Operations management Lecture 4

Factors influencing location

 Physical factors
1. access to key resources e.g raw materials, energy and utilities
2. transport infrastructure
3. communication links
4. availability of land or property
 socioeconomic factors
1. local labour supply
2. access to markets/customers
3. proximity of competition
4. business environment
5. political dimension e.g planning permission and development policy

a retailing perspective – selecting the “right” place

 location is key to success in retailing – size access and visibility
 location designs are supported by technology – such as plots of the entire population
by postcode to ensure that customers exist locally
 decision points –
1. in town
2. in a shopping centre
3. out of town
 there are also counter conventional (against the norms) location influencing factors
1. competitive clustering – co-locating for synergy and increase in customer
attraction – e.g Biscter Village where multiple clothing shops are located
2. pre emptive development oppurtunities – selling almost
identical/complementary goods e.g phone accessories near an apple store
3. business relationship opportunities

layout in different process types – the “manuscape”

process Layout
 process layout is a design for the floor plan of a plant which aims to improve
efficiency by arranging equipment according to its function
 it is important becayse it matches capacity to short and long term demand
 4 different possible layouts to influence the thought of customers or materials
1. Fixed position
2. Functional or process
3. Cell
4. Product
Fixed position layout
 This is where the recipient of the processing is stationary and the resources, plant
and people come to the service
 E.g motorway building, Shipbuilding, construction site, open heart surgery, high class
restaurant

Cell layout
 Self contained areas which contain all of the processes to complete a particular
operation or service
 E.g maternity unit in a hospital, lunch products in a supermarket, sports shops within
a department store

Product layout
 all operations (materials, information and/or customers) follow the same sequence
of processes
 e.g automobile assembly, self service cafetaria, paper manufacturing, television and
domestic goods assembly

Mixed layouts
  Some operations can have a combination of different layouts
 E.g fixed position layout – main seating restaurant, process layour – kitchen, cell
layout – buffet restaurant

Servicescape – effect of physical environment on customers

 Bitner summarizes the different elements of a servicescape into three composite

dimensions:
1. Ambient conditions such as temperature, lighting and aroma
2. Spatial layout and functionality
3. Signs, symbols and artefacts
 However whilst a supplier may think about all these things they also have to put up
with practical constraints such as customer flow, safety, security, flexibility, access
and replenishment

Selling space in Retail

 Value to the retailer – not uniform, depemds on location – sales per square foot
 Hot spots and dead spots
 Yield management - In simple terms, yield management is a strategy based on selling
to the right customer, at the right time, for the right price
 Space allocation
 Space elasticity – complex relationship between retail space and observed demand
 Selling/buying environment; reinforce retail brand image