Q. With the corporate focus on cost reduction through supply chain restructuring, shuttering inefficient facilities and the consolidation of redundant facilities, what can a large (500,000-950,000-sq.-ft.), second-generation facility offer a company?
A. This question has been with us now for over 25 years. The answer to the question should reveal what we have learned about this process. When you break down the results what you discover is that every facility has just two basic elements to offer: location and people. And that has been the usual order of importance, because it always has been easier to move people than the location.
In the past, the strategic driver for location was answering the question: Is it more important to be near the raw material supply or the customers? Given the pace of change within the food industry today, supply chain restructuring has opened up the organization to a wider range of suppliers, and target marketing has created so many new products with substantial volume that it appears your location should always be providing an advantage to someone for something. In short, the surviving plant mix from the last 25 years recently has begun to stabilize the strategic value of location. Just look at the reduction over the last several years in the construction of new food plants. If you have made it this far, it is hard to believe location is the problem.
While location has been a critical strategic element in consolidation decisions, people have always been the critical element when dealing with flexibility. Because the business model for the food industry does not allow for unlimited investment of capital, our people are still our most important resource. It is people that will deliver the cost savings on our investments in location and capital, which were made to improve dependability and reliability.
While it is true that we have significantly reduced the labor component in our total operation, we have now reached the critical testing point regarding the sustainability of our operations over the next period of change. The question for the future is: Have we blended our staffing and capital investment in a way that will allow us to provide the right level of flexibility for our ongoing operations? Correctly answering this question will demonstrate the value of your facility for tomorrow.