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Failure to consider and give proper attention to operational design often explains why companies with cutting edge facilities and well written SOPs still end up unable to compete or to combat price compression once the market saturates.
What is operational design as it relates to a cannabis business?
Operational design is the link between a company’s business model or business plan and the facility design itself. It is the series of decisions that are made to ensure that the facility that is built can create the products that the business model depends upon at the right cost to be successful. Designing the operation includes outlining the exact process taking place within the facility in order to produce a given product at a specific cost.
If we really wanted to get deep into the details, we’d start looking at how employees enter the building from the first door, and decontaminate themselves from the outside and don the appropriate PPE to move throughout the building. This would be your true step one for the facility’s interior, but for the sake of this product-specific example, we’ll begin with the first step of product creation for both a cultivation and manufacturing suite.
For a cultivation operation, step one considers how the facility will produce mother stock to propagate from, then how the facility will vegetate plants to provide production stock for flower rooms and so on. For a manufacturing operation, this includes intaking material from a cultivator, inventorying it, preparing it for extraction, processing the flower with an extractor and so on.
In order for an operation to be optimally efficient, nearly every action that an employee or piece of equipment completes should be adding inherent value to the end product. Solid operational design ensures that this efficiency model is adhered to. Within each process, equipment must be sized and selected to carry out these tasks. The equipment and the processes occurring throughout each step must be accounted for when deciding how large rooms must be for each step in the process. All regulatory compliance checkpoints must be considered throughout each process and must also be accounted for throughout the flow of the operation.
I’ve been in many facilities that make it obvious that operational design was not considered when designing the facility. Here are a few examples that illustrate situations I’ve encountered many times, indicating that operational design was not considered when designing the facility.
Example 1: The Sizing of a Dry Room
If only facility design is being considered, someone will ask, “Can we dry this much biomass in this given space?” And it’ll be a yes or no answer.
In order to consider the full scope of operational design, these additional questions must be asked.
- How will the biomass enter the room?
- How will the biomass be moved throughout the room and stored?
- What equipment is needed to hang/store the biomass?
- Will humans need to move throughout the room while the room is full to check on the product?
- If so, how will they do that? On lifts? On foot?
- Once the biomass is dried, how will the biomass be removed from the room?
- Where is it going after it leaves the dry room?
- How far away is that next step in the process?
When these questions don’t get asked, it becomes the staff’s responsibility to react to this lack of planning. It’s not uncommon that they end up needing to move the product two or three times to get it all to fit into the room. If there isn’t sufficient space for their lifts, they may need to use ladders instead, which are costly in time to set up, move, and takedown, and increase liability for injury. They also increase the risk of contamination when they must touch the product multiple times or if there isn’t enough space for them to walk through the dry room without physically bumping into the product that’s hanging to dry. Not only are all of these movements and mini-processes not adding inherent value to the end product, they are also increasing liability risk.
Example 2: Planning for an Automated Packaging Machine
When looking into add an automated packaging machine, those only considering facility design will ask a few questions such as:
- Does the footprint of the machine fit into the packaging room?
- Are our doorways and hallways large enough to bring the machine from the delivery truck into the packaging room?
- Do we have enough power and is the power in the right spot for the machine?
- Do we need compressed air? Where will the compressed air come from to support the machine?
In order to fully consider what the final packaging room design will look like, a list of additional operational questions must be answered. Here are just a few of the questions:
- How many people will be operating the machine?
- Where will they be standing and moving between while operating the machine?
- Where will the product they are packaging be coming from?
- Does the incoming product need to be manually broken down before it is fed into the machine or will it already be package-ready?
- Where will the empty packaging be stored?
- What path will empty packaging follow to be loaded onto the machine?
- Where are the labels coming from and how will the labels be fed onto the machine?
- Are we filling, capping and labeling the product on the same production line? If not, how are the packages getting from fill to capping and capping to labeling?
- Once the packages are filled, capped, and labeled, how will the packages be collected at the end of the production line?
- How will those packages be moved from the production line to the boxing area?
- Will we need machinery to move those filled packages? If so, how big is that equipment, how much room does it need to move? Is it freely moving or is it on a conveyor or a track?
The more complex a process is, the greater number of variables must be accounted for and the more detailed the questions become to effectively design an efficient operation. If these questions aren’t considered, the maximum value of the equipment cannot be realized and it’s likely that bottlenecks will occur somewhere in the process, limiting your revenue projections.
Example 3: Compliance Checkpoints
In all places where cannabis is legal, strict regulations must be adhered to in order to maintain compliance in the eyes of the governing body, whether that’s a state or national system. As a result, compliance of these regulations should be built into the facility. In my observation, compliance is often an afterthought and is not streamlined into the facility design or the operational design.
When considering compliance while designing a facility, the follow questions are a few that are asked:
- Do we have enough security cameras to be compliant?
- Do we have computers that enable staff to track plant movement throughout the building?
- Do we have scales that enable staff to enter weights of harvested material?
- Do we have access control throughout the facility that supports compliance mandated by the state?
Compliance is vitally important and must be adhered to in order to protect a company’s license and therefore its ability to stay in business. While the facility design questions as it relates to compliance often grow larger than the list above, the questions that help form an operational design are exponential in number. So that maintaining compliance doesn’t stifle revenue potential, it must be frictionless in the flow of the process. In order to keep compliance frictionless, we must consider the follow questions as part of operational design in a cultivation operation:
- How will we tag plants once they’re propagated? Where will initial tagging occur?
- How and where will we track plants after they’re transplanted?
- How will plants be digitally relocated when they’re moved from room to room?
- How will plants be digitally destroyed when they need to be culled?
- How and where will plants be weighed during harvest?
- Once dried, how will plants be weighed and combined into batches?
- How and where will these batches be labeled?
- Throughout every step of this process above, will there be a security camera to oversee the action to ensure compliance?
These are just a few of the questions that can effect the flow of a cultivation operation and therefore challenge the efficiency of the flow of product. If the facility is not designed to support stationary and mobile computer stations required throughout these steps in the process, employees are forced to create thousands of movements to and from computers to track everything needed to remain compliant. Instead, if these questions are answered ahead of time and compliance is considered while designing the operation and informs the facility design, the entire process can flow smoothly. Compliance tracking becomes just another part of the operational flow if designed properly.
A good operational design is reflected in a facility that can maximize profit and returns for the company that built it by minimizing waste and maximizing value throughout the entire process. The best operational and facility designs implement a linear flow from the beginning of the product creation process through the end. For a cultivation operation, this means locating the mother room close to the propagation room so that cuttings flow from one step to the other. Then positioning the vegetative and flowering rooms close together so that minimal movement is required from one step to the next, thereby minimizing employee motion and maximizing productivity. For manufacturing operations, this means positioning intake and inventory storage close together and grouping the prepping phase close to the extraction phase for the same reasons mentioned above. Each step has to logically flow from one process to another without having a disjointed flow to minimize errors and waste in the manufacturing process.
All of these decisions collectively define what operational design is. The answers to these operational decisions are driven by the business model. All of these answers then determine how the facility should be laid out, what size the rooms should be, what equipment is in each room and so on. This is where we really begin to see how operational design informs the facility design.
Stay tuned for next on deck: How operational design and facility design are inextricably linked
Brian Staffa is a seasoned Executive Cannabis Operator specializing in solving for operational underperformance, maximizing profitability, and foundational planning & structuring. Connect about your project below.