
  one in CP), all sub-assembly lines, and the
  material warehouse space that is currently being
  occupied in both buildings.

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PROBLEM STATEMENT

• Products are being manufactured in two separate
  buildinigs using similar processes and equipment.
• Two separate materials warehouses
• 2x the space
• Higher annual operating cost per sq. ft in the
  CSC building
• CSC 8.33 / sq. ft
• CP 3.52 / sq. ft

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MEASURES

• Successful implementation of this project will
  result in the following improvements
• 11 reduction in production area for the
  business
• Productivity Improvement in the hours per unit
  for each product line.
• CSC 147 hours per unit baseline
• CP 110 hours per unit baseline

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MEASURES

• Benefits
• Elimination of CSC Building Annual Lease
  220,500
• Elimination of CSC Building Taxes and Insurance
  49,500
• Elimination of CSC Building Variable Costs
  80,000
• Elimination of Inter-Building Trucking 123,000
• Production Technician Reduction (15) 525,000
• Material Warehouse Technician Reduction (4)
  140,000
• Production Leader Reduction (1) 50,000
• Manufacturing Engineer Reduction (1) 75,000
• Maintenance Technician Reduction (2) 70,000
• Total Benefits 1,333,000
• Costs
• Production Line Move 175,000
• Facility Upgrades 598,000
• New Equipment 205,000
• Total Manpower Resource 150,000
• Total Costs 1,128,000

Benefit/Cost Ratio 1,333,000/1,128,000
1.18 gt 1.0, Project is attractive
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OBJECTIVES

• Consolidate the CP and CSC Buildings into one
  building
• Maximize the utilization of floor space.
• Standardize similar processes and promote best
  practices.
• Determine the most cost effective manner of
  handling the Lease Agreement of the CSC building.
  (Note A need for warehousing space has been
  identified in the American Standard organization.
  In addition, a current vendor has shown interest
  in occupying the space. The confidence level is
  extremely high that one or both of these
  scenarios will occur. The lease will be removed
  or offset in the Trane Macon financials)
• Reduction of Manpower and Support requirements
  for the Production, Materials, and Operations
  departments.
• 20 Production Technicians
• 20 Materials Technicians
• 33 Operations Management
• 25 Manufacturing Engineering
• 33 Maintenance Technicians
• Create the Building Strategy of the CP.

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DELIVERABLES

• Building Strategy.
• Improvement results of the consolidation.
• Financial Analysis justification.
• Marketing Plan that will convey the benefits of
  this project to our customers and how we will be
  better positioned to meet their requirements.
• Control Plan for maintaining the integrity of the
  changes from the project after the initial
  implementation.

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ALTERNATIVES

• No Production or Materials Warehouse Redesign -
  Lift and Place current CSC line and materials
  warehouse into CP
• Materials Warehouse Consolidation Only -
  Production line design to remain the same
• Production Line and Materials Warehouse
  Consolidation and Redesign

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PROJECT APPROACH

• Project Champions
• Plant Manager
• Six Sigma Methodology
• DMAIC
• Alternative Selection through the use of a
  ranking matrix using the following criteria for
  selection
• Compliance to customer requirements.
• Reduction in resources.
• Benefit-Cost Ratio.
• Resources required for implementation.

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PROJECT PLAN

• Milestones
• Proposal/Define Phase July 22, 2003
• Measure Phase, Facility Upgrades to start July
  25, 2003
• Analyze Phase to start September 2, 2003
• Improvement Phase to start September 22, 2003
• Control Phase to start October 20, 2003
• Project Completion November 14, 2003
• Capstone Project Completed December 5, 2003

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PROJECT RISKS

• Red Light - Team Resources
• Red Light - Lack of available for Project
  Costs

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SUMMARY

• Drivers
• Productivity
• Elimination of unused floor space
• Cost Reduction
• Consistent use of MSETM tools throughout the
  course of the project

• Objectives
• Manpower Reduction
• Maximized space utilization
• Building Strategy
• Six Sigma
• Meeting Customer Needs

• Schedule
• Start Project July 2003
• Complete Project November 2003

• Results
• 1,333,000 annualized Cost Savings
• Consolidated building housing both product
  lines, sub-assys and materials warehouses
• Productivity - Hours per unit reduced
• Process excellence through the standardizing of
  best practices

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MSETM TOOLS

• Finance and Advanced Capital Investment Analysis
• Marketing Management
• Management of Technology and Innovation
• Performance Management
• Planning and Managing Technology Implementation

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QUESTIONS
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