Facility Location - Factors Influencing The Location

Facility Location - Factors Influencing
the Location
Facility Location is the right location for the manufacturing facility, it will
have sufficient access to the customers, workers, transportation, etc.
For commercial success, and competitive advantage following are the
critical factors:
Overall objective of an organization is to satisfy and delight customers

with its product and services. Therefore, for an organization it becomes
important to have strategy formulated around its manufacturing unit. A
manufacturing unit is the place where all inputs such as raw material,
equipment, skilled labors, etc. come together and manufacture
products for customers. One of the most critical factors determining
the success of the manufacturing unit is the location.
Facility location determination is a business critical strategic decision. There

are several factors, which determine the location of facility among them
competition, cost and corresponding associated effects. Facility location is a
scientific process utilizing various techniques.
Location Selection Factors
For a company which operates in a global environment; cost, available

infrastructure, labor skill, government policies and environment are very important
factors. A right location provides adequate access to customers, skilled labors,
transportation, etc. A right location ensures success of the organization in current
global competitive environment.
Industrialization
A geographic area becomes a focal point for various facility locations based on
many factors, parameters and issues. These factors are can be divided into primary
factors and secondary factors. A primary factor which leads to industrialization of a
particular area for particular manufacturing of products is material, labor and
presence of similar manufacturing facilities. Secondary factors are available of
credit finance, communication infrastructure and insurance.
Errors in Location Selection
Facility location is critical for business continuity and success of the organization. So
it is important to avoid mistakes while making selection for a location. Errors in
selection can be divided into two broad categories behavioral and non-behavioral.
Behavioral errors are decision made by executives of the company where personal
factors are considered before success of location, for example, movement of
personal establishment from hometown to new location facility. Non-behavioral
errors include lack of proper investigative practice and analysis, ignoring critical
factors and characteristics of the industry.
Location Strategy
The goal of an organization is customer delight for that it needs access to the
customers at minimum possible cost. This is achieved by developing location
strategy. 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

If the organization can configure the right location for the manufacturing facility, it will have
sufficient access to the customers, workers, transportation, etc. For commercial success, and
competitive advantage following are the critical factors:
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. On another hand 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: In current globalized world pollution, control is very important, therefore
understanding of environmental policy for the facility location is another critical factor.

Facility Location - Factors Influencing The Location

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Facility Location - Factors Influencing The Location

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Facility Location - Factors Influencing

Overall objective of an organization is to satisfy and delight customers

Facility location determination is a business critical strategic decision. There

Location Selection Factors

For a company which operates in a global environment; cost, available

Factors Influencing Facility Location

Customer Proximity: Facility locations are selected closer to the customer as to reduce

Free Trade Zone/Agreement: Free-trade zones promote the establishment of manufacturing

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