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As competition increases and belts tighten, many manufacturing companies are turning to their design-build firms for guidance throughout the strategic planning process. A strategic plan provides a roadmap for the company’s future growth by addressing operational, budgetary and visionary goals. 

Without a strategic plan, companies lack the knowledge and tools to evolve and adjust to changing market and economic conditions, as well as customer demand. How can production be increased without negatively impacting current operations? Should capital be invested to modernize equipment? Are there ways to reduce the cost of goods sold through efficiencies in manufacturing? What’s the best growth strategy: expanding the business, introducing new products, adding locations or introducing new market segments?

A strategic plan should be answer these questions, as well as account for operational adjustments and determine appropriate courses of action. Owners often can’t stop and take the time to analyze all of these factors, so having a plan in place allows the business to continue running while critical decisions are made.  A strategic plan should look at least three to five years into the future and should be re-evaluated against goals on an annual basis. Creating a comprehensive plan can take months and should involve key managers within the business; every single department and every employee has an impact on the company’s success. It can be a time-consuming and painstaking process, but a strategic plan is invaluable in today’s economy. Larger companies often establish internal teams to develop a business plan, while smaller and mid-size companies may choose to outsource the process. Engaging an outside consultant provides a critical, objective view of the organization that can help uncover new opportunities for business growth, as well as areas of inefficiencies. 

A strategic plan with clearly defined operational goals and procedures facilitates effective decision-making, especially where plant design and capital expenditures are involved. The plan should address future growth objectives, which will aid in space and land planning and maximizing the use of available square footage. All of these factors contribute to more effective cost management and budget planning.

Additionally, from a competitive advantage standpoint, a manufacturing company with clearly defined goals and a production optimization plan will be more successful in meeting its business objectives and gaining market share. 

Business Plan
Most companies already have a business plan in place, which will become a key component of the strategic plan. Manufacturing companies develop business plans at different stages of their life cycle, especially in preparation to launch a new product line, invest in a facility expansion or to identify new growth opportunities. Ideally, functional leaders within all key areas will participate in the business planning process to provide input and establish a holistic view of the organization before strategic planning begins to include manufacturing, marketing, sales, finance, logistics and the executive team.

A thorough industry analysis should include a market overview of competitors and their market share, industry profit margins and psychographics of consumer within this particular market. Layout sales goals and establish a marketing strategy to meet those goals. Is this a new market the firm is hoping to penetrate, or do product lines already exist in the market? Could the product target an entirely new demographic; if so, how will they be reached? How will sales goals be met—through organic growth, a business acquisition or a vertical growth strategy? What channels of distribution will be used to meet sales goals? Detail each product the company will manufacture and its contribution to meeting sales goals.

Master Plan
What will the manufacturing facility look like in the future based on growth projections? Will the firm expand its current facility, buy and develop adjacent property, or will it be necessary to embark on a greenfield project? A master plan can help answer these questions by developing a comprehensive three- to five-year long-range plan that will determine the facility’s physical and site requirements based on growth projections. 

Having a master plan allows owners to make good engineering decisions and manage capital expenditures more efficiently by planning for future growth requirements. The master plan should assess planning and zoning issues surrounding the current location, including utility and wastewater requirements, as well as physical space issues such as employee parking and delivery/distribution availability. 

Manufacturing Plan
Many owners take it one step further and develop a manufacturing plan to identify and assess the processes that are used to manufacture the product to meet specified sales goals. Developing a manufacturing plan requires an in-depth analysis of the physical facility,materials, equipment, personnel, storage, logistics and other processes related to manufacturing. The goal is to ensure the appropriate technology is in place and optimize current production practices to meet sales goals. The process of developing the plan will help identify where constraints exist and highlight areas to improve production efficiency.

A strategic plan that effectively conveys all of these elements in relation to corporate goals and objectives will benefit from improved communication and cohesiveness among employees. All personnel will have a clear understanding of the company’s direction and their role, which can lead to a more motivated and stable workforce.   

Joe Bove is vice president of design at Stellar. For more information, email jbove@stellar.net or visit www.stellar.net.

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