Table of Contents
Literature Review of Facility Location Decisions
Implications for DHL
The following analysis will take an in-depth look at the facility location decision making process. This decision is extremely important for many organizations and can provide a strategic advantage in terms of cost savings as well as ability to service customers. The location decision is a key part of the supply chain and as such must be well thought out. In order to fully understand the tasks and decisions involved it was important to first look at a variety of literature on the topic.
The literature review goes through many academic articles to find the important factors and models that are involved in the facility location decision making process. It discusses qualitative factors such as land, labour, capital, markets and sources, as well as quantitative factors which identifies three quantitative models that can be used to assist in the decision. These models are the fuzzy clustering model, the analytical hierarchical process, and the geographic information system.
The literature will then be applied to DHL which is the largest global logistics specialist company and supply chain solutions provider. The qualitative factors that DHL uses will be identified and discussed in more detail. Further, a recommendation will be given to DHL in order to improve their facility location decision making process. The recommendation is to incorporate the geographic information system in their decisions making process.
Every brick and mortar business involves a facility location decision, which is not only important from an operational point of view, but in an investment view as well. The facility location decision process can be lengthy and includes the analysis, evaluation and selection from all available alternatives. Decision makers who are responsible for site selection need to identify the “best” location, in terms of both the current and future system. Further, the location decision is normally a long term decision and irreversible in nature, and also affects “operation cost, delivery speed performance and organization capability to perform in the market place as compared to their competitors”. Managers also need to consider the need for extra capacity in the future or in an emergency situation. Facility location decisions are affected by environmental change, populations shift, and evolving market trends. In addition, finding an appropriate location can be an even more difficult task when the economy and future are so uncertain. When the market shifts from one place to another and preferences change then facility locations also need to relocate or need to make another flexible location in order to reduce its cost and to increase its performance for keeping its competitive advantage in market. The reinvestment or renting a new location is big challenges for company as it always includes cost and time. The following analysis of the facility location decision will take an in-depth look at the literature discussing the best practices and identifying key factors that need to be considered in the decision. In addition, there are 3 models that can be used to assist in the decision that will be compared and contrasted and one will be chosen as a recommendation for DHL. Literature Review of Facility Location Decisions
There are a broad range of discussions on the facility location decision. These range from thoughts on the contributing qualitative factors in the decision to the use of incentives that attract businesses, and to the...
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