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Manufacturing Excellence: Merging and Consolidating Operations

By: C. Richard Panico
Posted: October 14, 2008, from the May 2006 issue of GCI Magazine.

Successfully merging and consolidating manufacturing operations into a unified entity can be a task of great magnitude and complexity. Implementation is laden with risk, and the outcomes can vary between business growth and prosperity to the underachievement of organizational goals and potential cultural demise.

One way to ensure a positive outcome and help navigate the many issues posed by these consolidation challenges is to employ an approach that carefully balances two key activities:

  1. Logical and disciplined rationalization of the merging operations
  2. Proactive and insightful management of organizational change

It is important to note that these activities are not mutually exclusive, and must be effectively planned and managed concurrently. These activities are complementary in a consolidation strategy. Many consolidation projects fail before they even leave the starting line. Interweaving the human considerations into the tactical operational planning is paramount to success.

This discussion will explore the basic steps and considerations within each of these critical activities while providing insight regarding how to best plan and manage their application. I will draw upon lessons learned through management of numerous operational integrations, in a variety of corporate environments, to relay experiences describing common pitfalls and best practices. It is my hope that these lessons learned will help you to realize the synergistic benefits of an effectively consolidated operation.

The Nuts and Bolts

The first activity of rationalizing the merging operations can be thought of as the nuts and bolts. It is rigorous and requires application of a structured process to collect, comprehend and draw meaningful conclusions from relevant information. The investment of time up front to understand the operations and carefully plan the integration (front-end loading) will reap considerable dividends. Many times organizations instinctively want to skip right to implementation, often resulting in iterative fixes to actions that should have been done right the first time.

The following are key components of a consolidation framework that, when effectively employed, provide an excellent process to identify and capitalize on available synergies while minimizing rework:

Discovery and Characterization

The first step yields a factual baseline of processes within the merging operations and forms an excellent foundation for further analysis. Effective discovery and characterization requires truthful and accurate documentation, thereby eliminating bias and delivering a mutually understood and agreed to definition of the current state of the operations. Key activities include establishing a project management structure followed by data mining, data verification and data compilation to represent the current-state operations.

It is imperative to ensure that the consolidation effort is aligned strategically with the expectations and objectives of the managing organization, which can be achieved by soliciting understanding and agreement to the project charter with the appropriate stakeholders. Moving forward with an effort that is not aligned likely will create failure and disappointment as the project progresses.