2. DETERMINING THE RIGHT LOCATION

• Facility Location


  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