Location Planning & Logistics

1. Location Planning
and Logistics
One can never know for sure what a deserted area looks like.
—George Carlin
CHAPTER

2. Tasks ahead:
• Describing Influences on Location
• Planning Locations
• Selecting Logistics to Link Locations
CHAPTER

3. Values:
How will the
organization
conduct itself in
its mission?
Business Unit
Strategies
Corporate
Strategies
Forces Influencing the Location of a Facility
Inputs Facility Outputs

4. Values:
How will the
organization
conduct itself in
its mission?
Business Unit
Strategies
Corporate
Strategies
Forces Influencing the Location of a Facility
Inputs Facility Outputs
Input-related
Location
Factors
Availability

5. Availability
• Raw
materials
• Labor force
• Electrical
power

6. Values:
How will the
organization
conduct itself in
its mission?
Business Unit
Strategies
Corporate
Strategies
Forces Influencing the Location of a Facility
Inputs Facility Outputs
Input-related
Location
Factors
Availability

7. Values:
How will the
organization
conduct itself in
its mission?
Business Unit
Strategies
Corporate
Strategies
Forces Influencing the Location of a Facility
Inputs Facility Outputs
Input-related
Location
Factors
Availability
Indigenous
Location
Factors
Favorability
Stability

8. Favorability
• Taxes
• Regulations
Stability
• Political
• Weather

9. Values:
How will the
organization
conduct itself in
its mission?
Business Unit
Strategies
Corporate
Strategies
Forces Influencing the Location of a Facility
Inputs Facility Outputs
Input-related
Location
Factors
Availability
Indigenous
Location
Factors
Favorability
Stability

10. Values:
How will the
organization
conduct itself in
its mission?
Business Unit
Strategies
Corporate
Strategies
Forces Influencing the Location of a Facility
Inputs Facility Outputs
Input-related
Location
Factors
Availability
Indigenous
Location
Factors
Favorability
Stability
Output-related
Location
Factors
Proximity

11. Proximity
• Marketplace
• Transportation
• Storage

12. Planning a Location:
Center of Gravity
• Finds optimal location in
connection to other locations
• Assumes a flat map

13. Planning a Location:
Center of Gravity
• Finds optimal location in
connection to other locations
• Assumes a flat map
• Assumes costs are a linear
• First, the simple case…

14. Planning a Location:
Factor Rating
• Selects a location based on
subjective factors
• Locations must first be scored
on factors
• Employs linear averaging…

15. linear averaging
A numerically weighted
evaluation method used
in situations such as
awarding contracts,
selecting locations, or
ranking candidates.

16. Spreadsheet Model and Sensitivity Analysis of Factor Weights

17. Planning a Location:
Cost versus Volume
• Finds the best location from a list
of candidates
• Assumes desirability is an issue of
fixed versus variable cost

18. Planning a Location:
Cost versus Volume
• Finds the best location from a list
of candidates
• Assumes desirability is an issue of
fixed versus variable cost
• Always easier if volume to be
produced at that location is
known…

19. But what if you aren’t
sure what the future
volume is? Look for…

20. point of
indifference
When two alternatives
have identical merit.
But what if you aren’t
sure what the future
volume is? Look for…

21. logistics
Management of flow
between locations,
typically the
transportation of
products, personnel, or
other resources.

22. Transportation Modes of
Supply Chain Logistics

23. intermodal
container
A standard freight
container designed to be
loaded by the shipper and
unloaded at its
destination.

24. Intermodal
Containers cross
between
Transportation
Modes…

25. third-party logistics
(3PL)
Outsourcing logistics
activities to a provider.

26. freight forwarders
Third-party logistics
providers that facilitate
shipments for clients.

27. freight consolidation
A third-party logistical
service that groups small
shipments of several
clients into a larger
shipment to achieve
economies of scale
in transport.

28. Just a Few Questions About Any
International Shipment…

29. Just a Few Questions About Any
International Shipment…
Who is responsible for
delivering the goods to
dockside?
Who is
responsible for
loading the
goods at
dockside?
Seller’s
Location
Loading
Port

30. Just a Few Questions About Any
International Shipment…
Who is responsible for
delivering the goods to
dockside?
Who is
responsible for
loading the
goods at
dockside?
Who is responsible for the cost of transportation?
When did the ownership of the goods change from seller to
buyer?
Seller’s
Location
Loading
Port

31. Just a Few Questions About Any
International Shipment…
Who is responsible for
delivering the goods to
dockside?
Who is
responsible for
delivering the
goods to the
buyers
location? Who is
responsible for
the goods in
customs?
Who is
responsible for
loading the
goods at
dockside?
Who is responsible for the cost of transportation?
When did the ownership of the goods change from seller to
buyer?
Seller’s
Location
Loading
Port
Buyer’s
Location
Unloading
Port

32. Incoterms®
Standardized sets of
terms accepted worldwide
for transportation of
goods, established and
trademarked by the
International Chamber of
Commerce.