Facility Location And FacilityLayoutStrategic Importance Supplychain
Facility Location and Facility
Layout
Strategic Importance
• Supply-chain management is critical
• Facility location—intrinsically related to SCM
• Examples:
– FedEx: While opening a hub for Asia in Philippines
1995—
• it had to evaluate several sites
• Linking its American (Memphis) and European (Paris) Hubs
• BTW, the facility was closed and the new hub since 2009 is in Guangzhou, Southern China
– Mercedes’ first overseas plant in Vance, Alabama
• Evaluated 170 sites in 30 states and 2 countries
– Hard Rock Café location in Moscow in 2002
• Took 3 years of advance planning
• Russian Food Supply Chain
Facility Location
• Global Nature of Location Decision
• Objective: Maximize the benefit of location to a firm
– Marketing Strategy: New Markets
– Global Growth: New Markets and supply chain considerations – Cost of Doing Business: Attractive alternatives to relocate business elsewhere
1
Location Options
• Expand existing facility
• Add new location while retaining existing location • Close existing operation and move to a new location
Location Decision Factors
Country Factors
Community Considerations
Regional Factors
Site-related Factors
Site Selection Factors (Country and
Region)
Country
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Government stability
Government regulations
Political and economic systems
Economic stability
Exchange rates
Culture
Climate
Export and import regulations, duties and fees
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Raw material availability
Number and proximity of suppliers
Transportation system
Labor pool and cost
Available technology
Commercial travel
Technical expertise
Region
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Labor (availability, cost and unions)
Proximity of customers
Number of customers
Construction/leasing costs
Land costs
Modes and quality of transportation
Transportation costs
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Government regulations
Environmental regulations
Raw material availability
Commercial travel
Climate
Utilities
2
Site Selection Factors -(Community and
Site)
Community
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Community
Layout
Strategic Importance
• Supply-chain management is critical
• Facility location—intrinsically related to SCM
• Examples:
– FedEx: While opening a hub for Asia in Philippines
1995—
• it had to evaluate several sites
• Linking its American (Memphis) and European (Paris) Hubs
• BTW, the facility was closed and the new hub since 2009 is in Guangzhou, Southern China
– Mercedes’ first overseas plant in Vance, Alabama
• Evaluated 170 sites in 30 states and 2 countries
– Hard Rock Café location in Moscow in 2002
• Took 3 years of advance planning
• Russian Food Supply Chain
Facility Location
• Global Nature of Location Decision
• Objective: Maximize the benefit of location to a firm
– Marketing Strategy: New Markets
– Global Growth: New Markets and supply chain considerations – Cost of Doing Business: Attractive alternatives to relocate business elsewhere
1
Location Options
• Expand existing facility
• Add new location while retaining existing location • Close existing operation and move to a new location
Location Decision Factors
Country Factors
Community Considerations
Regional Factors
Site-related Factors
Site Selection Factors (Country and
Region)
Country
•
•
•
•
•
•
•
•
Government stability
Government regulations
Political and economic systems
Economic stability
Exchange rates
Culture
Climate
Export and import regulations, duties and fees
•
•
•
•
•
•
•
Raw material availability
Number and proximity of suppliers
Transportation system
Labor pool and cost
Available technology
Commercial travel
Technical expertise
Region
•
•
•
•
•
•
•
Labor (availability, cost and unions)
Proximity of customers
Number of customers
Construction/leasing costs
Land costs
Modes and quality of transportation
Transportation costs
•
•
•
•
•
•
Government regulations
Environmental regulations
Raw material availability
Commercial travel
Climate
Utilities
2
Site Selection Factors -(Community and
Site)
Community
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•
•
•
•
•
•
•
•
Community