Plant Location

Location of production and other facilities is an Imp managerial decision. It involves a heavy commitment of resources for a long time. After the plant is eracted the capacity creating is a long term commitment not only in terms of machinery & equipment but also in terms of arrangement and development of raw material resources, labour skills, market and distribution channels and the adjustments with the environment.

Plant location

A plant location is a plan for determining and arranging the desired machinery and equipment of plant, whether established or contemplated, in the one best place to permit the quickest flow of material at lowest cost and least amount handling in processing the product from the receipt of raw materials to the shipment of finished product A plant location involves planning and arranging manufacturing machinery, equipment and service first time in completely new plant The improvement in location already in use in order to introduce new methods and improvements in manufacturing procedures

Plant location
Following aspects are kept in view while evaluating the plant location 1.Production technology and product mix 2.Efficient,economic and uninterrupted flow of human and material resources 3.Proper space for maintenance 4.Futher expansion/diversification of the project 5.Safety precautions particularly when explosive or bulky material is required to be handled 6.Proper lightning and ventilation 7.Proper layout of utilities and services provisions for effluent disposal, where necessary 8.Effective supervision of work. 9.Proper storage and stacking space, where required 10. Availabality of transportation facilities.

Types Locational Decision

1.

2.

3.

4.

5.

6.

An organizational strategies. Location of plant for the conversion of inputs into finished products. Location of service units which provides assistance to production units. Location of distribution and retail units for dispersion of the product to the market. Location of procurement centres to assemble necessary inputs on the selected site. Location of warehouse facilities.

Some factor for consideration

Unit Cost : The site at which the cost of operations per unit is

minimised after considering all factors. While calculating costs, forecasts have to be made over the anticipated life of factory. Markets : The cost of production should be compared with the cost of distribution. Nearness to market is a big advantage in those industries where speedy delivery after production is most Diary product. Technology : General Technology constraints commonly eliminate most of the possible location. Where technology considerations like raw materials, water, energy, dominates the location oriented towards technology. Labour Supply : Skilled labour are required in some industries and accordingly the plant are located. Distribution Channels : Flow of goods & services may be direct & short (Producer directly selling to consume) or indirect and long (wholesaler, agent ,retailer). The intended objected for choice of location is profit maximization for economic activities.

Location of Production units

Production unit makes use of certain inputs like land, labour, capital, raw materials and energy. Four main factors should be considered: 1. Inputs costs :Inputs are the economic resources used in the process of production e.g. Land, Labour, Capital raw material, Power and water. 2. Location of the output market : In many cases plant tend to be located near the market for their product. The reason being a). The relatively higher cost of transporting bulky and heavy finished goods than the cost of moving raw material. b). The affluence of cities as a market c). The advantage of being close to customer for service purposes particularly in high technology and service industries.

3.

Transportation cost : Industries using bulky and

voluminous raw materials can save transport costs by locating near the source of materials. 4. Agglomerative economies : These are the savings in costs arising from the concentration of industries in a particular region. These savings could accure from developed infrastructure (roads, railways) skilled labour, banking services, common research and testing facilities, ancillary firms etc.

Plant Layout
Plant layout implies the physical arrangement of machines, equipment and other industrial facilities or the factory floor in such manner that they may be handled efficiently. As a floor plan of production facilies plant layout indicates the space allotted for material movement, storage and all supporting facilities for overall economy in production. Objective of Layout : 1. To minimised handling and transportation of materials. 2. To ensure economic utilization of available floor space. 3. To minimize work-in-progress inventory by eliminating bottlenecks. 4. To ensure efficient control over the various processes of production. 5. To maximize convenience safety of workers. 6. To obtain more efficient utilization of machinery, equipment and other facilies. 7. To minimize cost of production.

Advantages of Good Layout

Economical use of production, storage & service space Reduction in material handling cost. Avoiding delays & bottlenecks. Effective planning, supervision and control of manufacturing operations. Lesser capital investment in plant, equipment, tooling and other physical facilities. Improvement in production process as a whole on account of less energy consumption, less inspection cost, less fatigue and high worker morale.

Symptoms of Poor Layout

1. 2. 3. 4.

5.

Delay and work stoppages in manufacturing process. Slow movement of materials through the Plant. Accumulation of work-in-process between process. High material handling and transportation cost. Under-utilization of machines and workers i.e. too much waiting or idle time.

Types of Plant Layout

Product Layout Process Layout Fixed Position Layout Group Layout

Product or Line Layout

Product shop Lathe Drill Grinder Assembly Paint

A
Product B

1
Planner 1

2
Grinder 2

3
Miller 3

4
Lathe 4

5
Well done 5

Machines & equipment are arranged in the sequence of manufacturing operations. The materials move from one work station to other sequentially without deviation of material Advantages: Low cost of material handling. Optimum use of space less congestion of work. Shorter processing time as output. Lower cost of manufacturing.

Disadvantages

High initial capital investment. Breakdown in one machine results in work stoppage of the entire live of machines.

Suitability

Mass production. Simple & repetitive manufacturing process. Continuous supply of materials e.g. Automobile, Food processing chains.

Process or Functional Layout

Drilling A 2 ,1
B

Planning 3,2 4,4 Welding

Grinding 5,5 6,6 Assembly

1, 3 Milling

Product A Product B Machine of similar types are located together according to their function. Products move between the groups of equipments in order of the operational required.

Advantages

Lower initial capital investment as a machine is not tied to a simple product Change in product design & volume is easy Breakdown of one does not result in complete work stoppage.

Disadvantages

Material handling costs are high. More skilled labour is required. More frequent inspection is needed resulting in costly supervision.

Suitability
Product are not standardized. Quality of product is small. Job shop type of work is done. Machine are very expensive.

Fixed Position Layout

Ship Building Yard
Material Labour Equipment Finished Product shop

Equipment, labour & components are moved to the location, when the material being processed are large, very large, very heavy and difficult to move e.g. shipbuilding, Locomotive Manufacturing, wagon building & Aircraft.

Group Combined Layout

It is a combined form of product & Process layout for e.g. In soap manufacturing the soap is laid out in a straight line plants, one ancillary facilities like heading, Powerhouse, Glycerin plant and water treatment plant are arranged on functional bases.