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EvAluATing PRoCEss TECHnology 219
broke even. Yet, in the final analysis, the company regards the investment as infeasible.
It decides that absorbing such a radical new process technology in a relatively short
time-frame would put too great a strain on its own capacity for self-organisation. Thus,
sometimes it is not the absolute level but rather the rate of change in resource require-
ments that renders a project infeasible.

example nestlé’s flexible factories 8
It is not only process technology in its immediate sense that needs evaluating, it is also the infra-
structure that houses the technology. This is particularly true for large companies like Nestlé
(the largest food company in the world) that has operations in almost 200 countries around
the world. It also has over 400 factories around the world, many of them in developing coun-
tries. Nestlé opened its first factory in Africa (a condensed milk production plant) in 1927. But
factories are expensive to build, especially where infrastructure can be problematic and future
demand uncertain. This is why Nestlé has created a blueprint for a new type of factory that can
be built in half the time of a more traditional one for about 50 to 60 per cent of the cost.
The modular factory will be made of multiple, easy-to-assemble component sections designed
to offer a highly flexible, simple and cost-effective solution for creating production sites in the
developing world. Often, investing in these countries can be high risk, as they can lack infra-
structure, reliable energy sources and building expertise but the modular factory concept will
enable Nestlé to rapidly establish a footprint, creating local jobs and being closer to its cus-
tomers and its raw materials. ‘The model is a real evolution from the traditional bricks and mortar
factories of the past,’ says Alfredo Fenollosa, Nestlé Technical Head for Asia, Oceania and Africa.
‘Big companies traditionally build solid stuff but the lighter structure of this modular factory concept
represents a real mindset change for Nestlé. We hope to be able to apply it soon in countries in Africa,
and in some parts of Asia,’ he added.
The average Nestlé factory takes between 18 and 24 months and costs between CHF30m and
CHF50m to build. The new modular factory could be complete, and up and running, in less than
12 months, at a cost of between CHF15m and CHF25m. The modular factory uses a series of
purpose-built factory sections, which can be brought, ready-to-use, directly to the site and con-
nected to each other according to requirements. These could include, for example, a ready-to-use
generator and boiler, a staff canteen and changing rooms for factory employees. The factory can
then be expanded, moved or its function transformed without having to start from scratch. The
modular factory concept is designed to industrialise simple processes like repacking and mixing
dry goods such as Maggi bouillon cubes, rather than creating more complex products.

assessing financial requirements
In most process technology decisions the most important feasibility question is, ‘How
much financial investment will the technology require, and can we afford it?’ At its sim-
plest, this could mean simply examining the one-off cost of the purchase price of the
technology. Usually, though, an examination of the effect of the cash requirements on
the whole organisation is necessary. If so, it is often necessary to simulate the organisa-
tion’s cash flow over a period of time. Computing the total inflow of cash over time as it
occurs, and subtracting from it the total outflow of cash as it occurs, leaves the net fund-
ing requirement for the option. For example, Figure 6.11 shows the net cash inflows likely
to be earned if a proposed technology is adopted and the cash outflows associated with its
purchase and implementation. The resulting cash requirements show that a maximum

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