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Tips for Successful Product Transfers

Thinking about moving operations from one location to another? Maybe the move is within the same state, within the United States or to and from different countries or continents. Regardless of the geographic locations, transferring products is a major undertaking.

While there are many great project management tools available on the market from software to books and templates, Vitronics Soltec has selectively taken a combination of these tools and our own experiences to create a project management process that has proven to be effective.

Market Data
Before deciding to transfer products from one facility to another, regardless of geographic location, the decision to do so must be based on good research and market data. Organizations choose to do this for a wide variety of reasons such as moving to a region that brings them closer to their customer base or to have lower operational costs. A thorough analysis should be completed to come to the proposed solution.

Financial Analysis
Once a solution has been proposed, the next step is to conduct a detailed financial analysis taking into account all potential outcomes from the move and its impact on the bottom line. This is a critical step — validating the proposed solution and if the solution is accepted it will serve as a baseline for measurement of success of the project during the process and upon completion.

Financial Model
Expected revenue and margin increase. Depending on the reasons for making the transfer it is possible that you may experience an increase in revenue and margin due to gaining new customers or increasing business with the current customer base. An increase in margin may also occur with reduced transportation costs, reduced costs of material, labor and general expenses including overhead depending on the chosen geographic region.

Expected revenue and margin decrease. While an organization may experience an increase in revenue and margins, it is also possible to experience a reduction based on customer loss, increased shipping costs and an expectation of a reduced end product cost depending on the chosen geographic region.

New facility set up. These expenses will vary considerably based on whether or not a facility currently exists or if a new one must be constructed.

Human Resources. If moving to a new location, it is important to determine the number of personnel required to support the business and all associated expenses. If your project includes closing a business where new products will not replace the product moving then, severance packages should be included in the financial model.

Exit of current facility. These expenses should be carefully analyzed if your product transfer includes exiting an existing manufacturing facility. The expense will vary widely depending on the type of manufacturing done in the facility but may include costly removal of equipment, reversal of leasehold improvements, canceling existing maintenance contracts and environmental liabilities. If the current facility is rented, the lease should provide the basis for the extent of the exit requirements. If the facility is owned, preparing it for sale will likely require additional work and related expenses.

Travel. Travel expenses can be significant depending on the end location of the product being transferred. Travel is often required for those managing the transfer and for training purposes.

Naming Product Manager and Establishing Project Team. If the result from the market study and the financial analysis of the proposed decision validates that the project will begin, the next step is to assign a Project Manager and establish a cross functional team. Although team members will vary for organizations based on the type of business and available resources, there are a few key positions for all product transfers. In addition to the Project Manager an effective cross-functional team will require a high level member from the materials and procurement area and a high level operations member. While all team members are valuable, many of the critical functions will fall into these two functional areas.

Project Charter. Once the Product Manager and team are established the first task for the team to produce a Project Charter. There are templates available that can be quite detailed. We have taken a simple approach that includes the project objective or goal, a brief description of the business case for the project to include a completion date, assignment of the Project Manager and signature of the Project Sponsor on the document. For Vitronics Soltec this is a one-page document and the Project Sponsor is the person who is ultimately responsible for the success of the project.

Project Plan
The next step in our process is to create the project plan, this includes five major steps; determine the major milestones and completion date, determine required resources and dependencies, back fill to the major milestones with all activities required to achieve them, from this create the Work Breakdown Structure by functional area and lastly determine how the project process will work.

Major Milestones and Completion Date. Keeping the completion date in mind, major milestones should be established for all specific activities needed to complete the project. In a product transfer some major milestones include locating and setting up of a new facility, hiring resources, training for new resources, establishing a supply chain, building prototypes, determining if a beta site is required, ramping up production in the new facility and ramping down production in the old facility.

Determine Resources and Dependencies. Many of the milestones will require that specific tasks be completed before others which must be identified and scheduled accordingly.

Create Work Breakdown Structure (WBS). With the major milestones, completion date, required resources and dependencies identified the team is now ready to determine the detailed tasks that must be done to complete the project. Vitronics Soltec has adopted a very simple process for this using an Excel spreadsheet versus project management software. The WBS includes the individual tasks, the estimated time to complete the task and a task owner and is reviewed on a quarterly basis for review of completion dates and revisions where required.

Determine How to Manage Project/Process. With the WBS complete, the Project Manager and team must determine how the team will work together to successfully complete the project. The frequency of meetings will depend on the timeline of the project. For projects that are to be completed in a short period of time, six month or less, weekly meetings may be necessary. For projects that will last more than six months, meetings every two weeks will likely be enough. Meeting topics will vary according to the specific transfer, but most should include a review of open action items, a list of work done to date, a list of work to be completed next and a risk review.

The team will need to determine how to manage all project related documents and how files will be shared. Consideration should be give as to how to handle technical documents and other project related documents using a file sharing method, common drives or databases.

Communication Plan
With all the above work complete, the communication plan can be created. This is a critical step and will require much thought as to what to communicate, when and how. In most product transfers there is a sending side which often results in the loss of jobs. This is a critical point in the project and an opportunity to establish trust among your employees, customers, vendors, reps and distributors.

Monitor and Measure. Once the transfer is in process, achievement of major milestones and specific tasks will need to be monitored and measured. Key metrics should be identified and discussed during project meetings and should include measurable items such as the number of items that have been sourced or the number of engineering drawings that have been transferred.

When transferring products from one location to another project planning and execution become critical to an organization's future success. An organization can choose formal project planning methods to achieve this or can take a modified approach. Regardless of the method chosen for the right strategy for an organization, putting the right team in place, and communicating to all involved will help in achieving the desired outcome.

Contact: Vitronics Soltec USA, 6 Merrill Industrial Drive, Unit 3, Hampton, NH 03842 603-772-7778 E-mail: Web:

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