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Why Data is the New Oil Data is the New Oil, proclaimed, India’s Richest Person and the one of the World’s leading Businessperson, Mukesh Ambani. He was referring to the fights over data in the digital age being similar to the battles over Oil in the Industrial Age. As Oil was the Lubricant that made […]
Types of Inventories – Independent and Dependant Demand Inventories
Inventory Management deals essentially with balancing the inventory levels. Inventory is categorized into two types based on the demand pattern, which creates the need for inventory. The two types of demand are Independent Demand and Dependant Demand for inventories. Independent Demand An inventory of an item is said to be falling into the category of […]
Quality Frameworks and their role in Competitive Advantage
Adoption of quality frameworks like Six Sigma, ISO 9000 and Baldridge has ensured that companies derive a source of competitive advantage in the way in which they produce superior products with minimal loss of quality. Though these frameworks have been adopted in the manufacturing sector much earlier, the services sector has not lagged behind in […]
Elements of Information System Model
Introduction Proliferation of information technology has increased in the last decade. Today’s organizations are acknowledging the importance of information systems. It has been accepted worldwide that information system provides competitive edge and are the bedrock for innovation. The six basic functions of information systems are capture data, transmit data, store data, retrieve data, manipulate data […]
The Ubiquitous Smartphone and how it has Transformed Business and Commerce
How the Ubiquitous Smartphone has Revolutionized B2B and B2C Commerce Who doesn’t own a Smartphone? Right from teenagers to senior citizens and from businesspersons to business leaders, Smartphone ownership is Ubiquitous and all pervasive. Indeed, it is estimated that nearly 80% of the world’s population is now connected to each other through the mobile phones […]
Facility Location is the right location for the manufacturing facility, it will have sufficient access to the customers, workers, transportation, etc. For commercial success, and competitive advantage following are the critical factors:
Overall objective of an organization is to satisfy and delight customers with its product and services. Therefore, for an organization it becomes important to have strategy formulated around its manufacturing unit. A manufacturing unit is the place where all inputs such as raw material, equipment, skilled labors, etc. come together and manufacture products for customers. One of the most critical factors determining the success of the manufacturing unit is the location.
Facility location determination is a business critical strategic decision. There are several factors, which determine the location of facility among them competition, cost and corresponding associated effects. Facility location is a scientific process utilizing various techniques.
For a company which operates in a global environment; cost, available infrastructure, labor skill, government policies and environment are very important factors.
A right location provides adequate access to customers, skilled labors, transportation, etc. A right location ensures success of the organization in current global competitive environment.
A geographic area becomes a focal point for various facility locations based on many factors, parameters and issues. These factors are can be divided into primary factors and secondary factors.
A primary factor which leads to industrialization of a particular area for particular manufacturing of products is material, labor and presence of similar manufacturing facilities. Secondary factors are available of credit finance, communication infrastructure and insurance.
Facility location is critical for business continuity and success of the organization. So it is important to avoid mistakes while making selection for a location. Errors in selection can be divided into two broad categories behavioral and non-behavioral.
The goal of an organization is customer delight for that it needs access to the customers at minimum possible cost. This is achieved by developing location strategy. Location strategy helps the company in determining product offering, market, demand forecast in different markets, best location to access customers and best manufacturing and service location.
If the organization can configure the right location for the manufacturing facility, it will have sufficient access to the customers, workers, transportation, etc. For commercial success, and competitive advantage following are the critical factors:
Customer Proximity: Facility locations are selected closer to the customer as to reduce transportation cost and decrease time in reaching the customer.
Business Area: Presence of other similar manufacturing units around makes business area conducive for facility establishment.
Availability of Skill Labor: Education, experience and skill of available labor are another important, which determines facility location.
Free Trade Zone/Agreement: Free-trade zones promote the establishment of manufacturing facility by providing incentives in custom duties and levies. On another hand free trade agreement is among countries providing an incentive to establish business, in particular, country.
Suppliers: Continuous and quality supply of the raw materials is another critical factor in determining the location of manufacturing facility.
Environmental Policy: In current globalized world pollution, control is very important, therefore understanding of environmental policy for the facility location is another critical factor.
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