Factors Influencing Plant Location Selection
FACTORS
INFLUENCE
THE
SELECTIO
N
OF
P
L
ANT
LOCATION
PRESENTED BY
: SHIKHA
SINGH
ROLL
NO
:160617009
UNDER THE GUIDANCE
OF
:
DR
MAHALAKSHMI
RATHNANAND
DEPARTMENT
OF
PHARMACEUTICS
MCOPS
MANIPAL
UNIVERSITY
CONTENTS
•
Definition
•
Introduction
•
Factor
affecting
plant
location
•
Conclusion
•
References
1
DEFINITION
2
•
A
p
l
ant
is
a
p
l
a
c
e
where
me
n
,
m
aterials,
money,
b
r
o
u
ght
e
q
u
i
pm
e
n
t
,
m
a
chi
n
er
y
,
etc
are
t
o
get
h
e
r
f
o
r
m
anu
f
a
c
t
u
ri
n
g
products.
•
Pla
n
t
l
ocation
refers
to
t
h
e
e
s
tablishm
e
nt
of
an
industry
at
a particular
place.
INTRODUCTION
3
Plant location refers
to
the
choice of region
and
the selection of
a
particular
site
for
setting
up a business or
factory
An ideal location
is
one
where
Cost of the product
is
kept
to
minimum
With
a
large
market
share
Least risk &
maximum social
gain
It
is the
place of
maximum
net
advantage or which gives
lowest unit
cost
of
production and
distribution.
FACTORS
AFFECTING
THE
PLANT
4
LOCATION
Nearness to raw materials.
Transport
facilities
Nearness to
market
Availability
of
labour
Availability
of fuel &
power
Availability
of
water
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
RAW
MATERIALS
6
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
TRANSPORT
FACILITIES
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
be
fairly
small
compared
to
the
total
cost
7
NEARNESS
TO
MARKET
8
It reduces
the
cost
of
transportation
as
well
Moreover a plant being near to
the
market
can
catch a
big
share
of the
market & can
render quick service to
the
customers
AVAILABILITY
OF
LABOUR
9
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.
AVAILABILITY
OF
FUEL
&
POWER
10
•
Because
of the
wide spread use
of
electric
power,
in most cases fuel has
not
remained
a leading factor
for
plant
location
•
Electric power should
be
available
continuously,
in proper quantity
and
at
reasonable
rates.
AVAILABILITY
OF
WATER
shortage
11
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
CLIMATIC
CONDITION
Due
to
development
of
HVAC
(heating,
ventilation
&
air
conditioning),
climate
of
a
region
doesn’t
present
much
of
a
problem.
However,
usage
of
HVAC
needs
capital
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
&
OTHER
AIDS
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
14
Topography,
area, shape
of the
site, cost,
drainage and other facilities
as
well
as
the
probability
of floods
and earthquake
influence the
selection
of
site.
PRESENCE
OF
RELATED
INDUSTRIES
15
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.
EXISTENCE
OF
HOSPITALS,
MARKETING
16
CENTERS,
SCHOOLS
,
BANKS
ETC
Fo
r
t
h
e
f
u
t
u
re
ben
e
fi
t
s
o
f
the
sta
f
fs
and
their
family.
HOUSING
FACILITIES
17
Ac
c
o
m
m
o
dations
are
g
i
ven
to
employees
of
higher
rank,
thus
t
h
e
th
e
re
should
be housing
facilities
in
the selected
site.
FACILITIES
FOR
EXPANSION
18
While selecting
the
land
for
a plant site, it
should
be
seen that
there’s
plenty
of
land
for future expansion of the
industry
LOCATION
OF
A
FACTORY
IN
A
BIG
Big
markets
for sale of products
available
19
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
CO
N
TI…
Many similar
industries /plants exist
in
nearby
areas.
Housing
facilities
for workers and
employees
.
Police and fire protection
facilities
available
in
near by
areas.
DISADVANTAGES:
Insurance and taxation rates are
high
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
Possibilities
of expansion are
minimum
due
to
scarcity of
land
20
LOCATION
OF
AN
INDUSTRY
IN
SMALL
TOWN
ADVANTAGES:
Less
labour
trouble
Lo
w
er
rents
i
n
co
m
parison
to big cities and urban
areas
Noise
not
much
problems
DISADVANTAGES:
Lack of skilled
labour
Lack of
facilities
for
staffs
Police and
fire protection less
satisfactory
Transportation
&
marketing
facilities
not
satisfactory as
requi
r
ed
21
REFFERENCES
O.P.
Khanna’s,
Industrial Engineering
and
Management
17th
Edition
Dhanpat Rai
Publications, Edition:
2010
ISBN:
9788189928353, page
no.
Produ
c
tion
&
/
Prakashan,
1
st
Cvs
Subrah
m
anyam
Phar
m
aceut
i
c
a
l
Management,
Vallabh
Publications
edition,
ISBN:
8185731403, page
no.
23
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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Presentation Transcript
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
