Implementation: Ramping Up New Facilities for Top Performance

Abstract

Manufacturers with international experience manage to establish new sites abroad much faster and more cost-efficiently than companies with a relatively limited global footprint. Analysis of our interviewees’ strategies and practices revealed a number of clear success factors as well as traps to avoid.

Many relocation attempts fail because firms overestimate their capabilities. Companies need to carefully align the prerequisites and complexity of the undertaking with their skills and resources. If a mismatch is apparent, they should either reduce the project complexity or provide additional experienced personnel.

The actual site chosen can heavily impact the project’s economic viability, as location-related factors may differ significantly within regions. Local partners’ contacts with public authorities, customers, and suppliers can also make a huge difference when setting up in developing countries.

Posting expatriates to a new location is usually much more cost-intensive than using local skilled workers and executives. Their know-how and companywide connections are indispensable, however, especially in the initial phase. The role of human resources management (HR) is vital in dovetailing foreign postings with swift skill building for locals to take over.

Companies can achieve rapid ramp-up of their targeted capacity and quality by applying best practices that are readily transferable from one industry sector to another. Global leaders plan relocation with painstaking foresight to ensure high delivery reliability and capacity utilization even during the move. A phased start-up with the sequential introduction of uncoupled manufacturing processes, new suppliers, and products helps to stabilize production. This staggered approach also limits the risk of downtime from technical faults.