Factors Affecting Location Decisions

Facility Location usually involves a sequence of decisions.

National decisions Regional decisions Community decisions and Site decisions

Issues in Facility Location

The problem of Facility Location is faced by both new and existing businesses, and its solution is critical to a company’s eventual success.

An important element in designing a company’s supply chain is the location of its facilities.

Criteria Influencing Facility Location

Proximity to customers: helps ensure that customer needs are incorporated into products being developed and built.

Business climate: may include the presence of similar size business, presence of companies in the same industry etc.

Total costs: the objective is to select a site with the lowest total cost

Infrastructure: Adequate road, rail and sea transports are vital. Energy and telecom requirements must me met and local govt’s willingness to invest in such plans.

Continued…

Quality of labor: The educational& skills levels of the labor pool must match the company’s needs.

Suppliers: A high-quality & competitive supplier base makes a given location suitable .

Political Risk: the fast changing geopolitical scenes in numerous nations present exciting, challenging opportunities. Political risks in both the country of location & the host country influence the location decisions.

Envtmental Regulations: These regulations influence the relationship with the local community.

Contd…

Host Community: the host community’s interest in having the plant in its midst is required. Local educational facilities and the broader issue of quality of life are also important.