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Operations Management - Introduction to Operations Management

Need for the plant location analysis - Introduction to Operations Management

   Posted On :  22.06.2018 06:41 am

The strategic nature of the decision on Plant location, require very detailed analysis due to several reasons.

Need for the plant location analysis
 
 
The strategic nature of the decision on Plant location, require very detailed analysis due to several reasons. But the choice is made only after considering various costs associated and comparing the benefits of different alternative sites. It is a strategic decision that cannot be changed once taken. If changed, it can happen at the cost of huge cash outflow as well as considerable deployment of various firm’s resources. Each individual plant is a case in itself. The major reasons are,
 
1.      Wrong plant location generally affects cost parameters i.e. poor location can act as a continuous stimulus of higher cost. Marketing, transportation, quality, customer satisfaction are some of the other factors which are greatly influenced by the plant location decisions – hence these decisions require in-depth analysis.
 
2.      Once a plant is set up at a location which is not much suitable, it is a very disturbing as well as very expensive process to shift works of a company to some other place, as it would largely affect the cycle of production.
 
3.      The investments involved in the in setting up of the plant premises .buying of the land etc are very large and especially in the case of big multinational companies, the investments can go into millions of rupees, so economic factors of the location should be very minutely and carefully checked and discussed in order to achieve good returns on the money which has been invested. 
Tags : Operations Management - Introduction to Operations Management
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