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Qualitative analysis of manufacturing plant consolidation


Ross and Pugett

Ross and Pugett is the 4th-largest manufacturer of consumer products in the United States and 12th-largest consumer products company in the world. Company growth has been primarily through the acquisition of companies with underperforming products or poor marketing strategies.

As a result, Ross and Pugett owns manufacturing facilities around the world. Some of these divisions have high technology and new facilities, but the bulk of them have older equipment. Capacity planning is a big problem because some plants are at capacity while others are highly underutilized.

For example, the cosmetics division has manufacturing facilities is France, England, Switzerland, Germany, Norway, and the Czech Republic (which makes all of the packaging materials). None of these facilities operates for more than one shift, and the French plant utilizes 20% of its capacity. With more price competition, the company needs to consider consolidation in Europe. All product and package development is done in the United States at the Minneapolis headquarters.

Complicating the cosmetics division is the fact that raw materials are manufactured in the United States and Puerto Rico before being shipped to Europe. The international shipping and inspection costs have been very high, and the overall time to produce most cosmetics for the largest markets is quite long: 8 months-too long for a product with a short product life cycle.

Within the Food and Beverage Division, a recently acquired organic juice company has experienced tremendous growth of market share due to product reformulation. The market share has increased from 2% to 16% in the past 3 years. The current equipment cannot keep up with demand.

In addition, the raw materials for the product, primarily fresh fruit, are expensive to store, and scrap product due to aging has been causing costs to increase dramatically. The company needs to improve how it orders its raw materials for the organic juice division.

You are recently hired as a midlevel manager for Ross and Pugett. You have been hired with the expectation that you will look at several methods to improve efficiency and effectiveness for Ross and Pugett. You will use quantitative and qualitative methods to make recommendations for the improvements.
The cosmetics industry is very competitive, with technology, color palettes changes, and packaging changes as key differentiators. The product life cycle also tends to be less than 36 for most products, but colors can have a life cycle of 9-12 months in some cases.

Accelerated product development, streamlined manufacturing, and packaging launches are critical. Cost savings are becoming more and more important as more competitors enter the market.

Analyze whether or not to continue manufacturing in multiple locations in Europe, fewer locations in Europe, or move it all back to the U.S. You are the director of production planning for this division and need to write qualitative reasons stating the advantages and disadvantages of plant consolidation.

Draft your recommendation to management including estimated costs and benefits of shutting down or keeping open the European facilities, and then support your recommendation with a 12-month based action plan.

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The response addresses the queries posted in 1021 Words, APA References

Plant Consolidation

The reduction of existing manufacturing plant into one or less than present number of manufacturing plant is termed as manufacturing plant consolidation. The organizations consolidate their manufacturing plant in order to centralize their manufacturing process at one place. If consolidation is performed in an appropriate manner, it can contribute to save the manufacturing cost (Finkin, 1987). Ross and Pugett should consolidate its production plants at fewer locations in Europe. There are various reasons behind fixing the production process at fewer places; some of them are as follow:

· The capacity of most of the plants is not completely utilized, it will be better for the company to limit the production at fewer places.

· Another reason for plant consolidation is that some of the units at several locations in Europe are facilitating only one shift. The reduction of some plants will provide the options to fully utilize the rest of plants.

· The international shipping and inspection costs are also high. The processed raw material for cosmetic division is shipped to Europe from the United States. The consolidation of plants in Europe will help in minimizing this shipping cost.

· The present plants and equipments in food and beverage unit are not able to meet the increased demand of juice products. The new equipments should be planted at one place in Europe. This will centralize the process.

Advantages of Plant Consolidation

Plant consolidation directly affects the operations of the business and manufacturing. If it is handled carefully, the business can achieve huge profits. There are various advantages of plant ...

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The response addresses the queries posted in 1021 Words, APA References