The Economics of Nuclear Weapons
The recent India Pakistan skirmishes have brought the issue of a nuclear Armageddon to the forefront of international politics. The news channels in both countries, as well as the international media, have been discussing the possibility of the situation escalating into an all-out nuclear war. The question of the futility of such a war has […]
Six Sigma Team Dynamics
A surprising number of projects begin without considering the human resource aspect in mind. If a Six Sigma project were to be initiated without a project charter or without an explicit data collection plan, it would be considered lunatic behaviour. However, the same cannot be said about the Six Sigma team. Countless Project leads have […]
The Six Sigma Team
The Composition and the Reporting Structure Any Six Sigma Team usually has 7 types of personnel and a three layer reporting structure. The details of the same are as follows: Layer 1 of the Six Sigma Team: Project Champion and Process Owner Layer 2 of Six the Sigma Team: Project Lead, Finance Certifier, Project Coach […]
It’s Now or Never: Why Business Must Embrace Sustainability before it is Too Late
How Climate Change and Ecological Damage is Hurting Our Planet Everywhere we look around us, we see the impacts of our unsustainable lifestyles. Whether it is the Australian Bushfires, the Amazon forest burning, or the unseasonal storms and hurricanes, the effects of climate change and eco unfriendly business and lifestyle practices are taking a toll […]
International Production and Operations Management (IPOM) – Meaning, Nature and Strategies
Introduction International production and operations management deals with production of goods and services in international locations and markets. It involves management process which has to take into consideration local production market (labor and capital) and international customer requirements. Nature of IPOM The foundation for international production and operations is no different to domestic production and […]
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.
Your email address will not be published. Required fields are marked *
Capacity Planning – Meaning, Classification and its Goals
February 12, 2025
What is Aggregate Planning? – Importance and its Strategies
February 12, 2025
