Factors Influencing Plant Location Selection
Plant location selection is crucial for businesses, considering factors like proximity to raw materials, transport facilities, market accessibility, labor availability, and more. An ideal location minimizes costs, maximizes market share, and ensures social gains. Other factors include climatic conditions, financial support, community attitudes, and infrastructural amenities. The nearness to raw materials reduces transportation costs, while transport facilities impact both raw materials and finished goods movements. Understanding these factors is essential for optimizing production and distribution processes.
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FACTORS INFLUENCE THE SELECTIONOF PLANT LOCATION PRESENTED BY : SHIKHASINGH ROLL NO:160617009 UNDER THE GUIDANCE OF: DR MAHALAKSHMI RATHNANAND DEPARTMENT OFPHARMACEUTICS MCOPS MANIPALUNIVERSITY
CONTENTS Definition Introduction Factor affecting plant location Conclusion References 1
DEFINITION A plant is a place where men, materials, money, brought together products. equipment, machinery, etc are for manufacturing Plant location refers to the establishment of an industry at a particular place. 2
INTRODUCTION Plant location refers to the choice of region and the selection of a particular site for setting up a business orfactory An ideal location is one where Cost of the product is kept tominimum With a large market share Least risk & maximum socialgain It is the place of maximum net advantage or which gives lowest unit cost of production and distribution. 3
FACTORS AFFECTING THEPLANT LOCATION Nearness to raw materials. Transport facilities Nearness to market Availability of labour Availability of fuel & power Availability of water 4
Climatic condition Financial & other aids Land Community attitude Presence of related industries Existence of hospital, marketing centres, schools, banks post offices, etc Local bye-laws, taxes, building ordinance, etc Housing facilities Facilities for expansion Security 5
NEARNESS TO RAWMATERIALS It will reduce the cost of transportation of raw materials from the vendors end to the plant When the supplier of raw material is near the facility, then the immediate supply of the raw materials will be available 6
TRANSPORTFACILITIES Money is spent in transporting raw material as well as finished goods Depending on the size of a raw materials and finished goods A suitable method of transportation such a road, rail, water or air is selected & accordingly plant location is decided The cost of transportation must compared to the total cost be fairly small 7
NEARNESS TOMARKET It reduces the cost of transportation as well as the chances the finished products getting damage to transport the goods while Moreover a plant being near to the market can catch a big share of the market & can render quick service to the customers 8
AVAILABILITY OF LABOUR The labour should be stable, with proper attitude towards work and available at reasonable rates. Should be managed in such a way that the chances of boycotts, strikes or lockouts are less and the facility is able to achieve low labour cost per unit production. 9
AVAILABILITY OF FUEL & POWER Because of the wide spread use of electric power, in most cases fuel has not remained a leading factor for plant location Electric continuously, in proper quantity and at reasonable rates. power should be available 10
AVAILABILITY OF WATER Water is used for processing, drinking, and sanitary purposes For a pharmaceutical industry, water should be available in adequate quantity and should be of proper quality Pharmaceutical industry should not be located in an area known for its water shortage 11
CLIMATIC CONDITION Due to ventilation & air conditioning), climate of a region doesn t present much of a problem. However, usage of HVACneeds capital development of HVAC (heating, Facilities located in humid areas should consider the relative humidity of the place & its effects on the product. Thus regulating the relative humidity is also important. 12
FINANCIAL & OTHERAIDS Some states gives aids in the form of loans, feed money, subsides, machinery, etc to attract industrialists Special economic zone has economic law which is different from typical country s economic laws SEZ offer tax breaks to foreign investors SEZs are located within country s national borders aims to increase trade, increase investments, job creation & effective administration 13
LAND Topography, area, shape of the site, cost, drainage and other facilities as well as the probability of floods influence the selection of site. and earthquake 14
PRESENCE OF RELATEDINDUSTRIES Like packaging industry or a firm which produces raw materials could be helpful to the new industry which could get the raw materials from the nearby firm. 15
EXISTENCE OF HOSPITALS,MARKETING CENTERS, SCHOOLS, BANKS ETC For the future benefits of the staffs and their family. 16
HOUSING FACILITIES Accommodations employees of higher rank, thus should be housing facilities in the selected site. are given to the there 17
FACILITIES FOREXPANSION While selecting the land for a plant site, it should be seen that there s plenty of land for future expansion of the industry 18
LOCATION OF A FACTORY IN A BIG CITY Generally factories are located in big cities for obvious reasons of skilled labour, market for both raw material and end products ADVANTAGES: All types of skilled man power is available Repair, maintenance and service facilities for various utilities are available in abundance Big markets for sale of products available 19
CONTI Many similar industries /plants exist in nearbyareas. Housing facilities for workers and employees. Police and fire protection facilities available in near byareas. DISADVANTAGES: Insurance and taxation rates arehigh Due to higher living standards, cost of consumer goods and wages rates are high Cost of land is more if needed for expansion of the plant etc 20 Possibilities of expansion are minimum due to scarcity of land
LOCATION OF AN INDUSTRY IN SMALLTOWN ADVANTAGES: DISADVANTAGES: Less labour trouble Lack of skilled labour Lower rents in comparison to big cities and urbanareas Lack of facilities for staffs Police and fire protection less satisfactory Noise not much problems Transportation & marketing facilities not satisfactory as required 21
REFFERENCES O.P. Khanna s, Industrial Engineering and Management 17th Edition Dhanpat Rai Publications, Edition: 2010 ISBN: 9788189928353, page no. Cvs Management, edition, ISBN: 8185731403, page no. Subrahmanyam Pharmaceutical VallabhPublications Production / Prakashan, 1st & 23
