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.
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 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
of qualified employees
area due to good policing
acceptable in the surrounding region
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.
material availability and the transport of these resources to the plant at
of present and future demand and supply of the product being produced.
of waste disposal sites: the manufacturing plant must be as environmentally as
of governmental support, tax benefits, and other incentives
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.
of the market and potential for future growth
2. The cost
of transporting goods and services to people must be minimal
analysis in the region using relevant market intelligence.
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.
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
of transportation and communication facilities like airports, railway,
of infrastructure: running water, electricity, schools, hospitals, libraries,
Furthermore, political, technical and economic
considerations must also be taken into account before setting up a new
Tags : Operations Management - Introduction to Operations Management
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