Facility+location+decisions
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This document discusses facility location decisions in supply chain management. It covers why location is important, the factors to consider in location strategies, and three models used to evaluate potential locations: the weighted factor rating model, break even model, and center of gravity model. Location decisions have long term impacts and consider geography, delivery costs, and serving customers. Critical location factors include trade agreements, country competitiveness, taxes, infrastructure, labor, and quality of life issues.
Facility+location+decisions
- 1. DISC 333: Supply chain managementFacility Location Decisions
- 2. Why Facility Location?Long term impact on a supply chain;Evidence that innovation and competition are concentrated geographically;Geography affect the speed of delivery and cost in serving customers;Facility location decisions involve:Determining the location of the facility;Defining the strategic role of the facility;Identifying markets served by the facility;
- 3. Location StrategiesThe central question is: How will this location affect our performance by cost, access to talent, and access to customers?
- 5. Critical Location FactorsRegional Trade Agreements and the World Trade Organization;Competitiveness of Nations;Government Taxes and Incentives (tariffs, foreign trade zones, personal and corporate income taxes);Currency Stability;Access and Proximity to Markets/Customers;Environmental Issues;Labor Issues;Right to Work Laws;Access to Suppliers and Cost;Utility Availability and Cost;Quality of Life Issues;Land Availability and Costs;
- 6. Facility Location ModelsThe Weighted Factor Rating ModelThe Break Even ModelThe Center of Gravity Model
- 7. The Weighted Factor Rating ModelExample Calculation (for China):0.2 (100) + 0.15 (100) + 0.25 (80) + 0.3 (70) + 0.1 (80) = 84
- 8. The Break Even ModelA1600,000BC1200,000800,000400,0004,0003,0002,0001,000
- 9. The Center of Gravity Model