Step 4 of our series sees us testing our brainstormed solutions against the current state. If you followed along with our previous blogs, you should have at least three possible courses of action and a strong understanding of your current state and the problem you are trying to solve. Now is the time to test your ideas using the current state as a base.
Look back at the five steps to conduct a feasibility study.
- Identify the core problem to be solved.
- Understand your current state.
- Brainstorm solutions
- Test Solutions against current state
- Decide on a course of action
Here we are primarily testing against a hypothetical situation; however, if you are able to test your ideas in a real-world setting, do so.
Translate the Ideas into a Testable Hypotheses
Translating ideas into testable hypotheses requires you to create statements that can be proven. Here are some examples:
- If we relocated manufacturing from China to Mexico, we could cut down our transportation time from 6 weeks to 2 weeks.
- If we build a new facility in the United States using automation, we could reduce our labor use by 40%.
The testable hypotheses should align with your core problem(s). Using the above examples as guide, if you lead times are not a major issue, the testable hypothesis is useful. Rapid turnaround is vital for some companies but less important than others. Similarly, there are some companies that labor costs are not an important element in manufacturing.
Each idea should have multiple hypotheses connected to it. Relocation is a huge endeavor so one hypothesis to test the validity of the action is not enough.
Run Experiments
Real world experiments are best if you have the ability to run them. One experiment would, if you have more than manufacturing location, move more production to the secondary location and test if you receive the benefits that you predicted. It is much easier than building a new facility or moving everything.
We have found that you can create a spreadsheet to run numerous thought experiments that test them against each other. The advantage of this method is that it is easy to change key variables and test the hypothesis.
MTG ran a series of “back of the envelope" calculations to prove to our client that moving out of China was possible. Our team had been working in China at the client’s supplier for years so had had a considerable amount of data on their operations as well as a good understanding of what was possible with their manufacturing operation.
Our team in China saw that the factory had at least double the amount of personnel that they needed. With that in mind, we build out a new manufacturing schedule that compared the number of man hours needed to create a product and how much those man hours cost. By playing with the variables, we saw that the client could save enough money through increased productivity per labor hour that it could relocate to North America and save money.
The numbers were verified by both the client and our team. The client was convinced moving out of China was feasible and starting to build a new facility in Mexico. The process to move the manufacturing is going well despite a delays that were outside the client’s control.
Determine How a Course of Action May Not Work
I recommended in the previous blog that you always assume that the operation you are attempting to undertake will be more difficult than you expected. That applies while testing the ideas as well. Create hypotheses that show what happens if your other ideas don’t work.
Taking the examples above, “If we build a factory in the US and we cannot achieve the gains we were hoping, will it ruin our bottom line.” The consequence of failure is just as important to understand as the gains from success. Don’t let the great potential gains blind you to the risks.
Write Up Your Findings
The team responsible for testing the ideas should write up its findings in an easy-to-understand overview that can be shared with the key stakeholders. The stakeholders should be able to provide valuable feedback that can be used in the final section: decide on a course of action.
What can MTG do to help you improve your operations?
