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"Holderbank" Cement Seminar 2000

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Engineering
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Plant Master Plan
Chapter 12
Plant Master Plan
Holderbank Management & Consulting, 2000
Page 289
"Holderbank" Cement Seminar 2000
Engineering
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Plant Master Plan
'HOLDERBANK'
Page 290 Holderbank Management & Consulting, 2000
"Holderbank" Cement Seminar 2000
Engineering
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Plant Master Plan
!tH.;l:M?[Taa
PLANT MASTER PLAN
1
1
.
Introduction
292
2. Clarification of terminology
292
3. Plant Master Plans: Common Problems
293
4. Integration in Company's Planning cycle
294
5. Content and structure of Plant Master Plan 296
6. Procedure for Elaboraton of plant Master plans 297
7. CoNclusion and Key messages
299
Holderbank Management & Consulting, 2000
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"Hoiderbank" Cement Seminar 2000
Engineering
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Plant Master Plan
1. INTRODUCTION
In periods of growing demand, investors usually take the opportunity to set milestones in
direction of improving productivity and expanding capacity as well as controlling cost. New
plants, or suitable plant extensions, are the appropriate answers then. In period of harsh
competition, shrinking market shares, high interest rates and thus tight investment budgets,
it proves to be difficult to even keep up the pace of change in technology.
Comprehensive know-how and adequate assistance are always required to adapt the
company to the changing requirements and the future needs.
As the immediate and future needs of a company are determined mainly through a dynamic
process of changing parameters of the environment, a dynamic planning instrument must be
used for the identification and registration of these needs.
This appropriate instrument is called Plant Master Plan.
2. CLARIFICATION OF TERMINOLOGY
Plant Master Plans are, since a long time, a well known planning tool on plant level.
However, so far, there was no common understanding on purpose and content of Plant
Master Plans and for this reason a vast variety of plans were called Plant Master Plans.
Clarification of Terminology
Plant Master Plan
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In recent years attempts were made in the "Hoiderbank" Group to standardize the Company
Planning Cycle and in particular the Business Planning Process. This standardization called
for a clear definition of the objectives and the contents of Plant Master Plans: The Plant
Master Plan shall be the tool for plant management, comprehensively outlining the
operational measures and CAPEX projects to be implemented in the plan period.
'The Plant Master Plan" is a strategic paper outlining the development of the plant in all its
fields of activity, taking into account the directives of the corporate strategy and the relevant
external and internal factors.
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"Holderbank" Cement Seminar 2000
Engineering
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Plant Master Plan
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3. PLANT MASTER PLANS: COMMON PROBLEMS
A closer look at the realities of Plant Master Planning reveals following common problems:
Plant Master Plans : Common Problems
> Lack of coordination with Business Plan
> Shortcomings in sustainability
>
>
>
>
>
>
>
Wishful thinking
Strong focus on physical installations and CAPEX
Lack of economic analysis
Lack of involvement
Lack of alternatives
Lack of longterm thinking
Problem solving mainly by CAPEX
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Analysis of these problems shows that they touch 1) the integration of the Plant Master Plan
into the company's planning cycle, 2) the content and structure of the Plant Master Plans,
and 3) the procedure for elaborating Plant Master Plans.
Integration into Company
Planning Cycle
Content & Structure ]
Procedure for Elaboration
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Properly addressing these three problems provides in fact the keys to successful Plant
Master Planning. If these three elements are mastered, the result then is a Plant Master
Plan which is a helpful and valid tool for plant management to operate and develop their
plant in compliance with company strategy and Business Plan objectives.
4. INTEGRATION IN COMPANY'S PLANNING CYCLE
Elaborating a Business Plan and the corresponding Plant Master Plan(s) is an iterative
process: On the one hand, the Plant Master Plan translates strategy into operational
measures and on the other hand it provides input to the Business Plan, e.g. production and
investment costs.
Integration into Company's Planning Cycle
Strategic Assessment
Regular
Updates
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4
Strategic Direction
4
Business Plan
4
Plant Master Plan(s) 4
I
Yearly Action Plan & Budget
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4
Integration into Company's Planning Cycle
The Plant Master Plan
> translates strategy into organizational /operational
measures and CAPEX projects on plant level
> provides input forthe Business Plan
(plant needs as input to Business Plan;
in vestment /production cost)
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"Holderbank" Cement Seminar 2000
Engineering
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Plant Master Plan
A.m-UU-A^'UM
Integration into Company's Planning Cycle
Business Plan
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Plant Master Plants)
Materials and
Energies Supply
Producten
Process and
Plart
Plart
Organzati on
and Supporting
Functions
X
Operational Measures |
|
Investments
Proposed | -.} Proposed
Action Plan
Integration into Company's Planning Cycle
Long term:
Medium term:
Short term:
m
Strategic Assessment
Strategic Direction
Business Plan
Plant Master Plan
1
Yearly Action Plan
Budget
~5
years
Planning
Horizon
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Engineering
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Plant Master Plan
"HOLDERBANK"
CONTENT AND STRUCTURE OF PLANT MASTER PLAN
Content and Structure
Input from Business Plan
Materials and
Energy Supply
Production
Process
and Plant
Plant Organization
and Supporting
Functions
Operation;
Measures
CAPEX
Projects
Ran of Operational Measures
1 Plan of CAPEX ProjectstBIPI!
Projection of Production Cost
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The Plant Master Plan identifies gaps in the areas of materials and energy supply (from
main raw materials and fuels to alternative raw materials and fuels and mineral components
etc.), production process and plant (from raw material extraction to dispatch, internal and
external infrastructure etc.) and plant organization and supporting functions (from
organizational structure to crossfunctional processes, like maintenance, quality assurance
etc.).
The Plant Master Plan clearly defines operational measures and CAPEX projects and
indicates priorities, cost impacts and financial benefits.
Content and Structure
->
Guideline for structuring Plant Master Plans
-*
Complementary to CAPEX Guide
->
Pilots in Spain and Italy
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"Holderbank" Cement Seminar 2000
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Engineering
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Plant Master Plan
PROCEDURE FOR ELABORATON OF PLANT MASTER PLANS
Procedure for Elaboration of
Plant Master Plans
General approach for individual plant sections and
functions:
1. Assessment of status quo
implications of Business Plan
2. Alternatives: elaboration, evaluation, selection
(optimum exploitation of existing facilities)
3. Operational /organizational "i
Description
measures I
Cost /Return
4. CAPEX projects
Priority
To assure comprehensiveness of the Plant Master Plan, the team put together to elaborate
such a Plant Master Plan must be composed interdisciplinarily, providing knowledge and
experience from all relevant areas and disciplines.
On the other hand such a team should include not only plant staff but also representatives
of the company management to assure that those who will be responsible for its
implementation are really committed to the proposals and priorities of the resulting Plant
Master Plan.
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Engineering
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Plant Master Plan
Including external experts, from HMC and/or from other companies and their plant, further
helps to challenge the status quo and to consider a variety of alternatives (Faster Learning
Organization). Priority focus must be on optimum exploitation of existing installations in
order to minimize CAPEX.
Procedure for Elaboration of
Plant Master Plans
Targets:
> Comprehensive approach
> Challenge of status quo
> Consideration of a variety of alternatives
> Commitment
Team configuration:
> Interdisciplinary
> Plant
> Company
> HMC
> Other companies, plants
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Engineering
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Plant Master Plan
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CONCLUSION AND KEY MESSAGES
Key Messages
(1)
Integration lnto"Company
Planning Cycle
S
The Plant Master Plan is an integral element ofthe
planning cycle, translating strategy into operational
measures and CAPEX projects, on a five year horizon.
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Key Messages
(2)
Content & Structure [
The Plant Master Plan ...
> identifies gaps in all relevant aspects in the
areas of materials and energies, production
process and organization
> clearly defines operational measures and CAPEX
projects and indicates priorities, cost impacts and
financial return _.,..., ,.
3];t ,.,,^.
Key Messages
(3)
Procedure for Elaboration
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*****
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> Elaboration requires an interdisciplinary team from
the plant, the company, HMC and other companies /
plants to assure a comprehensive approach,
challenging the status quo, considering a variety of
alternatives and get the commitment
> Priority focus on optimum exploitation of existing
installations in order to minimize investments.
:;-; '1-1 VMrivm
Holderbank Management & Consulting, 2000 Page 299
"Holderbank" Cement Seminar 2000
Engineering
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Plant Master Plan
'HOLDERBANK'
Page 300 Holderbank Management & Consulting, 2000