OPERATIONS MANAGEMENT

CIA-1

EVIS ELEZABETH REJI

19212028
BBA-A
Plant Location-
Every business is facing the issue of selecting the suitable location for their factory plant.
Units concerning both manufacturing as well as the assembling of the products are on a very
large scale affected by the decisions involving the location of the plant. Location of the plant
itself becomes a very important factor concerning service facilities, as the plant location
decisions are strategic and long-term in nature. Plant location refers to the choice of region
and the selection of a particular site for setting up a business or factory.
An ideal location is on where the cost of the product is kept to minimum, with a large market
share, the least risk and the maximum social gain. It is the place of maximum net advantage
or which gives lowest unit cost of production and distribution. For achieving this objective,
small-scale business can make use of location analysis for this purpose.

Success Factors
I. Proximity to Market: If the proof of pudding lies in eating, the proof of production
lies in consumption. Production has no value without consumption. Consumption
involves market that is, selling goods and products to the consumers. Thus, an
industry cannot be thought of without market. Therefore, while considering the
market an entrepreneur has not only to assess the existing segment and the region but
also the potential growth, newer regions and the location of competitors

II. Environmental Policy: Because pollution management is so crucial in today's

globalized world, knowing environmental policy for the facility's location is
another critical component.

III. Availability of Manpower: Availability of required manpower skilled in specific

trades may be yet another deciding factor for the location of skill- intensive industries.
As regards the availability of skilled labour, the existence of technical training
institutes in the area proves useful. Besides, an entrepreneur should also study labour
relations through turnover rates, absenteeism and liveliness of trade unionism in the
particular area.

IV. Distributors: A reliable and consistent supply of raw materials is another important
consideration when deciding where to locate a manufacturing plant.

V. Availability of Raw Materials: One of the most important considerations involved in

selection of industrial location has been the availability of raw materials required. The
biggest advantage of availability of raw material at the location of industry is that it
involves less cost in terms of ‘transportation cost.
 Failure Factors

I. Failure to get an agreement on search parameters among important

decision-makers: Making ensuring all corporate decision-makers are aware of
and agree on essential search parameters are one of the most crucial duties in
any site-selection process. To prevent wasting time, money, and other
resources analysing marginal or otherwise undesirable areas, this alignment
must take place before their search begins.

II. Choosing a location with high logistical costs or poor access and egress:
Many sorts of sites and expansions, particularly automotive and distribution
operations, take logistics costs into account. From a logistical standpoint,
choosing the wrong location might result in a permanent increase in
manufacturing costs per unit.

III. Failure to maintain the project and confidentiality: Confidentiality is

critical in most industrial site selection operations. On many levels,
inadvertently disclosing information to company competitors or workers may
be expensive. It is crucial not to divulge the identify of a corporation doing a
web search or the product they want to make in the early phases of a project.

IV. Choosing an insufficiently large site: Committing to a location that is too

small might hinder future growth and impair the success of the first start-up. It
is critical to choose a location that is large enough to handle a best-case
development scenario while still providing enough solitude from potential
commercial or residential encroachment.

V. Prior to ultimate selection, a single prospective location is narrowed

down: The selection committee should restrict the list of possible sites until
only two or three remain, ideally in rival places, for the best site search
outcomes. All of these locations should be suitable as a final destination. If
you focus on one site too quickly, you run the danger of having to restart your
search if that site has a fatal defect.