Check Lists for Success: The Ultimate Handbook for World Operations Management

By Peter C. Napier

This book contains a number of check lists which I have written, used, and
collected over many years. Some of the check lists included are ones that I have used in
conjunction with consultants and other 3rd parties employed by the companies where
I have worked. My thanks are due, not only to my own staff, who have worked with
me and contributed and added to my lists, but also those consultant fi rms employed
by our fi rms, who have been kind enough to give me access to documentation that
has been used on our projects. My thanks also goes to my wife, Elena Nikolaeva,
without whose support, editorial help and understanding, this book would never
have been written.
As is usual with this type of document, as I have used these check list on successive
projects, the lists have been amended and added to, based on our user experience.
So - many thanks to all of the above personnel and please send me your additions
and suggestions for inclusion on any future issues of this book.

• Language: English
• Publisher: Xlibris US
• Release date: Jan 6, 2010
• ISBN: 9781465322319

Peter C. Napier

Peter Napier, founder and Principal Partner of Napier International Consulting, is a successful World Class Manufacturing Operations consultant. He has extensive experience setting up and directing low risk and cost effective production facilities n over 20 countries. Peter is a turnkey navigator to the often daunting task of off-shore sourcing in emerging markets. He is a former Vice President and Director of Global Operations for Gillette, Schering, and P & G. As an International Consultant, he offers budget cost analysis of complex sourcing problems supported by his worldwide network of foreign associates. A graduate of Swarthmore College and the Technische Hochschule in Munich, world traveler and linguist, he has also lectured at colleges and companies in Europe and the United States.

Book preview

Acquisitions

As this checklist book is arranged alphabetically, it starts with one of the most difficult subjects. Having been the manufacturing executive on a number of quite large acquisition project teams, an acquisition survey can take anywhere from three or four days up to several weeks. Usually, there is a multifunctional team assigned to these tasks including engineering, finance, operations, R&D, sales and marketing, etc.

As luck might have it, one of my first acquisition team assignments was to assess a smallish company in Southern Europe that produced and sold ladies cosmetics. As our company produced medical and consumer products, this seemed liked a questionable candidate for acquisition. It was only after some days on site that a rumor circulated in our team that the Vice President, who had proposed this acquisition, had more than a passing interest in the quite attractive owner of the company. After strongly opposing acquisition of this company, other manufacturing representatives were often sought on future projects. So one of the lessons is, obviously, to apply the common sense test.

The keys to carrying out a successful review of the prospect are, ideally, speaking the local language (but not letting them know you do), asking lots of questions to lots of people and comparing the answers, and listening at length. Daily team reviews are always helpful.

Acquisitions

I. Company

A. Present legal name and data on name changes

B. Address and phone number of main office

C. Type of business

D. Description of business activity

E. Changes of business activity

F. Date company originated

G. State of incorporation and states where qualified to do business

H. Countries to which operations extend

I. List of subsidiaries and divisions

J. Addresses of all facilities

K. List of shareholders, if privately held; major shareholders,

if publicly held

L. Number of shares owned by officers or insiders

M. List of types of securities

N. Number of shares outstanding

O. Number of shares in float, if publicly held

P. Price range of stock, if publicly held

Q. Stock sales volume, if publicly held

R. Number of shares authorized

S. Number of shares of treasury stock

T. List of nonoperating investments and amounts

U. List of any unusual situations or circumstances

V. Name, address, phone number of company’s bank, name of person responsible

W. Name, address, phone number of company’s auditor, name of person responsible

X. Name, address, phone number of company’s attorney, name of person responsible

Y. Name, address, phone number of other company advisors

II. History

A. How company was originally formed

B. Reason for founding

C. Names of founders and successors

D. Brief review of sales progress

E. Brief review of profit progress

F. Brief review of product-line history

III. Management and personnel

A. Number of employees, by function or department

B. Organizational chart

C. List of officers

D. Information on principals and key employees

E. Indispensables, if any

F. List and summary of employment contracts

G. Rates of compensation for management

H. List of fringe benefits of key personnel

I. New management requirements

J. Strength of secondary management

K. Will management stay if there is a change of ownership

L. Outside consultants used

M. Appropriateness of office accommodations

N. Morale

O. Employee benefits

1. Incentives, bonus, and profit sharing

2. Stock options and stock or phantom stock plan

3. Pension plans

4. Life, medical, and dental insurance

5. Vacation plans

6. Number of paid holidays

7. Recreation facilities

8. Employee discounts

9. Employee social function

IV. Facilities

A. Land and buildings

1. Location

2. Legal description and ownership

3. Mortgages (amount, terms, and conditions)

4. Description of lease(s)

5. Appraisals, if owned

6. Plans and drawings

7. Insurance

a. Sprinklers

b. Fire protection

c. Police protection

8. Condition

9. Repairs needed

10. Improvements needed

11. Building’s floor area (in square feet / meters) and number of floors

12. Total land area (in square feet / meters)

13. Amount of rent

14. Amount of property taxes

15. Amount of office space in building

16. Amount of warehouse space

17. Number of shipping docks

18. Type of electrical power

19. Compliance with OSHA regulations

20. Compliance with Environmental Protection Agency regulations

21. Space for expansion

22. Location of public storage facilities

23. Time frame for the appropriateness of existing facilities

24. Where to move if you had to move

25. Where comparable property costs are available

26. Adequateness of security systems

27. Housekeeping

28. Desirability of location

a. Labor

b. Marketing

c. Shipping

d. Materials

e. Transportation

29. Production capacity of facilities and how does it relate to sales

30. Percent of present facilities that are being used

31. If retail facilities

a. Approximate size of trade areas

b. Demographics of trade areas

32. Location of nearest

a. Post office

b. Airport

c. Railroad station

d. Port

33. Availability of service of common carriers and UPS

B. Equipment

1. List of equipment’s age, date purchased and cost, stock number, condition

2. List of tooling, dies, jigs, fixtures

3. Obsolescence

4. Depredation policy

5. Value of all equipment

6. Policy regarding own vs. lease

7. Adaptability for other operations

8. Resale possibilities

9. Maintenance costs

10. Replacement costs

11. Proper laying out of equipment

12. Compliance of equipment with OSHA regulations

13. Does equipment meet requirements of other regulatory agencies

14. Safety of equipment

15. Policy for inventory of equipment parts

16. Noise-pollution conditions

17. Policy for preventive maintenance

V. Production (if manufacturing) and R&D

A. Production costs

1. Labor cost as percent of sales

2. Material cost as percent of sales

3. Manufacturing overhead as percent of sales

4. Possible improvements and economics

5. Future cost prospects for labor, material, and manufacturing overhead

6. Production costs and profits by product

B. Production labor

1. Average hourly rate

2. Names of unions

3. Past labor relations

4. Present or future labor problems

5. List of hourly rates and job classifications

6. Payroll procedures

7. Productivity experience

8. General employee morale

9. Procedures for hiring and firing

10. Union-contract expiration dates

11. Number of hours in workweek

12. Advancement and promotion procedures

C. Production procedures

1. Are production schedules established and kept current?

2. Flexibility: Is there flexibility to increase and decrease production? Can profit margins be maintained?

3. What is the minimum production required for breakeven?

4. Are assembly procedures efficient?

5. What percent of product is purchased outside?

6. What is their system of quality control and inspection procedures?

7. How is salvage handled?

8. Are material-handling procedures efficient?

9. Are all safety precautions being followed?

10. Are preventative-maintenance procedures followed?

11. Is there a continuing program to improve procedures?

12. What are the production increase obstacles?

13. What is the maximum production capacity with existing equipment?

14. What are the types of cost controls?

15. How is inventory controlled?

16. How often is physical inventory taken?

17. Are there time studies?

18. Lead time: How long? Can it be reduced?

19. What other types of controls are there?

20. Is there proper coordination between production and marketing?

D. Research and development

1. R&D cost as a percent of sales

2. Number of R&D employees

3. Objectives of R&D programs

4. Facilities R&D require

5. Is there proper coordination between R&D and marketing?

VI. Marketing and products

A. Product lines

1. List of principal products and sales brochures

2. If retail or distribution:

a. Suppliers

b. Exclusive arrangements / contracts

c. Length of relationships

3. Uses and applications

4. Price lists and product costs

5. Competition

a. List with estimated sales and profits

b. Competitor’s brochures and price lists

c. Nature of trade practices and type of cooperation

d. Comparisons of prices, packaging, utility, and value

6. Seasonality

a. Seasonal characteristics

b. Other available products to round out season

7. Pricing

a. What effect would a price increase have?

b. Are prices stable?

c. What are the future pricing considerations?

d. How many different price lists are there?

e. What are the bidding conditions?

f. Should prices be increased on some products?

g. Should prices be decreased on some products?

8. How complete is the product line?

9. What effects do general economic conditions have on product line?

B. Sales

1. Breakdown by product line for last five years.

2. Breakdown by product for next five years.

3. Methods of distribution

a. Should a change be considered?

b. Are all markets being covered?

c. Should some markets be eliminated?

d. Should the company go direct?

e. Can methods of obtaining distributers or dealers be improved?

f. Identify specific areas covered.

g. Are customers considered faithful to company?

- Is there a big turnover of customers?

- What is the nature or reorders?

h. Are private brands sold?

i. Are other methods of distribution being considered?

j. Do customers have a good attitude toward company?

- How can it be improved?

k. If retail,

- Should more stores be opened?

- Should some existing stores be closed?

4. Sales department

a. Number of employees and organization chart

b. Sales methods used

c. Percent of sales to top five customers

d. List of top twenty customers and sales