Facility Location Is Actually A Term

Published Date: 02 Nov 2017

In factor rating method, first we find the most important factors in evaluating alternative sites for the new facility. Then weights are assigned between 0.1and 1 to each of these factors.

Cost-Profit-Volume Analysis:

Cost-profit-volume analysis can be used to identify the location with the lowest cost when there is difference in fixed and variable costs for each site then

Dimensional analysis method:

Under this method, Plant site that incurs least cost is selected. It is easy to select a plant site when all costs are tangible however there are many intangible costs, which are difficult to evaluate in absolute terms (educational facilities etc.) Since both tangible & intangible costs need to be considered thus a system of relative merits is considered.

Brown & Gibson Model:

This model is more elaborate & considers three classes of site location factors: Critical, e.g. water for a refinery Objective....e.g. labour costs, raw material costs. Subjective, e.g. recreational facilities, union activities.

FACTORS AFFECTING FACILITY LOCATION

There are various factors affecting selection of facility location:

AVAILIABILITY OF RAW MATERIAL

As a manufacturing unit is engaged in the conversion of raw material into finished goods, it is very essential that it should be located in a place where the supply of raw materials is assured at minimum transport cost. The sugar industry, the paper industry, the iron and steel industry, the industries engaged in the solvent extraction of oil from rice bran, the china clay washery, factories manufacturing low tension porcelain insulators, and the like should be located near the sources of their raw materials.

Nearness to raw material offers various advantages as:

Reduced cost of transportation

Regular supply of material uninterrupted by transportation breakdown.

Savings in cost of storage of material

AVAILABILITY OF POWER

Power is essential to move the wheels of an industry. Coal, electricity, oil and natural gas are the sources of power. Where coal is source of power, as n the case of iron and steel industry, factory has to be located near to the coal mines. Also electricity as a source of power has become very significant in modern industries because of ease in handling, cleanliness, flexibility and cheapness.

TRANSPORT FACILITY

Availability of transport facility is very important. They are essential for bringing raw material and men to the factory and for carrying finished goods from factory to market. Places with existing transport facilities are perfect for plant location.

SUITABILITY OF CLIMATE

Climate as a factor has its own importance in location of plant. There are some industries which because of their nature of production require particular climatic conditions. For example: humid climate for cotton textile and jute. That is why mostly cotton industries are situated in Mumbai. Climate also effects labour efficiency. Extreme climate condition adversely affects labour efficiency and such places donot attract industries.

GOVERNMENT POLICY

The influence of government policies and programmes on plant location is apparent in every country particularly planned economies like us.

Also the Government of India has been influencing plant location in number of ways. Some are licensing policy, freight rate policy, institutional finance and government subsidy.

AVAILABILITY OF LABOUR

Despite of mechanization and automation, importance of labour on industrial side has not completely been lost. Labour is very important factor of production. Adequate supply of labour at reasonable wages is very essential for smooth working of an organisation.

Locations of glass factory at Firozpur, woollen carpet industry at Mizapur are examples of industries situated near the supply of skilled labour.

LOCAL TAXES AND RESTRICTIONS

Local authorities collect charges for supply of water, electricity, and other facilities. They also collect various taxes from industrial units. They impose restriction on local new units in public interest. Therefore, areas with fewer restrictions are preferred.

DIFFERENT FACTORS IMPOERTANT ARE TO DIFFERENT INDUSTRIES SUCH AS:

• Factors such as environmental, safety, socio-economic and also the engineering factors affect the construction and operation of nuclear power plants to be located in different parts of the country.

• Nearby regions of Jharkhand, Bengal, Chhattisgarh and Orissa regions are best suited for steel plants as choice of this site is mainly because of more economical transport of the finished goods as compared to basic raw materials.

• Plants which manufacture cement are located near the lime and the coal deposits.

• Namroop and Thal Vaishet, both act as very important sites for the gas-based fertilizer plants. Coal based fertilizer plants at Ramagundum are located near the source of raw materials (coal).

• Naptha / oil based fertilizer plants at Mangalore, Madras, Cochin have been located near ports, which act as a great source for the import of the raw materials.

• ‘Nearness to market’ forms a major factor which affects plant location decisions in case of heavy machine tool industries therefore for such industries sites are scattered over different parts of the country such as Ludhiana, Pune, Bangalore, Calcutta, Mumbai etc.

• Information Technology/Software Industries depend largely on availability of skilled personnel, infrastructure etc Because of these reasons most of such organizations operate in urban areas such as Delhi, Chennai, Hyderabad, Bangalore etc.

FACILITY LAYOUT

Special attention is given to facility layout as is very important for an organization to have an effective and efficient manufacturing unit. Facility layout is an arrangement of different aspects of manufacturing in an proper manner as to achieve desired production results effectively and efficiently. Facility layout considers available space, final product, safety of users and facility and convenience of operations.

An effective facility layout ensures that there is a smooth and steady flow of production material, equipment and manpower at minimum cost. It also looks at physical allocation of space for economic activity in the plant. Therefore, main objective of the facility layout planning is to design effective workflow as to make equipment and workers more productive.

OBJECTIVES OF FACILITY LAYOUT

A facility layout should be what that is able to provide an ideal relationship between raw material, equipment, manpower and final product at minimal cost under safe and comfortable environment. An efficient and effective facility layout can has following objectives:

Provide optimum space to organize equipment and facilitate movement of goods and to create safe and comfortable work environment.

promote order in production towards a single objective

reduce movement of workers, raw material and equipment

Promote plant safety as well of workers.

facilitate extension or change in the layout to accommodate new product line or technology up gradation

increase production capacity of an organization

The above-mentioned objectives can be achieved by an organisation by ensuring the following:

There should be Better training of the workers and supervisors.

Creating awareness about of health hazard and safety standards

There should be optimum utilization of workforce and equipment

Encouraging empowerment and reducing administrative and other indirect work

FACTORS AFFECTING FACILITY LAYOUT

Facility layout decision and implementation is affected by number of factors that may vary from industry to industry. These factors are:

The design of the facility layout should consider overall objectives set and goals of an organization.

Optimum space needs to be allocated for process and technology.

A proper safety measure as to avoid mishappenings.

Overall management policies and future direction of the organization

DESIGN OF FACTORY LAYOUT

Objective, factors influencing facility layout and constraints of facility layout of facility layout is main consideration to be in mind for designing of facility layout. Principles for design of facility layout are as follows:

Flexibility: Facility layout should provide flexibility for expansion or modification.

Space Utilization: Optimum space utilization should be insured as it reduces the time in material and people movement and promotes safety.

Capital: Capital investment should be minimal when finalizing different models of facility layout.

TYPES OF FACILITY LAYOUT

There are six types of facility layout and they are:

Line Layout

Functional Layout

Fixed Position Layout

Cellular Technology Layout

Combined Layout, and

Computerized Relative Allocation of Facility Technique

THREE ORGANISATIONS AND THEI RFACILITIES TO BE STUDIED HERE ARE:

TATA IRON AND STEEL COMPANY LIMITED, JAMSHEDPUR PLANT

MALWA COTTON SPINNING MILLS LTD, PUNJAB AND HIMACHAL PRADESH

TATA IRON AND STEEL COMPANY LIMITED

COMPANY PROFILE

Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) is an Indian multinational steel-making company headquartered in Mumbai, Maharashtra, India, and a subsidiary of the Tata Group. It is the 12th-largest steel producing company in the world, with an annual crude steel capacity of 23 million tonnes approximately, and the largest private-sector steel company in India measured by domestic production

Tata Steel has manufacturing operations in 26 countries, including Australia, China, India, the Netherlands, Singapore, Thailand and the United Kingdom, and employs around 81,500 people .Its largest plant is located in Jamshedpur, Jharkhand. In 2007 Tata Steel acquired the UK-based steel maker Corus in what was the largest international acquisition by an Indian company to date.

In 1919 Lord Chelmsford named the city Jamshedpur in honour of its founder, Jamshedji Nausherwanji Tata, whose birthday is celebrated on 3 March as Founder's Day. J. N. Tata had written to his son Dorabji Tata about his vision of a great city in the area.

The city has several nicknames including 'Steel City' (which was referenced during TATA Steel's 'Green City - Clean City - Steel City' campaign); 'Tatanagar after the name of its railway station Tatanagar Railway Station or simply 'Tata' in deference to the significant presence of Tata companies in the city and its adjoining areas.

Factors affecting location of Tata iron and steel plant at Jamshedpur are:

1) Easy availability of water was there as plant was located near the confluence of the rivers Subarnarekha and Kharkai in Jharkhand.

2) Transport facility was easily available as Jamshedpur was only 32 km away from Kalimati station on the Bengal-Nagpur railway line.

3) It was close to the iron ore, coal and manganese deposits as well as to Kolkata, which provided a large market.

4) Easy availability of raw material as TISCO gets coal from Jharia coalfields, and iron ore, limestone, dolomite and manganese from Orissa and Chhattisgarh.

5) The Kharkai and Subarnarekha rivers ensured sufficient water supply. Government initiatives provided adequate capital for its later development.

MALWA COTTON SPINNING MILLS LTD, PUNJAB AND HIMACHAL PRADESH

COMPANY PROFILE

Malwa Cotton Spinning Mills Ltd., an ISO 9001:2000 company, a major yarn producer and manufactures. We produce acrylic cotton yarn, high bulk acrylic yarn, dyed yarn, polyester yarn, polyester cotton yarn, viscose yarn, dyed viscose yarn and viscose cotton yarn. Our units are across Punjab & Himachal Pradesh with total installed capacity of 143856 spindles and a strong, skilled workforce of 5000 persons including highly experienced textile professionals. Our units are equipped with hi-tech state-of-the-art machineries from world-renowned textile machinery manufacturers like Rieter, Trutszler, Crossrol, Schlafhorst and Savio. All the above process machines are also equipped with latest on-line quality control equipments combined with computerized information system. Worldwide recognized & accepted high reliability Uster quality control equipments form the core of our R&D and constant monitoring quality control department. Please feel free to contact us for ask more details.

Factors that lead to location of Malwa Cotton Spinning Mills ltd. at Punjab and Himachal Pradesh

Punjab, Haryana and western Uttar Pradesh produce large quantity of long staple cotton which plays significant role in the localisation of the industry in this region.

the facilities of proximity of raw materials, skilled labour, capital

there is benefit of good transport and humid climate

Nearness to market.

COMPARITIVE ANALYSIS OF 3 ORGANISATIONS

FACTOR AFFECTING LOCATON OF PLANT

TATA IRON AND STEEL COMPANY LIMITED, JAMSHEDPUR PLANT

MALWA COTTON SPINNING MILLS LTD, PUNJAB AND HIMACHAL PRADESH

Raw material

Essential to be located near to the raw material place to reduce transportation cost

Sugarcane as raw material They loose weight as well

Essential to be located near to the raw material place to reduce transportation cost

Iron ore as raw material is richly available at this place

Not essential that plant to be located near to source of raw material.

Doesn’t lose weight

Availability of power

As coal is source of power, this industry should be located near coal fields

Electricity availability is important

Suitability of climate

Proper rainfall in this area suitable for industry

Very important. Humid climate is required

Availability of labour

Cheap labour

Cheap and skilled labour

Availability of water

Easily available. Plant located near to affluence of rivers.

Availability of water necessary. Punjab and Himachal Pradesh are good for this.

Transport facility

Easy availability of transport is there.

Good transport facility is available and required also