The right location for the manufacturing facility, it will have sufficient access to the customers, workers, transportation, etc. For commercial success, and competitive advantage
Overall objective of an organization
Satisfy and delight customers with its product and services
Manufacturing unit
The place where all inputs such as raw material, equipment, skilled labors, etc. come together and manufacture products for customers
Facility location determination is a business critical strategic decision
Factors determining facility location
Competition
Cost
Associated effects
Facility location
A scientific process utilizing various techniques
Location Selection Factors
Cost
Available infrastructure
Labor skill
Government policies
Environment
Right location
Provides adequate access to customers, skilled labors, transportation, etc. Ensures success of the organization in current global competitive environment
Factors leading to industrialization of a particular area
Material
Labor
Presence of similar manufacturing facilities
Secondary factors leading to industrialization
Available of credit finance
Communication infrastructure
Insurance
Errors in Location Selection
Behavioral errors
Non-behavioral errors
Behavioral errors
Decision made by executives of the company where personal factors are considered before success of location
Non-behavioral errors
Lack of proper investigative practice and analysis, ignoring critical factors and characteristics of the industry
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
Factors Influencing Facility Location
Customer Proximity
Business Area
Availability of Skill Labor
Free Trade Zone/Agreement
Suppliers
Environmental Policy
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. 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
Understanding of environmental policy for the facility location is another critical factor