chp-8.qxd 10/18/05 9:24 AM Page 65 CHAPTER 8 Production Programme, Plant Capacity, Manpower Requirements and Layout PRODUCTION PROGRAMME Production programme of a food processing unit is based on several parameters local conditions, market access and technology. Your programme should be justified in relation to: Market requirement and marketing strategy, e.g. fruits/vegetables are perishable. Input requirements and supply schedule seasonal nature. Technology and economy of scale low BE, cottage, small and medium scale in food processing. Minimum economic size and equipment constraints. Resource and input constraints. Performance of staff/labour. PLANT CAPACITY Consider these to determine the plant capacity: Project cost corresponding to various sizes and whether one has financial resources to meet the cost and whether one is prepared to run a risk commensurate with the project cost
chp-8.qxd 10/18/05 9:24 AM Page 66 Minimum economically viable size of plant Popular plant size of existing small-scale enterprises making similar products Comparative capital cost of major plant sizes, within the maximum of the project cost one has estimated, offered by machinery producers and their operating income/expenditure implications. A comparison of net financial impact of individual plant sizes. Market size and growth prospects (biscuit market in India is growing rapidly and a well-organised promoter may find himself unable to meet the demand, if he chooses too small a market size) SSI in India gets benefit in excise duty and interest rate concessions. But there is a legal ceiling on the investments in plant and machinery to avail these concessions. No wonder, most plants are priced just around that ceiling. You may choose a size matching the ceiling, for exceeding it will deprive you of excise/interest benefits. The cost of expanding the plant capacity vis-à-vis setting up a larger plant must be considered for it might be cheaper to establish a larger plant of 5 MT per day than to expand capacity from 2 MT to 5 MT. MANPOWER REQUIREMENT You will need manpower for: Production (Workers) Supervision (Technicians) Administration, sales, miscellaneous work (Staff) In a small unit, it is possible that the entrepreneur handles administration, sales and technical supervision, and thus have limited manpower needs. It is, however, important to analyse workload and arrive at a gross manpower need. Manpower requirements will be decided by manufacturing operations, material handling and packing jobs. It is useful to classify your manpowerneed in three categories skilled, semi-skilled and unskilled. The wage rate for each category varies. Special attention should be paid for hiring and retaining skilled workers. 66 Chapter Eight
chp-8.qxd 10/18/05 9:24 AM Page 67 Look at the availability of skills at the selected location and plan for their recruitment. It may be, for instance, difficult for a biscuit manufacturing unit in Himachal Pradesh being established at Parwanoo to source biscuit machine operators locally. They may have to be brought from Delhi/Chandigarh. It is difficult to find skilled people in industrially backward areas and may have to be scouted for in nearby towns. Arrangements will have to be made for technical and other staff also. Such employees expect better living conditions or compensation and won t move in otherwise. SELECTION OF LOCATION Ideally one may want to locate the project in one s home town or native place, but there may be a problem of high land price if that place is a large city. Usually, the government offers investment subsidy and tax concessions to enterprises in specified areas. One must be aware of various physical and commercial facilities to run an enterprise. The hometown or native place may not be an ideal choice. Various parameters need to be considered while deciding a location. One will then have to select a site a specific piece of land in a given town where the enterprise will be located. Sometimes, one may also have to drop a location for want of a good site. How should one go about location/site selection? We recommend a twostage procedure. Practically, only a few locations will merit consideration. In the first stage, identify two-three such locations. Identify one or two sites at each location. In the second stage, examine each location/site according to a six-dimension selection checklist: Basic consideration (development status of the town and its location vis-à-vis enterprise needs) Status of physical infrastructure (power, water, etc.) Status of commercial infrastructure (telecom, banking, etc.) Status of social infrastructure (housing, health, etc.) Financial incentive position (investment subsidy, tax concessions etc.) Site-specific considerations (land price, contours, etc.) The findings of each parameter will help decide a location. Production Programme, Plant Capacity, Manpower Requirements and Layout 67
chp-8.qxd 10/18/05 9:24 AM Page 68 Sources of Information on Location How do we get answers to the checklist? We try to tap the right sources of information: Industrial Estate Officials Local Authorities Revenue Department State Electricity Board Public Works Department Office-bearers of Local Industry Associations Local knowledgeable Persons/Businessmen Banks/State Financial Corporations District Industries Centre Landowners, Residents of Nearby Villages/Towns, Local Opinion Leaders, etc. It is important to visit the location, armed with the checklist and to put down answers to each point. One may also get water and soil tests done. One must review the data objectively and then decide. PLANT LAYOUT PLAN One needs to develop a factory layout plan to decide on location of each facility like raw material, storage, individual machines, packaging, finished goods storage and quality control unit and work out the space for each. The distance between one facility and another or one machine and another should meet technical requirements. Usually, the flows of production process and space requirements for material handling and manpower determine the layout. It calls for considerable technical knowledge. Without the layout plan, it is not possible to decide the gross built-up area of the enterprise. For a food processing industry, statutory requirements like FPO and by-laws of the local authority issuing food production license have to be fulfilled in the layout plan. Where HACCP or GMP is required, additional care must be taken as per the rules and regulations. 68 Chapter Eight
chp-8.qxd 10/18/05 9:24 AM Page 69 Following is a model layout plan for a jelly and jam manufacturing unit: A Preliminary Layout Plan 20 MT BOILER ROOM QC LAB OFFICE 12 MT RAW MATERIAL & OTHER STORE PACKING 2 1 FRUIT JUICE EXTRACTION JUICE EVAPORATION & JAMS/JELLY MAKING (Note: Layout is not to scale) Production Programme, Plant Capacity, Manpower Requirements and Layout 69