Home | ARTS | Operations Management | Factors influencing Manufacturing Plant Location - Introduction to Operations Management

Operations Management - Introduction to Operations Management

Factors influencing Manufacturing Plant Location - Introduction to Operations Management

   Posted On :  22.06.2018 06:47 am

Plant location decisions are needed when a new plant is to be set up or when the operations involved in the company at the present location need to be expanded but expansion becomes difficult because of the poor selection of the site for such operations. These decisions are sometimes taken because of the social or the political conditions engulfing the working of a company.

Factors influencing Manufacturing Plant Location
 
 
Plant location decisions are needed when a new plant is to be set up or when the operations involved in the company at the present location need to be expanded but expansion becomes difficult because of the poor selection of the site for such operations. These decisions are sometimes taken because of the social or the political conditions engulfing the working of a company.
 
The way the works of a company have to be performed, largely depends upon the industrial policies issued by the government. Any change that creeps in the industrial policy of the government which favors decentralization and hence does not permit any change or any expansion of the existing plant – requires strictly evaluated location decisions. We will broadly put the factors into four heads;
 
 

Operational Factors

 
 
Operational factors that play a key role in factory location or relocation are diverse, touching on everything from cost consciousness and labor management to strategic direction and regulatory compliance. Other elements in the plant-opening equation include government stimulus programs -- such as fiscal incentives -- and geographical convenience— availability of land / power and other related infrastructure.
 
A company’s top brass may take various steps to analyze plant location issues and remedy problems with factory site selection. Senior executives may develop an objective understanding of the best locations to pick, why some sites are inappropriate, how to avert logistical nightmares with respect to worker commutes and how the site-search team can collaborate effectively with corporate manufacturing personnel to make the search a success.
 
1.      Availability of qualified employees
 
2.      Stable climate
 
3.      Secure area due to good policing
 
4.      Socially acceptable in the surrounding region
 

Materials Management

 
 
Materials management deals with the mixture of processes and tools a company relies on to determine how much merchandise it has at a given point, to instill in warehouse personnel the need to prevent product decay, to arrange for shipping companies to quickly access storage areas and to expand factory capacity while heeding the importance of profit management and sales growth. Simply put, materials administration helps the business produce items it can sell, minimize waste and make more money. Materials falling under the items management function include finished goods, work-in-process merchandise and raw materials.
 
 
1.      Raw material availability and the transport of these resources to the plant at minimal cost
 
2.      Forecast of present and future demand and supply of the product being produced.
 
3.      Availability of waste disposal sites: the manufacturing plant must be as environmentally as possible
 
4.      Availability of governmental support, tax benefits, and other incentives
 

Connection

 
 
Plant location considerations connect with the material management work stream in corporate processes, especially in businesses with a large manufacturing base or those relying heavily on a continued stream of supplies to make money. Examples include large grocery stores and multi-channel food distribution centers.
 
The operational symbiosis between the two concepts often helps corporate management do away with the primary dilemma of modern business management: how to produce goods quickly and not too far from distribution centers so customers can have them when needed.
 
 1.      Availability of the market and potential for future growth
 
2.      The cost of transporting goods and services to people must be minimal
 
3.      Competition analysis in the region using relevant market intelligence.
 

Deal Economics

 
 
Before locating -- or relocating -- a factory or production process, company principals sit department heads and business consultants at a table, asking them to ponder costs associated with the move. Senior executives focus on clarity of thought and idea generation and do not let the group trundle off with a hazy idea of what relocation expenses will be. In this context, deal economics includes things like land cost, factory construction, labor expense, fiscal implications and production capacity.
  
1.      Land availability in terms of future expansion of the plant and the ability of the soil to support a factory
 
2.      Labor and raw material availability and the transport of these resources to the plant at minimal cost
 
3.      Availability of transportation and communication facilities like airports, railway, telephone, etc
 
4.      Availability of infrastructure: running water, electricity, schools, hospitals, libraries, etc.
 
Furthermore, political, technical and economic considerations must also be taken into account before setting up a new manufacturing plant.
Tags : Operations Management - Introduction to Operations Management
Last 30 days 535 views

OTHER SUGEST TOPIC