Chapter 7: Facility Design
Have you ever toured the factory of a small company and wondered
how anything gets made in this place? No smooth process or assembly
lines, shipping and receiving is right in the middle of everything,
and the shop telephone is in a noisy place. Maybe one end of a hall
is full of junk. Everything looks jury-rigged. Well just maybe you
visited a start-up of the boot-strap variety.
In the early phase of venturing, our mission is to start manufacturing,
cover direct costs as soon as possible, and begin the growth process.
Early in the cycle, it is vital to get going, manufacturing product.
Later, we can organize our facility for efficiency, improve quality,
reduce costs, and optimize our system. Moreover, for a host of reasons,
we may not be able to just create or move into a building designed
to fit our needs. With no time to waste on a limited budget, we must
make do, and do it fast.
If we have a feeling for the local area infrastructure (business
support services) and talents needed, we are a long way toward accomplishing
our goal. And if we are veterans of the turf, have an idea that has
a market, have the drive to make it all happen, and some wherewithal,
our facility will simply be the first step along our march toward
a thriving business.
The following lists are exemplary, intended to stir your thinking
toward the practical issues. I will proceed on the assumptions that:
our process has never been practiced commercially; our product is
unique; we will boot-strap our operation to maximize eventual return;
we must design a unique piece of equipment ourselves; all other items
are off-the-shelf; our start-up team consists of at least three persons
with varied skill-sets who are also the owner/operators; we will
be renting space; we have a strong prospect for growth; and our process
is defined in terms of input materials, finished product, floor and
overhead space, energy, transportation, environmental impact, and
The facility issues are basically dual in nature-location and design;
each may affect the other. Location features include: labor markets,
access to communication and transportation, political and business
climates, distance from home, weather, energy costs, municipal services
(fire, police, ambulance, and waste handling), tax and insurance
rates, facility parameters, state and local permits required, environmental
regulations, and local services available.
Design is affected by several variables, but, for the start-up,
the foremost question is: Is this facility sufficient for what we
need to do at a price we can afford? So we select the first reasonable
option that suffices.
We now know where square one will be. Most production facilities
have four basic functions: 1) Entries for input materials and products,
2) manufacture of finished goods, 3) exits for effluent and shipments
of goods, and 4) management modules which include all internal support
functions. Items 2 and 4 usually require the most thought and planning.
Since our facility will be the first of its kind on earth, we have
no choice but to learn as we go. The planning operation is critical;
the plan is not. Plans can be no better than the planning process.
If our planning is done well, we know how to meet the unexpected.
The typical plan is quickly dated. In venturing, as in research,
I have seen plan after plan become an albatross, impossible to complete.
But there can be no substitute for knowing what we are doing today
and what we likely will do tomorrow. Next week will take care of
itself-until we learn to see around corners. Today, each day, is
our focus-this is what matters most.
From our process flow sheet we know the components we must use for
manufacturing and the sequence for their deployment. We know also
about our building and how much weight can go here, how power is
provided there, and why the effluent collection must be over yonder.
Component suppliers are available everywhere. So also for raw materials,
parts, fabrication houses, and other services. These are just a few
of the direct issues with logical resolutions. Finally, relationships
with the local and state regulation authorities must be established
and fostered on a regular basis.
So how do we get up and running as soon as practical? Working hard,
the obvious answer, is only one part of the solution. The other part
is "working smart" with realistic time goals. This may
seem obvious, but I have been victimized by overly optimistic target
dates more than once. Target dates are typically designed to: 1)
push people to higher performance, 2) schedule things in an orderly
fashion, or 3) give the boss the sense of being in full control.
But we, the founders, are the target-setters and target-achievers-the
bosses and slaves at once. Since we must move as fast as possible,
it makes little sense to take time out and plan everything to the
nth degree, then go out and do it "according to plan" complete
with due dates. Rather, in my experience, we accomplish more without
the bureaucratic trappings of drawing up a plan that will be valid
only for a few days anyway. Entrepreneurs feel the urgency; no hype
is needed. Plans have a place in the world of efficiency, but early
on we need to be effective with a different mindset, a mindset to
deal with the unknown and get there first.
Perhaps an anecdote will be helpful here. The Alta Group (a company
I co-founded) built a facility in 1985 to refine titanium. It employed
electrolytic cells never before used commercially or outside the
laboratory. We had to start from scratch. None of us had direct experience
with the process. It was evident that the cells would be long-lead
items. I went to work on the process design while my cohorts scouted
locations. With our first location rented in three weeks, we established
our first headquarters;
designing long lead items first and putting them on order;
finding the needed equipment suppliers and fabricators;
clearing things with the local authorities and landlord;
contacting the power company for a transformer upgrade;
beefing up the foundation to support the cells;
poking a hole in the roof for ventilation;
assembling equipment as it arrived;
contracting out electrical and mechanical work covered by codes;
designing and assembling supporting structures and reagent handling;
testing each device and circuit as it arrived;
calibrating the furnaces
turning on power for the first time, and
using hair dryers to dry our first several lots of crystal after rinsing!
All this and more happened in 80 days flat-from nothing to a producer
of high purity electronic grade titanium. A tornado promptly shut
us down for four days, but we still made a shipment 17 days later.
Tough times were still to come, but we had our factory. In retrospect
there was no looking back. The Alta Group became the world's leading
supplier of electronic grade titanium in '86, and ready for the industry
ramp-up in '88-after building a larger facility and surviving a downturn.
As for our methodology we:
were able to do most of it ourselves, with our individual skills - no general
had the right chemistry to achieve the E2E Drucker Transition. E2E means going
from being effective to being efficient-from doing the right things (to get
started) to doing them well later (to secure our market);
were each experts and experienced in our own fields; we each led our own area
of expertise but kept others advised and aware;
encouraged cross talk (at one point a "dumb question" redirected
our cell design);
were each conscious of the need for speed;
were each flexible in the jobs we did and wore many hats;
were physically, mentally, and emotionally energetic;
hired a marketing consultant in electronic materials to teach us how computer
chips are fabricated and their market dynamics;
tackled the toughest jobs first; so also for the long-lead designs;
did everything in parallel - "nonlinear"; did what was possible each
regularly reviewed progress; visited suppliers who fell behind;
called on various customers, keeping them posted;
bought second- or third-hand equipment, often at auction, saving 90-99 cents
of every dollar budgeted for equipment;
tested each component and assembly as we went along and made instant changes
used known solutions we knew would suffice;
improvised where there were no ready solutions;
enlisted help from family and friends; and
tracked expenditures daily and reforecast the market regularly.
Our facility came on line with capacity to spare for the total world
demand in the near term-only a couple of years as it turned out.
To get ready for the market explosion of 1988, we bought a larger
building and did it all over again.
With a week's worth of inventory on hand, process improvement began.
Our first refined metal harvest and cell turn-around took 12 hours.
That was later reduced to two hours by systemizing procedures, improving
component fit-up, beefing up mechanical and electrical equipment,
taking unnecessary steps out of the process, and smoothing workflow
This facility was the first of its kind on earth, but its creation
is representative of many issues facing any new start-up. My lists
will differ for other ventures, of course. But they illustrate the
diversity often needed to create a facility that will get you where
you want to go as expeditiously as possible. Flexibility and teamwork
are the great enablers.
In conclusion, and to summarize a bit, knowing our turf, our process,
the local infrastructure, and our market will help us locate our
facility, scope its size, and create the management structure needed
to fit our operation. Doing what is possible each day and working
as much as possible in parallel minimizes construction time. A flexible,
can-do spirit, and zest for adventure are what it takes. But if you
are not ready for latrine duty, forget it.
Now that we have our facility, it is time to think about staff selection-the
single most important function for any entrepreneur. This will be
my topic for next time.
© Copyright 2000 by Harry Rosenberg. All rights reserved.
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