Factors Affecting Plant Siting

Posted by The New Economics Education

Plant site selection requires careful consideration. In the current management has decided to operate at a particular location, a lot of costs into fixed and difficult to be reduced. Location decisions often depend on the type of business. For the location decisions of industry, the strategy is a strategy commonly used to meminmalkan cost, is for business and professional services kidding, strategies that focus on maximizing revenue. However, warehouse selection strategy is determined by a combination of cost and speed of delivery. In general, the purpose of location strategy is to maximize profits for the company's location.

The options that exist within the site include:
  1. Do not move, but expanding existing facilities 
  2. Maintain the current location, while adding other facilities elsewhere 
  3. Close the existing facility and moved to another location.
Plant site selection is influenced by several factors. These factors are different in practice its application for a plant with another plant, according to the product produced. Factors affecting the selection of sites in terms of the resulting product is as follows:
  1. Primary factors, ie factors that must be met, if not, then the operation can not function properly. 
  2. Secondary factors, ie factors that should be there, otherwise the operation can still be resolved at a cost of more expensive.

Factors influencing the selection of plant location are as follows:
  1. The location of the consumer or the market, the placement of plants in the region close to the consumer. The reasons underlying the selection of sites closer to consumers is the ease to know the changing tastes of consumers, reducing the risk of damage in transport, if the goods are not produced long-lasting, expensive transport costs, particularly for the production of services. 
  2. Sources of raw materials, the placement of plants in the region close to the raw material. The basic consideration is taken when the raw materials used by weight and volume shrinkage, easy rasak raw materials and changing the quality, high-risk raw material shortages. 
  3. Source of labor, an alternative that is used is whether unskill labor required, on account of low wages, simple living culture, mobiiitas tingp so that the amount of wages is considered as an attraction, labor or skill, if pemsahaan need fasilifeas better, the thinking bright future, it takes skill, and easier to find another job. 
  4. Water, adjusted to the resulting product does require a natural clear water, clear, unnatural, or any water. 
  5. Air temperature, these factors affect the smooth operation of process and quality results. 
  6. Electricity, generated a product tailored to the required voltage capacity. 
  7. Transportation, in the form of air transport, sea, river, rail, and highway transportation.
  8. Environment, society, and attitudes that arise when the factory was set up near where they live, whether accepted or not. 
  9. Government regulations, laws and tax systems. General aspects of the law is regulated maximum working hours, minimum wages, minimum working age, and working conditions. 
  10. Industrial waste disposal, to do with the level of pollution, waste disposal system for the protection of surrounding natural habitat and maintain balance. 
  11. Facilities for the plant, in the form of spare parts, machinery, to reduce costs. 
  12. Facilities for employees, in order to boost morale and health.

Along with the globalization, the selection of sites is becoming increasingly complicated. Globalization occurs because:
  1. Market economy 
  2. Better international communication 
  3. Travel and shipping faster and more reliable 
  4. Ease of movement of capital flows between countries 
  5. Differentiation of high labor costs.

An approach to select a location in a State is to identify what is believed by the central organization as a factor supporting the success (critical success factors, CSFs) necessary to achieve competitive advantage. Some of the considerations and factors that influence the location decision is described as follows:

 

Image. Factors affecting location decisions

The importance of the plant site selection is to determine the success of the company with operating costs, selling prices, as well as the company's ability to. compete in the market. Alternative site selection is a dikeiuarkan cost considerations compared with the level of benefits. Alternative site selection is whether the new plant is established, expansion, or relocation of existing plant. The alternative is the selection of a new plant if the new employer or new entrants. Relocation of an alternative selection of the old plant was not meeting the expected standards, and alternatives. selection based on the grounds that the expansion of production facilities deemed outdated, grow and market demand is greater than the productive capacity, and if the support facilities (production factors) is no longer sufficient.

{ 4 comments... read them below or add one }

0s0-Pa said...

As with most successful businesses, site selection is KEY. A bad plant site could lead to disaster, so get multiple opinions!
-Jon

The New Economics Education said...

@Jon..

Thanks so much for your additional... :)

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