importance of facility location, factors affecting facility location, types of factors, GIS

3. Fahad Sattar (06)
Bilal Ahmad (05)
Masab Farooq (10)
Zaid Ali (29)
Abdul Rehman (02)

4. The process of determining
geographic sites
for a firm’s operation.

5. Location has much importance on these factors
1. Impact on supply chain
2. Supplier relationship Process
3. Transportation Cost (inbound or outbound)
4. Coordination difficulties.

6. Location has significant Impact on
1. Operating cost
2. Price it charges for its services and goods
3. Ability to compete in market place
4. Penetrate new customer segments

7. Locating new facilities or relocating existing facilities is usually costly,
therefore these decisions must be carefully evaluated by the
organization’s accounting and finance departments.
When locating new retail facilities must carefully assess how the
location will appeal the customers and possibly open up new markets.
Relocating all or part of an organization can significantly affect the
attitudes of firm’s workforce and the organization’s ability to operate
effectively across departmental lines.

8. 1. Spartanburg, South Carolina
2. Economic Environment
3. Monetary Incentives
4. Improved highway system
5. Airport
6. Seaport
7. Tax incentives
1. Shifted from singur ,west bengal to
sanand Gujrat.
2. Land
3. Soft loans(95000 million@0.1%
interest in 20 years
4. Water supply
5. Infrastructure
6. Road infrastructure

9. Managers generally can disregard factors that fail to meet
at least one of the following two decision
The factor must be sensitive to the location.
The factor must have a high impact on the company’s
ability to meet its goals.

10. Managers should not consider a factor not affected by the location decision.
E.g if community attitudes are uniformly good at all locations.
The factor must should directly effect the company to achieve its goals. E.g
distance from the suppliers of raw material.

11. Dominant factors are derived from competitive priorities (Cost, Quality,
time, Flexibility) and have a particular strong impact on sales or cost.
Secondary factors are also important , but management can downplay or
even ignore some of these factors if other factors are more important.

12. 1. Favorable Labor Climate
2. Proximity to Markets
3. Quality of life
4. Proximity to suppliers and Resources
5. Proximity to the parent Company’s Facilities
6. Utilities, Taxes and Real Estate Costs
7. Other factors

13. Favorable labor climate my be the most important factor for
labor intensive firms in industries such as textile, furniture and
consumer electronics.
Labor climate is a function of wage rates, training requirements,
attitudes toward work, worker productivity and union strength.

14. Locating near markets is particularly important
when final goods are bulky or heavy and outbound
transportation rates are high.
For example manufacturers of products such as
heavy metals require proximity to their markets.

15. A factor that considers that availability of good
schools, recreational facilities , cultural events and an
attractive lifestyle.
In U.S, Japan and Europe more than 50% of new
industrial jobs went to nonurban regions during the past 2
decades. Reason for movement includes high costs of
living, high crime rates and general decline in the quality of
life in many large cities.

16. Firms depends on inputs of bulky, perishable or
heavy raw materials which emphasize proximity to their
suppliers and resources. In such case inbound
transportation costs become a dominant factor.
Another advantage of locating near suppliers is the
ability to maintain lower inventories.
Locating paper mills near forests and food-
processing facilities near farms is practical.

17. In many companies plants supply parts to other
facilities or rely on other facilities for management and staff
support. These require coordination and communication,
which become more difficult as distance increases.

18. Other location decision factors include utility
costs (telephone, energy and water) local and state taxes,
financing incentives offered by local or state
governments, relocation costs and land costs.
For example BMW received tax relaxation and
other incentives by the government of Spartanburg,
south Carolina while installing their plant for BMW X
series vehicles.

19. Some other secondary factors are
1. room for expansion
2. construction costs
3. accessibility to multiple modes of transportation
4. the cost of shuffling people and material between
plants
5. insurance costs
6. competition from other firms for workforce
7. local ordinances,
8. community attitudes.

20. 1. Proximity to Customers
2. Transportation Costs and Proximity to Markets
3. Location of Competitors
4. Site Specific Factors

21. Location is a key factor in determining how
conveniently customer s can carry on business with the
firm. Influence of location on customers tends to be the
dominant factor.
Being close to customer who match a firm’s target
market and service offering is thus important for
profitability.

22. For warehousing and distribution operations,
transportation costs and proximity to markets are
extremely important. With a warehouse nearby , many
firms can hold inventory closer to the customer, thus
reducing delivery time and promoting sales.

23. Management must not only consider the current location
of competitor but also try to anticipate their reaction to the firm’s
new location. Avoiding areas where competitors are already well-
established often pays off. However competitors is actually
advantageous.
A situation whereby several competing firms clustered in
one location attract more customers than the total number who
would shop at the same stores at scattered locations.

24. Retailers also must consider the
1. Level of retail activity
2. Residential density
3. Traffic flow
4. And site visibility.

25. A system of computer software, hardware and data that the
firm’s personnel can use to manipulate, analyze and present
information relevant to the location decision.
A GIS can be a really useful decision making tool because
many of the decision made by business today have
geographical aspect. It provides different important
demographic variables which are helpful in decision making
and to reach the target markets.

26. 1. Stores databases
2. Display maps
3. Create models that can take information from
existing data sets, apply analytical functions and
write results in newly derived data sets.
GIS can also be useful for identifying customer
location that relate well to a service firm’s target
market.

27. Some examples of Important GIS are Arcinfo,
Mapinfo, SAS, SiteAmerica and MapPoint 2004.
MapPoint 2004 is developed by Microsoft. One
of the nice features of MapPoint is that the maps and
much of the census data come with the software itself ,
while in many other systems maps and data are
purchased separately. MapPoint is easy-to-use GIS that
mainly focus on everyday business.