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Many governments all over the world have made attempts to abolish poverty. However, most of them have not succeeded. The theme of eradicating poverty has been common to both socialists as well as capitalists. However, no one seems to have been able to solve the problem. It is likely that the problem itself has been […]
Return on Investment (ROI) in ERP Project
When a proposal is put forward for implementing an ERP system, two questions are invariably asked i) How much it is going to cost ii) What is the pay back period. It is always preferable to have a cost benefit analysis before embarking on ERP project. A properly done ROI analysis builds a business case […]
BPI – Introduction to Process Efficiency Measurement
Business Process Improvement projects are extensively used by Organizations from time to time to overhaul their existing processes and operations in a bid to improve the efficiency and effectiveness. In the current situation where intense competition and changing business environment calls for Organizations to keep reinventing themselves and building capability as well as flexibility in […]
Communication Systems and Groupware – Information System Concepts that Apply in All Functional Areas of Business
Introduction Information systems can be defined as set of co-ordinated network of components, which act together towards producing, distributing and or processing information. Information systems in conjunction with information technology have various applications in today’s business environment. Communication System The process of transmitting information from one place to another is called communication. The transfer of […]
Six Sigma Project Team Members
The actual work done in a Six Sigma project is done by the members involved. The Project Lead, Finance Certifier, Project Coach are all planning and enabling the team members to work in some way. Since the Project Team is usually a heterogeneous mix of people from different departments, there is no uniformity in the […]
Facility Location is the right location for the manufacturing facility, it will have sufficient access to the customers, workers, transportation, etc. For commercial success, and competitive advantage following are the critical factors:
Overall objective of an organization is to satisfy and delight customers with its product and services. Therefore, for an organization it becomes important to have strategy formulated around its manufacturing unit. A manufacturing unit is the place where all inputs such as raw material, equipment, skilled labors, etc. come together and manufacture products for customers. One of the most critical factors determining the success of the manufacturing unit is the location.
Facility location determination is a business critical strategic decision. There are several factors, which determine the location of facility among them competition, cost and corresponding associated effects. Facility location is a scientific process utilizing various techniques.
For a company which operates in a global environment; cost, available infrastructure, labor skill, government policies and environment are very important factors.
A right location provides adequate access to customers, skilled labors, transportation, etc. A right location ensures success of the organization in current global competitive environment.
A geographic area becomes a focal point for various facility locations based on many factors, parameters and issues. These factors are can be divided into primary factors and secondary factors.
A primary factor which leads to industrialization of a particular area for particular manufacturing of products is material, labor and presence of similar manufacturing facilities. Secondary factors are available of credit finance, communication infrastructure and insurance.
Facility location is critical for business continuity and success of the organization. So it is important to avoid mistakes while making selection for a location. Errors in selection can be divided into two broad categories behavioral and non-behavioral.
The goal of an organization is customer delight for that it needs access to the customers at minimum possible cost. This is achieved by developing location strategy. Location strategy helps the company in determining product offering, market, demand forecast in different markets, best location to access customers and best manufacturing and service location.
If the organization can configure the right location for the manufacturing facility, it will have sufficient access to the customers, workers, transportation, etc. For commercial success, and competitive advantage following are the critical factors:
Customer Proximity: Facility locations are selected closer to the customer as to reduce transportation cost and decrease time in reaching the customer.
Business Area: Presence of other similar manufacturing units around makes business area conducive for facility establishment.
Availability of Skill Labor: Education, experience and skill of available labor are another important, which determines facility location.
Free Trade Zone/Agreement: Free-trade zones promote the establishment of manufacturing facility by providing incentives in custom duties and levies. On another hand free trade agreement is among countries providing an incentive to establish business, in particular, country.
Suppliers: Continuous and quality supply of the raw materials is another critical factor in determining the location of manufacturing facility.
Environmental Policy: In current globalized world pollution, control is very important, therefore understanding of environmental policy for the facility location is another critical factor.
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