Advantages of Plant and Warehouse Site Selection

Topics: Economics, Cost, Costs Pages: 3 (658 words) Published: January 29, 2012
Advantages of Plant and Warehouse Site Selection
When a company selects a less-than-optimal site, it may have labour availability problems, ongoing transportation issues and yearly recurring cost. These issues can be resolved by paying close attention to site selection. A sound plant and warehouse site selection will generally have the following benefits; (1) reduction in transportation cost; (2) reliable and productive labour force; and (3) minimizes development cost. i. Reduction in Transportation Cost

Transportation is one of the most important factors in distribution centre logistics. The cost of hauling products from a distribution centre to customers and consumers is based on fuel prices as well as driver and truck maintenance cost, which usually increase annually. Being in the right location is vital in minimizing transportation costs from a distribution centre to retail stores, or wherever the company’s destination is.

An optimum distribution centre location needs to best serve its delivery points. By analyzing the current network and planned distribution centres is a good way for firm to determine optimal location. In the retail business, on-time delivery is crucial; hence the proximity of clients and suppliers through highly accessible highways or rail lines will saves time and cuts costs. In addition to the site’s physical location, its internal functions – rack and conveyor systems and pick-and-pack solutions – are important. When a plant or warehouse is designed and located effectively, these systems help increased product flow and shipping efficiency. ii. Reliable and Productive Labour Force

While various markets may meet a company’s transportation needs, it may be harder to find a reliable and productive labour force. As such, labour force is the foremost community characteristic to identify in site selection. Firms should also analyze turnover rates because retraining employees increases operating costs. In the United States, most...
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