Week 8A

1
Week 8A Location Planning Chapter 7S

• Location decision factors, multi-plant
  strategies, cost-profit-volume analysis, GIS

2
Location Decision Factors

• What are some factors that you think are
  important in making a location decision?
• ?????

3
Global Supply Chain Factors - 1

• Government stability
• Government regulations
• Political and economic systems
• Economic stability and growth
• Exchange rates
• Culture
• Climate

4
Global Supply Chain Factors - 2

• Export/import regulations, duties, tariffs
• Raw material availability
• Number and closeness of suppliers
• Transportation/distribution systems
• Labor force cost, education, experience

5
Global Supply Chain Factors - 3

• Technology availability
• Technical expertise
• Commercial travel
• Cross-border trade regulations
• Group trade agreements
• Language

6
Regional Location Factors

• Close to suppliers
• Quick delivery
• Close to raw materials
• Major raw material
• Close to customers
• Tradeoffs with supplier proximity
• Labor supply
• Right skills, sufficient amount

7
Community Location Factors - 1

• Taxes
• Property, income, sales
• Development support
• Infrastructure, loans, tax abatement
• Regulations
• Environmental air, water, hazardous material
• Other building codes, restrictions, requirements
• Utilities
• Electricity, natural gas, water, phones, cable,
  satellite

8
Community Location Factors - 2

• Acceptance
• Community support
• Services
• Police, fire, medical
• Quality of life
• Schools, recreation, COL, housing, shopping,
  transportation, religious institutions
• Universities
• Research facilities and higher education

9
Site Location Factors

• Land
• Purchase/lease costs
• Geological, flood control
• Transportation
• Air, rail, highway
• Environmental/legal
• Toxic cleanups
• Zoning regulations

10
Multiple Plant Strategies

• Organize by product
• Organize by market
• Organize by process (or component)
• Combination

11
Examples

12
Examples

• Tin can manufacturer (peaches)
• Refrigerator manufacturer
• Automobile assembly
• Car dealer
• Fast food franchise (McDonald's)
• Fast food franchise (Taco Bell)
• Electronic test equipment manufacturer
• MRP II Consultant

13
Tin Can Manufacturer

• Customer fruit canner

14
Refrigerator Manufacturer

• Close to ????

15
Automobile Assembly

• Desired factors ???

16
Car Dealer

• Think as a customer!

17
Fast Food Franchise

• McDonalds

18
Fast Food Franchise

• Taco Bell

19
Electronic Test Equipment Manufacturer

• HP in the 1970s

20
MRP Consultant

• In-house and on-site training and consulting

21
Cost-Profit-Volume Analysis

• Mathematical or graphical
• Procedure
• Determine fixed variable costs
• Plot costs for all considered locations
• Determine lowest total cost for expected output
  (volume)
• Note that at different volumes other alternatives
  may be preferable

22
Geographic Information Systems

• Increasing use due to data and software
  availability
• May contain
• Census data
• Maps
• Utilities and transportation hubs and routes
• Places of interest
• Examples of use