Discuss:

1. Facility

Size of facility needed with a plant layout sketch.

2. Location

City, state and address where plant will be located.

3. Production

Production methods and the state of art of your production process. Discuss how the manufacturing operation will help make the business a success. Detail production capacity versus sales needs. Include product literature on key pieces of equipment you will purchase and why you are buying that piece. Discuss how you will produce or provide the service or product.

4. Staffing

Describe number of workers needed, the skills needed and training programs.

5. Inventory

Inventory policy for raw material and finished goods.

6. Quality

Quality control, quality assurance plans and plans to implement ISO 9000 or QS 9000.

7. Material

Raw materials needed and sources of supply. List key suppliers.

8. Environmental Issues

Environmental issues and any anticipated environmental factors. Discuss your environmental compliance program.

9. Condition of Production Assets

10. Manufacturing Process Advantages

Unique competitive advantage in the manufacturing process.

11. Government Requirements

Manufacturing Plan Sample

Company Locations and Facilities
Cattle Producers Marketing Coop has been operating at no cost out of office space in an available building owned by the Bright County Economic Development Corporation. However, the coop is currently looking at Larry and Linda’s Locker Plant in Bordertown. Larry and Linda’s has been processing all of the Marketing Coop meat products and an expansion of that facility will soon be necessary to handle the growing volume and additional product lines. The locker plant owners are reluctant to make further investment because of their age and the dependence on a very special market. The building is USDA certified and is in excellent shape. Preliminary engineering reports indicate it can readily be expanded to provide new processing space and the installation of a commercial kitchen for preparation of precooked product. If Marketing Coop is the purchaser of the building, the locker owners have agreed to finance the sale of the business.

The facility is located at 102 Creek Street, Bordertown, IA 50325. Phone number is (515) 294-0000.

Production and Condition of Production Assets
The plant will need to be expanded to accommodate processing a volume of 20 head per day and to produce precooked product. At present, slaughter capacity exists for 20 head per day but has not been utilized because the necessary cutup and cooking facilities did not exist. With the current equipment and the new equipment that will be purchased, the facility will be equal to or better than that of the competition. Analysis of current accounting records shows the facility, with good management and workers, is able to produce product in a cost effective manner.

Equipment to be Purchased

Cooper vacuum packing machine

10 horsepower rotary vane vacuum pump

Lorenz smokehouse with microprocessor control

Used electric lift

Current margins on product produced exceed 30 percent, which is ahead of industry averages as shown in Robert Morris Financial Statement Studies. An 18-20 percent gross margin must be maintained in order to service the cost of the following:

• paying producers the competitive market prices they hope to receive for their cattle;
• purchasing Larry and Linda’s on contract;
• servicing the debt on monies borrowed to upgrade the machinery and equipment; and
• paying a moderate wage for an acceptable general manager.

The key is the execution or use of available assets, which is a function of management.

Existing production assets are in good condition. Analysis of financial records show routine maintenance has been done on the facility and equipment. As part of the purchase process, Jay Stiles, Locker Equipment Appraisal, was hired to provide an appraisal of the value and condition of the assets. He rated the equipment as good to excellent.

Staffing
Existing staff is adequate and can handle any increase in volume. Additional training required for use of new equipment will be provided on contract by the equipment vendor. If new workers are needed, existing employees will help recruit new employees. Skidmore Community College will provide dollars for job training for new employees using existing State of Iowa job training programs and will provide the training.

Inventory
Cooler space exists to hold 100 carcasses or processed product. The company does not want to hold product for more than five days and will attempt to tie processing to orders to minimize inventory. Of course, the inventory policy to be followed is “first in, first out.” Product freshness will be monitored daily by the quality manager.

Material
Cattle will be supplied by cooperative members. Larry Cutter will be responsible for buying cattle. Purchase schedules will be set to include purchase from all members based on product availability.

Quality and Government Requirements
HACCP, OSHA and environmental plans are in place to meet all state and federal requirements. The quality manager also plans to implement a quality system for all aspects of the business. He is planning to implement ISO 9000 with the assistance of the Center for Industrial Research and Service (CIRAS) at Iowa State University. Implementation will begin after the new facility is completed and will take approximately one year.

A quality system also has been implemented with the member producers. Marketing Coop has established a European system that tracks each animal from birth through the slaughter and processing steps. In a sense, each animal will have a passport or record of its history. The coop will be able to show consumers the history of the meat they are buying. In addition, the cooperative will be able to monitor cooperative members’ records to assure the standards of natural product are maintained.

Environmental Issues
There are no environmental issues to be dealt with at this time. All federal, state and local permit requirements have been met. The discharge to the local sewer is monitored by the city and meets its requirements.

Manufacturing Process Advantages
Larry and Linda’s Locker Plant does not have any unique competitive advantage. The equipment is the same as that used in other facilities. The one key advantage is a bar code system, which allows accurate tracking of production data and inventory. The use of bar codes will allow both natural and traditional product to be processed and stored in the same facility. Responsibility to uphold this advantage lies not in the equipment as much as with the management team, which has already discussed the issue.

The facility and equipment that will be in the facility are in excellent condition due to the maintenance program. No equipment replacement due to wear or damage is anticipated in the near future.

Key Assumption
A key assumption in the manufacturing plan is that Cattle Producers Marketing Coop will be able to retain Larry Cutter as plant manager. His retention is critical to the success of the venture because it enables the coop to continue to provide current product while ramping up to provide more volume. If Cutter decides not to stay with the coop, a search will be carried out to find a qualified candidate.

Another key assumption is that the management team can successfully manage the slaughter and processing of both traditionally raised and natural raised cattle in the same facility.