FACILITY LOCATION Facility location , is a branch of operations research concerning itself with mathematical modeling and solution of problems concerning optimal placement of facilities in order to minimize transportation costs , avoid placing hazardous materials near housing, outperform competitors' facilities, etc. also known as location analysis . Once a firm has decided to open a new facility OR relocate an existing facility, it must decide the site where that facility should be located. The selection of location is most important for organization. The business commenced without proper location analysis may have the high risk chances and may not longer compete with other competitors.
FACILITY LOCATION KFC & Facility Location: KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken is a chain of fast food restaurants based in Louisville, Kentucky. KFC is the third largest fast food chain with over 12,200 outlets in 99 countries . KFC has maintained its title, for the last 60 years , of being the chicken Experts. Opening the first KFC outlet in Gulshan-e- Iqbal in 1997 . KFC wore the title of being the market leader in its industry. Serving delicious and hygienic food in a relaxing environment made KFC everyone’s favorite. Since then, KFC has been constantly introducing new products and opening new restaurants for its customers. Presently KFC is branched out in eighteen major cities of Pakistan (Karachi, Lahore, Gujranwala, Sukkur & Muree) with more than 60 outlets nation-wide. The outlets comprise of franchises, company owned and affiliated. They used the proper method for facility location and layout analysis of new or existing outlets. Facility location involves the evaluation of various sites for a new facility.
FACILITY LOCATION Existing Locations of KFC In Lahore: Barket Market Defence Cavalry Ground Shadman Mall Road Thokar Niaz Baig M.M. Alam Road Y-Block GT Road
FACILITY LOCATION Factors That KFC Management Keep in Mind during Facility Location Analysis: There are several factors that influence the Facility Location Decision. Proximity to Customers, Business Climate, Total Costs, Infrastructure, Quality of Labor, Host Community, Etc.
FACILITY LOCATION Facility Location Techniques: There are many analytical techniques that can be used in facility location decision. Some of these are: 1) Factor Rating 2) Cost-Profit-Volume analysis 3) Center of Gravity Method, and 4) Transportation and Simulation Models. But first two methods “ Factor Rating ” & “ Cost Profit Volume Analysis ” are more simple & suitable for KFC Because of easily understandable than “Center of Gravity” & “Simulation Method”.
FACILITY LOCATION Method of Factor Rating: In factor rating method, first we must identify the Most Important Factors in evaluating alternative sites for the new facility. Then we should assign a weight between 0 and 100 to each of these factors. Each alternative location will then be rated based on these factor weights. The most weighted alternative is selected as the best alternative. Example: Suppose KFC is considering three alternative sites for its new facility locations. Site A. Moon Market Site B. Shadra Site C. Chock Chu Burgi
FACILITY LOCATION Method of Factor Rating(Cont…) After evaluating the firm’s Needs, the Managers have narrowed the list of Important Selection Criteria down into three major Factors. - Availability of skilled labor - Availability of suitable Infrastructure, and Proximity of target customers. Weights reflecting the relative importance of each factor have been assigned as follows:
FACILITY LOCATION Method of Factor Rating(Cont…) ow we will multiply each score by its corresponding factor weight: Weighted scores are calculated as: (Site Score) x (Factor Weight).
FACILITY LOCATION Method of Factor Rating(Cont…) From these results, the largest total weight is for Site A. It appears to be the best location. What happens if we change the factor weights. Lets use the following factor weights: Skilled labor: 0.45 ; Raw Materials: 0.40 ; and Market: 0.15 Then the following results are obtained: In this case, Site “C” appears to be the best choice with largest weight score. Therefore, factor rating method is very sensitive to the weights assigned to each factor.
FACILITY LOCATION Cost-Profit-Volume Analysis: When the fixed and variable costs for each site differ, Cost -profit-volume analysis can be used to identify the location with the lowest cost. Example: Suppose KFC is considering three alternative sites for its new production facility. Site A. Moon Market Site B. Shadra Site C. Chock Chu Burgi The Annual Production Cost associated with each alternative is a linear function of the production volume. That is: Total Production Cost = (Fixed Cost) + (variable unit cost) x (annual production volume)
FACILITY LOCATION Cost-Profit-Volume Analysis (Cont…): Assume that the expected annual production volume is 250.000 units. And further assume that: ( x : production volume = 250) For Site A : Prod. Cost = 10,000 + 250 x For Site B : Prod. Cost = 25,000 + 150 x For Site C : Prod. Cost = 60,000 + 50 x Based on these information, Which site has the lowest cost? At a production volume of 250.000 units, site B has the lowest cost , because For Site A: Prod. Cost = 10,000 + 250 (250) = 72,500 For Site B: Prod. Cost = 25,000 + 150 (250) = 62,500 For Site C: Prod. Cost = 60,000 + 50 (250) = 72,500
FACILITY LOCATION Cost-Profit-Volume Analysis (Cont…): This graphic shows that annual production cost changes with different production volumes. - If the expected annual production volume is below 150 units, then choose site A . - If the expected annual production volume is between 150 and 350 units, then choose site B . - If the expected annual production volume is over 350 units, then choose site C .
FACILITY LAYOUT Facility layout: Facility Layout means Planning And Arrangement of all Machines , Utilities , Employee workstations , Customer service areas , Material storage areas , Aisles , Restrooms , Lunchrooms , Internal walls , Offices , and Computer rooms , for the smooth flow patterns of materials and people around, into, and within Buildings Infrastructure services.
FACILITY LAYOUT Factors that influence layout: - Volume, weight of items to be produced. - Nature of the service to be provided. - Cost of the building to house the operation. - The fragility of the product or component KFC Facility Layout: Internal & External layout of KFC outlet is attractive and charming all over the world. Ideal color schemes, pleasant lighting outlets, comfortable sitting arrangement, fully trained employees and their proper work division, State of the art interior beautification, speedy & appropriate cooking process, special club/block for kids, etc. are the chief characteristic of the KFC layout.
FACILITY LAYOUT KFC Process Layout Map: KFC fallow the standardized process for production. The facility layout process schematic diagram are presented blow. KFC Old Process Layout: KFC Modern (New) Process Layout: Raw Material Cook Assemble Finished Goods Customer Place Order Deliver Raw Material Cook Assemble W. I. P. Customer Place Order Deliver
FACILITY LAYOUT Advantage of KFC’s Good Layout: Reduces bottlenecks in moving people or material. Minimizes materials-handling costs. Reduces hazards to personnel. Utilizes labor efficiently. Increases morale. Utilizes available space effectively and efficiently. Provides flexibility. Provides ease of supervision. Facilitates coordination and face-to-face communication where appropriate.
FACILITY LAYOUT Conclusion And Recommendation: KFC can progress rapidly by identifying new facility locations and increasing existing target market and facility locations by launching new competitive product chain at minimum cost. KFC’s Unity Drive had a simple but essential message and objective. To bring together the people of Pakistan by promoting in the words of KFC founder, “ Unity, Faith & Discipline ”. In a time of uncertainty and fear, KFC rose to the occasion and built a platform of solidarity and togetherness for the people of Pakistan. The campaign proved to be a successful initiative in not just providing hope for our patrons, but also allowed KFC Pakistan to take an effective step forward during tough times and entrust other responsive companies to act in a similar manner.