PHASE IN/OUT OF NEW PROJECTS

One of the challenges we will face during the project phase occurs in the transition time between the phase in of the new project and the phase out of the old one, when both productions have to run in parallel to maintain demand.

First, it’s important to know if the new project will replace the current project in series, or it will have priority, running both projects in parallel.

If both projects will run in parallel, the main task in the early stages is to check the free capacity of suppliers, and if there is not enough to start the process, for the current but also other potential suppliers, to increase capacity because total demand will increase and preparations must be made.

If the new project will replace the current one, we face two different challenges.

If we have a fast ramp up/down, the investment for new project will be placed at once, but the old platform has to run in production during the implementation phase of the new platform. If the new project will be implemented by same supplier as the current one, we need to take into account needed space and resources to the produce old project in parallel with implementing the new project.

If we have a slow ramp up/down, investment can be implemented step by step, but the old platform will remain in production for a long time with lower and lower quantities. If the new project is implemented by a new supplier, we need to take into account the financial impact of the volume reduction by the current supplier because even if low, those quantities will be needed for a long time.