LOGO

PRESENTED BY:- PRESENTED BY:-

GROUP NO. – 5GROUP NO. – 5LALITA KALWANI-2042LALITA KALWANI-2042

IQBAL SINGH-2043IQBAL SINGH-2043KARISHMA TRIKHA-2044KARISHMA TRIKHA-2044

SHERIN ALEX-2047SHERIN ALEX-2047 APOORVA GARG-2048APOORVA GARG-2048

FACILITY LOCATION

FACILITY LOCATION-INTRODUCTION

It is an integrating phase of production systems of any organization.

It is defined as a placement of a facility with respect to customers, suppliers, labor and other facilities with which it interacts.

Location decisions are critical at several level of geography. e.g. : in case of retailing.

Location decision is a long term strategic decision because it has a major impact on the organization’s ability to compete.

LOCATION AS A STRATEGIC DECISION

OBJECTIVE- To maximize the benefit of location to the firm.

Facility location has a long term impact on the supply chain and must be a part of firm’s strategy

Regional facility strategy

Product facility strategy

TYPES OF FACILITIES

MANUFACTURING FACILITY

Physical proximity to customers is not necessary.

Being near to competitors may be desirable.

E.g.- Pharmaceuticals companies in BADDI(H.P)

SERVICE FACILITY

Physical proximity to customers is necessary.

Being near to competitors may not be desirable.

E.g.- Fast food restaurants

FACTORS AFFECTING LOCATION DECISION

QUANTITATIVE FACTORS:

Labor cost

Material cost

Transportation into and out of the facility

Utilities, taxes, real estate costs and construction cost

Government incentives

FACTORS AFFECTING LOCATION DECISION Contd..

QUALITATIVE FACTORS:

Quality of life

Proximity to labor

Proximity to suppliers

Proximity to customers

Proximity to competitors

Demographic factors

LOCATION ANALYSIS TECHNIQUES

Transportation model

Factor rating method

Center of gravity method

REASONS FOR LOCATIONAL CHANGES

Changes in resources

Geography of demand may shift

Mergers

Need for greater capacity

Changes in political and economic conditions

BEHAVIORAL IMPACT IN FACILITY LOCATION

CULTURAL DIFFERENCES Employees will be hired from within the new locale

Establish community relations to fit into the locale

Adapt to norms and customs of subcultures

Greater cultural differences at international level

e.g. Japanese work tradition vs. Western industrial society

JOB SATISFACTION

CASE STUDY: Japanese Automotive Industry Locates In North America

1982, Marysville -Honda Motor Company opened doors to first Japanese-owned facility to manufacture

automobiles

Capacity grew to more than 500,000 units per year

Honda started exporting cars from Marysville to Tokyo

Followed by transplants from Nissan, Toyota, Mazda

Total ten plants with capacity of nearly 2.5 million units per year

What caused the Japanese to locate this much capacity in North America??

Japanese were responding to pressure from U.S. automakers and the UAW

Seven transplants avoided union contracts by locating in rural or semi-rural areas of Mid west

Locating facilities in the Midwest gave the Japanese credibility with the car buying population in the Midwest

Three transplants were joint ventures with the U.S. automakers

Final Thought

The ideal location for many companies in the future will be a floating factory ship that will go from port to port, from country to country – wherever cost per unit is lowest.

THANK YOU