Supply Chain Blog

FMCG Manufacturing, Sourcing and the Ukraine-Russia Unrest

Posted by Dave Jordan on Wed, Sep 24, 2014

The unrest – what a terrible BBC understatement that is – in Ukraine does not look to be going away in the near future and will possibly be hanging over us for considerably longer. The “unrest” is not localised and it obviously involves many other countries and regional bodies with political, economic and territorial interest in the area. One recent escalation has been to ban the sale of EU goods inside Russia which is rather a throw-back to Cold War days when the same rule applied to iconic western branded goods like Coke and Wrangler jeans.

In Cold War times big brand name FMCG consumption behind the iron curtain was probably driven by the efficiency of the black market and wider Russia was probably just a tempting white spot on the corporate globe. Now it is a different matter as Russia is a little bit more important, if you allow me to adopt some BBC understating diction. As part of the BRIC countries Russia is important in driving the growth aspirations of many of the world’s largest FMCG companies. Or it was.......

Most of the large companies have developed pan-European sourcing strategies and gone are the days when each individual region or even country had its own small “local for local” factory operations. This means that tea maybe sourced from Russia for EU countries but olives are imported from EU into Russia, for example. Companies with a local for local approach in Russia will be largely immune to the EU ban whereas others may actually have exports to Russia as a critical part of their businesses.

What can companies do about this? Well, legally and above board, not a lot. There is always someone willing and able to get passed all manner of regulations and restrictions but usually not in significant volumes and certainly not at the same overall cost of supply. Organisations with local manufacturing operations may well keep the Russian market supplied without hindrance and with little impact on cost and efficiency.

Mfmcg factories russia ukraine resized 600eanwhile, those big names relying on exports into Russia from EU may be far less comfortable as they may be saddled with higher costs as production reduces and fixed costs have to be reallocated across residual volumes. In turn this makes factory gate prices higher for existing EU MSO buying offices if sourcing units do indeed pass on the full hit and wood-panelled HQ does not put its hand in its pocket. Turnover of the Russian MSO is also hit as it cannot get hold of products to sell.

“Really not very good at all” says the man from Aunty Beeb in a clipped English accent brimming over with deep concern and gravitas.

As the region is so important to FMCG growth is it just remotely possible that Russia will come out of this conflict with a far larger local manufacturing footprint and a huge amount of western investment?  Indeed, that may sound ridiculous now but will this turmoil force or persuade more companies to be present on the ground and behind the invisible curtain?

Image courtesy of exdos4 at freedigitalphotos.netfreedigitalphotos.net

Tags: FMCG, Dave Jordan, Manufacturing Footprint, Supply Chain, Sales

Improve Supply Chain Performance via Total Productive Maintenance

Posted by Dave Jordan on Wed, Jun 25, 2014

When I first came across Total Productive Maintenance (TPM) I was sceptical of yet another ”blue sky” approach to pursuing manufacturing excellence. Surely, this would soon be replaced by the next set of buzz-word initials dreamed up by smart-suited consultants. But no; I saw the light and now I’m a believer (RIP Davy Jones) in this technique that originated in Japan.

If you have a factory that is running below par in terms of efficiency, output, reliability or cost etc then TPM could be the ideal tool to achieve a sustainable turnaround. Companies do not like under-performing factories and there is usually somewhere else they could make their products better, faster or cheaper. So, if your factory is under threat of closure you might consider following the TPM principles.

TPM is not rocket science but it requires just as much senior management buy-in and patience as an S&OP process demands. There are multiples levels of TPM success but even the basics will require a significant and sustainable change in behaviour. Kick off with the Kaizen 5S approach which is remarkably simple stuff.

Total Productive MaintenanceKaizen 5S is based on the translation of 5 Japanese words relating to systematic improvement and maintenance of a clean, efficient, well organised operation.

  1. Sort – Sort out what you really need – I mean really need! Throw out anything that has been hanging around for a few years “just in case”. Check out your spare parts store and see what items are held for equipment you no longer own!
  2. Straighten – Have you ever mislaid your car keys? This system creates a dedicated space for every tool or spare part located near to where it is needed.
  3. Scrub – Clean the machines and the production area thoroughly. Dust can affect quality, spills can be hazardous and well maintained equipment lasts longer.
  4. Standardise - If you use identical working practices for maintenance and cleaning your employees will become highly proficient. Standardisation provides you with a flexible workforce that can be deployed where needed and without a training period.
  5. Sustain – From the factory manager to the tea boy you must keep the faith and sustain every initiative. This is very difficult at first but you have to grit your teeth and keep going.

Of course, this is merely a snap-shot of what TPM entails but it shows the basic elements you need to start the journey. As mentioned, the first tentative steps can be painful but if you stay the course the benefits are immense in efficiency and employee satisfaction. The principles apply equally to logistic centres, offices; essentially everywhere people work.

Oh, but don’t try this at home or a divorce is highly probable, believe me!

Image credit: corbindavenport.blogspot.co.uk

Tags: FMCG, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain, S&OP, Cost Reduction

FMCG/Pharma IT: The Supply Chain of the Future?

Posted by Dave Jordan on Thu, May 23, 2013

Do you agree that Supply Chains seem to evolve very, very slowly? I cannot recall any major ground-breaking innovation in recent times. Yes, we have had bar-coding, RFID and S&OP etc but nothing that sticks out as significant or a major leap forward. Is there a revolution around the corner? Will Producers continue to make small incremental steps or will someone take the industry by the scruff of the neck and drag Supply Chain kicking and screaming into a brave new world.

I have dusted off my crystal ball and after a bit of gazing I saw a version of the future through the swirling mist.

Consumers

Rightly, consumers drive the largest change by buying exclusively on line as premium pricing applies to shopping in stores. Petrol will cost around 25 Euros per litre so driving will be prohibitive any way.

Advance consumer purchase demand accumulated by “Cloud IKAs” and automatically fed to brand owners SC IT.

Manufacturing

Today’s big name Multi-National Companies (MNC’s) will not own manufacturing assets. Products will be produced by versatile 3rd party factories in an automated supply support network.

Few people involved in the entire process and that sadly for those currently working in Supply Chains, is a recurring theme.

Factories will have seamless automated supply of RM/PM to mixers and machines without man handling. Not a “just in time” approach but “right on time” on each at each and every stage of the process.

Automated changeovers will maximise asset utlisation and output efficiency leading to lower and controlled product costing.

Late post dosing/late differentiation will be perfected to further streamline manufacturing  and provide supply agility.

Where no quarantine is required there will not be any intermediate factory storage of finished goods as produce to order is in place.

Planning

No people. Repeat, no people involved. Simply, SC IT analysing, collecting and accumulating consumer driven demand signals and allocating supply requirements on the manufacturing network.

Supply Chain Future ImprovementsDeliver

High quality “Super 4PLPs” will deliver around the clock to retailer picking platforms and not necessarily to stores.

Some PLPs will offer order assembly to cut out a stage and deliver directly to consumer’s homes or workplaces.

Fuel and time efficiency will be gained from having trucks filled with goods from all suppliers and products from compatible industries. (Always puzzled me this one. Producers keep goods apart apparently as long as possible yet you get Knorr mixed with Signal and Lipton next to meat in the back of store warehouse, shopping baskets and in the car. Although some items like tea will indeed soak up flavours and fragrances I think producers are far too cautious.)

Route To Market (RTM)

In Developing & Emerging (D&E) markets D&E the Traditional Trade (TT) will still exist as the prime method of getting products in front of consumers. In TT there will be a small number of distributors per country or region acting solely as 3PLPs and moving competing products.

Increasingly, the key players in your Supply Chain will be found in your IT department!

As the mist slowly clears once again I stop playing Nostradamus and put the crystal ball back in its box.

Image courtesy of Salvatore Vuono at freedigitalphotos.net

Tags: FMCG, Route to Market, Dave Jordan, Performance Improvement, Manufacturing Footprint, Forecasting & Demand Planning

FMCG/Brewing/Pharma Factories : Manufacturing Golden Rules

Posted by Dave Jordan on Thu, Apr 25, 2013

When I was managing an FMCG factory in Saudi Arabia one of the most frustrating challenges was the lack of factory capability understanding of Sales & Marketing colleagues and some detached Board members. People who have never worked in factories tend to have little understanding of what can and cannot be done in terms of flexibility.  Commonly however, factory guys are their own worst enemies by always striving to meet S&M requirements by overcoming significant time and equipment hurdles.

If you are experiencing unfair pressure or you simply want to be very transparent about your factory capability then a set of Manufacturing Golden Rules will come in handy. Written simply and based on hard manufacturing reality this will diffuse and divert a large number of requests and allow colleagues to focus on what is possible in the short term.

FMCG ManufacturingThe aim of a Manufacturing Golden Rules booklet is to unambiguously state in-house manufacturing capabilities and limitations. This information should be widely circulated around the business to ensure the Marketing & Sales Organisation (MSO) and the S&OP process teams all have the same information and understanding. This provides one consistent voice from the factory and is designed to avoid misconceptions and misunderstanding in MSO staff. This operates in parallel with the Service Level Agreements (SLA) which should also be in place between MSO and SourcIng Units (SU).

This is a dedicated factory and we are committed to providing the lowest cost and highest flexibility in service. If we only had one SKU this factory would be able to meet all your needs 100% of the time with very little notice. We have more than 1 SKU and therefore we need to put these rules in place so everybody knows what we can do while ensuring optimum factory operation and supply surety.

Rules

  1. We make Bloggo and Brand X in the same mixers and filling lines so they cannot be produced at the same time.
  2. Liquid production will follow a light to dark colour approach to minimise or even avoid cleaning downtime between different products.
  3. The downtime between chemically different products is 1 hour.
  4. The downtime between variants of the same chemical base is 45 minutes.
  5. The minimum production length is one complete 8 hour shift
  6. Batch size is fixed and cannot be reduced.
  7. The factory will only accept planning communication and adjustment requests from the MSO Supply Planner as an output from the MSO S&OP.
  8. The plan for the following week must be frozen 1 week in advance. Any requirement for deviation due to RM/PM availability or factory downtime will be discussed between the SU and MSO planners only.
  9. New Product Development/Change (NPD) trials require 30 working days notice.
  10. NPD and product change first production runs assume that first shift output is unfit for sale. This includes new suppliers of the same material and change in supplier and/or supplier production site.
  11. One working day each month will be allocated to plant maintenance and/or staff training.
  12. The ABC filling line produces the following quantities of SKU pieces  per shift:                                                                                                           300ml       5000 piece
    1000ml     4000 pieces
    2000ml     3000 pieces 
  13. The XYZ filling line is also capable of filling the following SKUs with due adherence to the NPD/product change procedure: 100ml, 1500ml, 3000ml, 5000ml 
This is simply an example but you need to keep the list reasonably concise or people will not read through to the end. The more unnecessary debate and misunderstanding you remove from your processes the easier it will be to delight customers and consumers as often as possible.

Image courtesy of Stuart Miles at Freedigitalphotos.net

 

 

Tags: SKU, Brewing & Beverages, FMCG, Dave Jordan, Pharma, Manufacturing Footprint, S&OP

Supporting S&OP & pre-historic factory managers

Posted by Dave Jordan on Thu, Mar 07, 2013

Back in the murky depths of time before the birth of humanity and Supply Chains, only dinosaurs roamed the Earth. Fighting and killing their way around the bubbling, steaming globe before an asteroid cut short their existence, allegedly. Sharks, crocodiles and the humble tortoise are just a few of the species that remain from that period in ancient history.

I can cope with the theory that the sharks and crocs were underwater predators, cold blooded and did not need the sunlight but what about Tommy the tortoise? Hardly the most threatening of creatures. Anyway, there is actually one dinosaur which still roams the planet in surprisingly high numbers. You would not recognise them as dinosaurs as millions of years of development and change have passed but nevertheless they walk amongst us.

S&OP in FactoriesMany of the species have adapted to continuous change but others remain uncompromising, aggressive and lonely figures. No hunting in packs for this beast that avoided fossilisation and subsequent digging up with a small spoon and a paint brush by a man in a brown nylon kagool on day-time TV. I refer to the breed of autocratic and dictatorial Factory General Manager (FGM) – with emphasis on the “General”. I have reported a sighting only this week from within an FMCG/Brewing/Pharmaceutical business.

Nothing happens in their domain without the decision and direction coming from the FGM. All activities are focused on making the factory the slickest, cheapest and most efficient source for their product range. TPM, Lean, TQM and other initiatives are designed to continuously improve the factory operation and in many ways, rightly so.

What is wrong with this? Sounds like a standard approach? This is certainly what an FGM should be doing but the key element missing is internal customer service. All decisions are internally driven and not in support of the Marketing & Sales (MSO) activity. The MSO diligently develops a monthly forecast and a 6 month+ forward plan within S&OP but all that effort is then wasted as the factory does what it believes is right for the manufacturing operation.

If your company fails to attract and delight consumers then having a Rolls-Royce factory becomes irrelevant. And if volume drops substantially you could find yourself with a redundant FGM in a redundant factory.

The challenge and appropriate behaviour is to accept the plan as the best indication of what will happen in the market and then align the factory operation behind this. No, of course the MSO forecast will be wrong as it is really just and educated guess but by responding to the market demand rather than factory efficiency the company will have the best chance of in-market success.

Factories that continue to operate with a narrow minded, internally focused approach will soon end up alongside the dinosaurs.

Image courtesy of Popover/ FreeDigitalPhotos.net

Tags: Brewing & Beverages, FMCG, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain, S&OP

“Lean” FMCG/Drinks factory operations mean excess manpower

Posted by Dave Jordan on Mon, Feb 04, 2013

Back in the days when the only reality TV was live sport, a tablet got rid of your headache and a mobile was a normal phone with a longer cable, I used to run a large FMCG factory. Long before TPM was implemented the factory cost base was huge and unsustainable. There were people everywhere and everyone seemed to have their own assistant or “mate” to do any tasks that were difficult or labour intensive.

The factory did not really need conveyors on the filing lines as the high operator numbers could pass the filled bottles or stamped tablets to one another towards the packing station. Even the packing stations were only semi-automatic and required a human helper. There were so many operators that 50% of them could have all gone to the toilet at the same time – space permitting – and production efficiency and output would not even blink.

In D&E countries the labour cost is usually so low that capital proposals for automation investment don’t really get too far. People can do the jobs far cheaper although excess manual handling can lead to unacceptable quality variation.

Production SupplyChainAfter some time listening to the raft of reasons why staff numbers could not possibly be reduced I started to observe a little more closely and at unexpected times of the day. I noted that most production lines were actually running reasonably well with little or “no touch” from humans. Line operators were slouched against walls or leaning on machinery and that is when I realised that this type of “lean manufacturing” was not helping and had to stop. The only place where more people were being paid to do nothing was in the EU parliament.

With a liberal helping of Non Violent Direct Action (NVDA) aided by non-unionised labour:

  1. Slowly but surely remove people from overstaffed operations. If after making a reduction you are not sure if more can be removed, remove 1 more and see what happens….. and repeat.
  2. Residual staff will now have to actually work. Ease the pain by sharing some of the saved salaries across the new team in return for KPI efficiency improvements.
  3. Train the staff in multi-disciplinary skills to facilitate seamless sickness and leave substitution as well as job rotation.
  4. Avoid having a separate maintenance or repair department. The people who run a machine need to be the ones to fix any problem right now, immediately and not at the whim of another group.
  5. Get people motivated to implement one of the continuous improvement programmes, e.g. TPM, 6-Sigma. High profile leadership is required for success.

This is just for starters. Once you get some momentum and operator involvement in decision making you will start to see significant cost, efficiency and reliability benefits and no leaning!

 

Tags: Brewing & Beverages, FMCG, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain, Cost Reduction

5 Reasons to Improve FMCG Factory Performance in Recession

Posted by Dave Jordan on Thu, Oct 11, 2012

There remains so much discussion and debate around planning, S&OP and APO etc that the “make” element of Supply Chain has not had much air time. Regional and global strategies are reasonably well represented but it is what is actually going on inside factories that concerns me. The signals coming into factories ought to be much improved when you consider the time and money being spent on improving the demand input.

Factory performance and reliability in recessionPerhaps all factories are now at a peak of fitness and slickness and no further attention is necessary. I don’t think so.

Unless your factory is one of the lucky few who have benefitted from the closure of others and consolidation of volume your output may well be flat or dropping. The recession continues and producers are generally hanging on to over capacity for when the economy picks up – whenever that might be! Certainly, if you have made a heavy capital investment you will not be popular in suggesting a closure, write off or write down before any payback has materialised.

Factories can get lazy in low volume periods as the pressure is relatively low. There is enough time to cope with breakdowns, cleaning and variant changeovers and if the market is being supplied what is the problem?

  1. Efficiency improvements you have sweated over will be lost. Line operators will no longer be trying to push equipment capability to or even beyond name plate capacity.
  2. Initiatives such as disciplined TPM will suffer as the pressure is off and perhaps factory management is not so closely involved.
  3. Operators will be influencing downtime to maintain shift patters and payments – this will happen.
  4. Raw materials in and finished goods out processes become slack as the source and deliver colleagues share the malady. “I’ll move that finished goods pallet tomorrow.”
  5. When the market perks up again your factory will not be fit to ramp up and ably support increased demand.

You have to keep the pressure up.  Many FMCG  factories that have been advised of closure usually perform extremely well to the end; almost in defiance.

Athletes who do not train for a while lose their edge. Politicians become more honest during parliamentary recesses. Premier league footballers forget how to dive in the penalty area during the close season. The status quo is disrupted and it takes time to recover.

Adjust working patterns, work flexible shifts, refresh training but do anything to ensure you maintain pressure on performance and KPI targets – keep factory teams on their toes. If you keep your factory operating in top condition you will be ready for the keenly awaited boom.

No, I have no idea when that will be either!

Tags: FMCG, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain

FMCG Regional & Global Manufacturing; Is the factory tide turning?

Posted by Dave Jordan on Thu, Sep 20, 2012

This post on migration and return of retailers to the high street had me thinking about a similar effect in manufacturing.  No, I don’t mean FMCG companies are now placing factories in towns and villages next to post offices and fast “food” outlets. The days when industrial units were located in residential areas are rightly long gone in most countries.

Once upon a time, most countries – particularly in Europe - covered by multi-national FMCG giants would have their own dedicated factory to make detergent, margarine, soap, shampoo and soup for the local market. Service and cost was very much local-for-local and very rarely did stock cross borders except for a few export markets. Local-for-local product innovations also meant that the same brand would have a different formula in different markets.

Regional Manufacturing SmallEventually, the FMCG giants realised the potential for consolidating manufacturing facilities in much larger purpose built facilities strategically located in places served by good infrastructure. For example, producing all your soap in a small number of factories inevitably saves cost through capital efficiency and consolidated buying. Yes, you may pay more to get the product to the final destination and that may indeed extend lead times but overall the decisions to close smaller factories were financially sound.

Many of these large strategic manufacturing units also house integrated 3rd party packaging production operations. This factory in a factory approach allows key packaging items to be readily available and easily interchangeable with lower cost and very short lead times. The FMCG giants also win by renting their own space to the 3rd party producers for packaging production.

How far can this go? Can we expect to see more factories the size of a large town making product for the whole continent or even the globe? Are regional/global factory locations sustainable or will we see some degree of reversal?

Through the use of Swiss/Singapore based legal entities many of the large FMCG players are already taking tax advantage of “owning” manufacturing facilities and stocks. Precise factory locations within trade agreements are becoming irrelevant and manufacturers are keen to take advantage of subsidies and grants offered by growth opportunities.

Watch this space!

Tags: FMCG, Dave Jordan, Manufacturing Footprint, Supply Chain, Cost Reduction

FMCG Supply Chain - how green and environmentally friendly is yours?

Posted by Dave Jordan on Wed, Apr 25, 2012

I have always thought it a little strange. The “green “ movement is all about saving the Earth  yet the same colour is used for “green” house gases  (GHG) that are far from green and moving us towards unavoidable planetary oblivion, apparently. Now, there is huge debate about what contributes more to the ozone layer depletion; is it excessive human use of fossil fuels or is it primarily the fact that cows eat enormous quantities of grass leading to “cow house gas” emissions in rather large volumes?

However, that is not the point of this blog. I simply want to take a look at how many FMCG, Brewing and Pharmaceutical companies waste money which if they avoided would have a welcome knock-on effect of reducing their overall emission footprint.

Carbon footprint complex Netsize resized 600

  1. Why are office lights kept on all night? There is nobody in the office yet it is lit up like a Christmas tree with potentially hundreds of lights creating heat and gobbling up electricity for absolutely nil benefit. A simple timer system would secure a decent reduction in the fuel invoice. “But it is included in the rental cost” – it probably is and you are paying for this whether you like it or not. Perhaps this source of waste sounds insignificant when compared to a heavy duty factory but it all helps.
  2. Rain water harvesting really should be mandatory for factories. They usually have expansive roofs which are ideal for channeling and collecting water. Instead of using fresh water that has been chemically treated and pumped from miles away to flush toilets why not use “free” rain water. Ok, if you are located in Riyadh then the opportunity for rain collection is a rarity but if you are based in Manchester UK just think how much you can save and contribute to a cleaner environment.
  3. Solar water heating and electricity generation are becoming increasingly affordable and should be considered for any new factory project. Solar heating of water is probably more advanced yet panel costs are lowering each year. Yes there is an investment but if you are a major user of gas or electricity for water heating and you get a reasonable amount of sun (i.e. not Manchester) then a decent return on investment is achievable.
  4. Do you know how much your business is wasting in write offs and stock you do not need? If you don’t, you should. If we assume a moderately sized business of 500m Euro turnover then depending on the sector you could be running at a waste level of up to 8% of turnover, e.g. short shelf-life yoghurt etc. A detergents business will operate at considerably lower levels of waste but if we assume a modest 1% overall waste then that is 5m Euro down the drain. This is probably the worst kind of waste as you have paid for the product to be manufactured transported etc and then nobody buys it and you have to pay to have it destroyed.
  5. My bug bear is unnecessary packaging. Companies say they have reduced by x% and used more recycled materials but there is still a fair way to go. Innovation decisions need to be business wide and not just marketing wish lists. If you do not keep marketing in check they will add colours, layers, weight, thickness etc all to make their product better than competition. I admit that at the sharp end of the Route To Market shopper decisions can be swayed by packaging quality and appearance but still there is so much that is not required and goes directly into the waste bin (or hopefully the recycling system).

You will appreciate that items 1-5 are not exclusively about Supply Chain but that department inevitably receives the most focus. However, taking a look across the total business will expose numerous areas of waste and unnecessary material consumption.

While many may well blame the loss of the ozone layer on a their local herd of Black Angus cattle, companies can do so much more and it is not rocket science any more.

Tags: FMCG, Route to Market, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain, S&OP, Low Carbon

FMCG Supply Chain: 5 Top Tips to ease the pain of a factory closure

Posted by Dave Jordan on Mon, Apr 23, 2012

Never easy. Never pleasant. Never going to happen? Never believe your factory is safe!

From a UK perspective if you had a job in a factory in the 1970’s you expected to have a job for life as long as you kept your nose clean and performed adequately. However, even in the time I have been breathing the number of factories in UK has plummeted and the economy is now largely one of service. All those manufacturing jobs have gone despite Trade Unions and mostly eastwards.

Initially, the opportunity of low cost manufacture in CEE persuaded producers to invest in green field facilities supported by EU grants and local tax benefits. Now most of CEE is in the EU the position is changing again as companies look at supply on a global basis and relocate even further to the east.

Nokia City Romania resized 600Take Nokia in Romania as an example. A new factory and local infrastructure was built just over 3 years ago and the local area relied on this investment for their collective livelihood. The location was known as Nokia City rather than the geographically correct Jucu yet it was not safe. There was somebody somewhere who could build mobile telephones better, faster and/or cheaper.

They may never admit this but companies know that Supply Chains in countries with weak trade union laws will be easier to close and downsize. Try closing a factory in France!

So, it happens and sometimes to the most highly performing manufcaturing operations when global economy shifts present opportunities elsewhere. When a factory gets a piece of irreversible bad news what can you do as an FMCG, Drinks or Pharma producer to exit with conscience and fingers in tact?

1. Request someone from head office to actually make the formal announcement in front of staff to be made redundant. This will take some of the heat away from local factory management -who may indeed also be losing their roles – to minimise the “them and us” situation.

2. The business case to close the factory must contain a healthy and realistic budget for staff out placement, relocation and re-training activities. If you do not budget for this in advance then exit will be difficult and the business proposal was flawed anyway!

3. Appoint someone to run the scheme to find jobs for your people. If you partner with 3rd party recruitment agencies ensure they are only rewarded on the number of people who find alternative employment or secure 3 interviews per person, for example.

4. Unless there has been some masterful and very, very quiet stock-build it is likely you will have to keep the factory operating and people motivated. Exit packages should be linked to loyalty AND continued performance. Those who stay until the bitter end should be adequately rewarded. It is no coincidence that closing factories tend to perform at a very high level until closure as human nature adopts a “we’ll show them what they are missing” mentality.

5. Treat everybody fairly and with respect. Do not allow any “special cases” to be agreed outside of communicated terms and conditions as this will anger others and lead to rapid loss of motivation. Make exit packages transparent in broad terms depending on work level and length of service and keep it simple. Try and maintain a “we are all in this together” attitude.

Many people who have been through factory closures often come out the other side with better opportunities and prospects. Don’t dwell on the bad news of the closure and do focus on preparing for the future.

How you manage people exits will have a bearing on corporate reputation. Don’t forget, you still have to sell your products to consumers who are now your ex employees so handle with care!

 

Image credit: HotCellularPhone.com

Tags: Brewing & Beverages, FMCG, Dave Jordan, Performance Improvement, Pharma, Manufacturing Footprint, Supply Chain, CEE