Supporting manufacturing reallocation decisions

During past decades manufacturing companies started opening new plants and transfer their manufacturing to other countries in order to increase their competitiveness in the market. An important area in today’s complex business environment became manufacturing location decisions that have a direct impact on companies’ future success. Many scholars introduced suggestions in what factors should be considered in manufacturing location decisions when opening new plants. However, less research has been done by identifying what critical factors should be considered in manufacturing reallocation[1] decisions when a company operates within a manufacturing footprint and intends to move manufacturing activities between existing plants. In order to fulfil this gap the study was conducted by developing a conceptual framework for supporting manufacturing reallocation decisions. The main factors, evaluation and effects were explored. In order to conduct the study three cases were analysed in two Swedish manufacturing companies, where one of the companies was currently executing a manufacturing reallocation to another plant. It was found that sometimes companies are forced to reallocate manufacturing unwillingly due to currency value changes or local governmental regulations. A tendency was noticed that some of the factors are considered at the strategic level and some are left to be handled at the operational level. However, operational level factors have a great impact on the long term strategy and future costs and should be included when making manufacturing reallocation decisions. The evaluation of factors is mostly based on assumptions and intuition. Only evaluations of economic factors are based on facts. Improvements of economic factors’ evaluations could be made by closer collaboration between plants and involvement of the right people at the right time during data collection before making a decision. Manufacturing reallocations could have effects on the sending plant and long term strategy that increases the importance to include it during decision making since hidden costs and future risks could be prevented. Finally, the conceptual framework for manufacturing reallocations is presented that could be used as a support for manufacturing reallocation decisions. [1] to assign or allot to a different place from the one originally intended