Introduction to Plant Location and Plant

Layout:-
 Plant Location / Facility Location:-
Facility location is the process of identifying the best geographical
location for setup a service or production facility.

 Plant Layout / Facility Layout:-

Plant layout refers to the configuration of departments , work-
centres, equipment and machinery with focus on the flow of
materials.
In other words , A plant layout refer to the arrangement of
machinery, equipment and other industry facilities - such as
receiving and shipping department, tool rooms, maintenance rooms
, etc. for the purpose of achieving the quickest and smoother
production at the least cost.

 Significance of plant location and layout in production and

operations management:-

1. Importance of Plant Location:

I. Cost Effectiveness: The right location will help cut down on
the transportation, labour, and raw material expenses. Close
proximity to both suppliers’ and customers’ sites lowers the
costs of logistics.

II. Access to Resources: Locating somewhere close to

important things such as raw materials, skilled labour, or
utilities is important for ensuring efficient operations of a
business.
III. Market Accessibility: If the product comes from a plant
geographically close to the market, customer orders can be
fulfilled faster and takes less time which enhances customer
satisfaction.

IV. Legal and Environmental Constraints: There are factors

such as the local laws, taxation policies, environment and other
factors which affect the location of the plant. Customers often
target industries that receive support from the government in
the form of subsidies and tax exemptions.

V. Infrastructure and Utilities: Production would not be

adequate and continuous without sufficient technical resources
such as roads, harbours, electricity and water.

2. Important of Plant Layout :

I. Efficient Workflow: A properly designed layout promotes an
orderly movement of the processes as well as the materials
around the plant, which reduces lead time and cost of
operations.

II. Optimal Use of Space: A great care is taken in the layout

planning so that the available resources are fully utilized and
operational growth does not get bottlenecked.

III. Improved Safety and Working Conditions: A well-organized

layout provides for the orderly organised equipment and
 machines such that as clear passageways are provided for,
chances of accidents are well minimized.

IV. Flexibility: Changes in product types, the introduction of new

technologies, or even an increase in the manufacturing volume
leads to a need for change in the layout.

V. Increased Productivity: Growth in productivity in every

organization depends to a great extent on the layout design
because it centralizes delays, minimizes handling and
processing of materials, and all other procedures that slow
down efficiency which leads to a reduction of operating
expenses.

Plant Location:-
As we previously discussed the meaning of plant Location so now,
we are going to start for factor affecting plant location.

Factors Influencing Plant Location / Factors

affecting plant location decisions:
1. Sourcing:
i. Availability of Raw Materials and Labours
ii. Availability of Natural Resources
iii. Proximity to Suppliers
iv. Availability of Internet Connection

2. Markets:
 i. Proximity to Market
ii. Proximity to Large Customer Base
iii. Connectivity

3. Cost:
i. Less Transportation Cost
ii. Cost of Land
iii. Tax , and Other Duties
iv. Lesser Lease or Rental Cost

4. Environmental Concerns:
i. Climate
ii. Earthquake, etc.

5. Community and Political Issues:

i. Supportive Community and Political Stability

 Methods of Plant Location Selection:

There are two Methods for selection of plant Location
i. Qualitative Methods
ii. Qualitative Methods

1.Qualitative Methods :
Qualitative Methods refers to those methods which does not
contains any numerical and mathematics values it includes
A. Brainstorming Method :
It is a problem solving technique which provides us a large
numbers of solution in short time. It is mainly done in groups
but it can also done by individuals.
 B. Delphi Method :
In this type of technique experts give their opinions on the
topic or is issue and it involve number of rounds where
experts provide their solutions and later the solution are
summarise which is given by the experts .
C.Nominal Group Technique (NGT) :
Nominal group technique is a type of group decision -
making to generate a idea on particular topic later the idea is
given by each individual is anonymously rank to get a clear
idea for the best option

2.Quantitative Methods :
Quantitative methods refers to those methods which include
numerical and mathematical value to calculate day location
alternatives.

a. Factor Rating Method:

It is a quantitative method which is used to select the
location of plant based on the various factors. In this method
we used to assign weights to various factors which affect the
location.
- Steps:-
i. Develop a list of factors affecting the location
ii. Assign weights to the factors considered for
evaluation.
iii. Generate a scale for each factor ( e.g, 1 -10).
iv. Allot a score to each location for each factors ,
using the scale developed in the above step.
v. Multiply the score by the weight for each factor of
each location.
 vi. Now, add the score of each location.
vii. Select the location with higher score.

Hence, In this above picture we will choose the location “B”

because it has the greater score than location “A”.

b. Centre – of – Gravity Technique:

Centre of gravity technique is mainly used to find the location
of the distributive centre that minimise distribution caught
and increase efficiency and also reduce the delivery time.
- Steps:-
i. Identify the location of markets .
ii. The volume of goods skip to those markets .
iii. Please location on a co-ordinate graph or chart.
iv. Calculate its and why co-ordinate for centre of
gravity
 v. Then put all data in graph , after putting the all data
you will get the location for plant setup.

Hence , this figure showing how the centre of gravity

graph look like after all processes.

c. Locational Break Even Analysis:

It is a method of cost volume analysis used for industrial
locations. It helps to determine the total cost of each location
alternative so that manager can select the cost effective
location alternative.

- Steps:
i. Identify the location alternatives.
ii. Determine fixed cost and variable cost of it location.
iii. Calculate the total cost for each locations.
 iv. Select location with the lower total cost for expected
production volume.

Hence, In this above picture company choose the “

Brussels” location because it has least total cost, but if
company want to produce 1000 unit then they will
choose location “Athens” and if company want to
produce more than 1000 but less than 2500 then they
will choose location “Brussels” and if they want to
produce more than 2500 then they will choose location
“Lisbon”.

d. Point Rating Method:

In point rating method we assign points to factors and
accordingly we give points to location for selecting a best
location.
- Steps:
i. Identify to factors .
ii. Assign points to all the factors .
iii. Accordingly assign points to the location alternative.
 iv. The site with the highest total number of points is
considered superior to other site.

 Case study analysis :

Maruti Suzuki India Ltd . – Location Decision

Maruti Suzuki India limited is a leading automobile manufacturing

in India, had strategically set up multiple production plant across
the country. The most important plans location are in Haryana
and Gujarat to optimise products and distribution.

- Rationality behind this choice:

i. Proximity to Market: Company choose this
location because it is closer to Delhi NCR, which is
India's major automobile market and Gujarat offers
better port facility to export the product.
ii. Infrastructure: Both religions provide good road ,
rail , ports facility.
iii. Government Support: Both Haryana and Gujarat
get tax benefit and subsidies from government.
iv. Cost Effective: Cheap land , access to raw
material and local suppliers reduce operational
expenses.

- Success :
 • Maruti Suzuki plant location decision is highly
successful because it dominating the Indian market with
over 40% of market share.
• The Gujarat plants location near ports help to boost
Maruti Suzuki export capabilities in both domestic and
international market.

• The company multi location setup help to increase

production capacity by 2 million cars which help them to
meet growing demand.

Plant Layout:
As we previously discussed the meaning of plant Layout now, we
are going to start for factor affecting plant Layout.

Factors Influencing Plant Layout / Factors

affecting plant layout decisions:
1.Plant location :- Such as plant size , type of building is affect
the plan layout . Suppose if plant size is too big then there is
different layout and if plant size is small then there is different
layout.
 2.Natute of product :- Plant layout is also depends on nature of
the product like , Bulky product have different layout and
different for small layout.

3.Type of Industry:- There is different layout for intermittent

industry and different layout for continuous industry.

4.Production Volume:- High-volume production usually favors a

product layout (assembly line), while low-volume production can
choose batch production or fixed production layout or etc.

5.Type of Material:- Layout is also depends upon which type of

material is used by company (such as solid, liquid, heavy, light,
small, big and etc.)

Criteria for Plant Layout Design / Plant Layout

Principles:
1.Principal of minimum travel :- Men and material should travel
the shortest distance between operations so as to avoid waste of
labour and time and minimise the cost of material handling.
2. principal of sequence:- Machinery and operation should be
arrange in sequence. This principle based achieve in product
layout.

3. Principle of usage:- Every unit of available space should be

efficiently utilised.

4. Principal of safety and satisfaction:- The layout should

contain build in provisions for safety for the work man. It should
also be planned on the basis of the comfort and convenience of the
workers so that they feel satisfied.

 Types of Layout:-
1.Product layout / Flow – line layout:-

- This type of plant layout is useful when the production process is

organised in a continuous or repetitive way.

- In this layout material is feed into first machine and finish product
come out from last machine.

- If there are more than one line production then there are many
lines of machines.

- There are special purpose machines.

Advantages Disadvantages
1. Insert smooth flow of 1. Lack of flexibility.
operation.
2. Minimise the cost of 2. Boring and repetitive job.
production.
3. Large volume of output in less 3. Less scope of expansion.
time.
4. Less supervision required. 4. Need different type of
machines for each products.
5. Optimum utilisation of 5. Huge initial investment.
resources

2.Process layout / Functional layout:-

- This type of plant layout is useful when the production process is

organised in batches.

- Equipment’s machinery and personal to perform the same

function are allocated in this same area.

- The different items have to move from one area to another

according to sequence.

- There are general purpose machine.

Advantages Disadvantages

1. Increase flexibility. 1. Requires more investment

and space.
2. Handle a variety of products. 2. It increase the cost of
production.
3. Breakdown in a machine do 3. Most Supervision required.
not lead to halt in production as
substitute machines are there.
4. Ensure fully utilisation of 4. Time consuming process.
machines and equipment’s.

3.Fixed Position layout:-

- In fixed position layout the item being worked on remains

stationery and workers, materials, and equipments are move about
as needed.

- It is widely used for building planes, shapes, roads and etc.

- This type of layout use when moving cost of product is very high.

Advantages Disadvantages
1. Precise control over design 1. Inefficient use of space.
elements.
2. Easy to implement complex 2. Less flexibility.
designs.
3. Suitable for large products. 3. High cost for moving workers
and tools.
4. Reduce the risk of diamonds 4. Can lead to delay if resources
during transportation. are not available when needed.

4 . Combination Layout:-
-A combination layout is a blend of process layout and product
layout.
-These days pure product or process layout are rare.
-A combination layout is possible where an item is being made in
different types and sizes.

Advantages Disadvantages
1. Production time will reduce. 1. High investment.
2. Optimum utilisation of 2. Complex process.
resources.
3. Easy for manufacturing 3. More space required.
complex products.
4. Wide variety of products can 4. Less flexible.
be produce.

 Practical Application:
Toyota Motor Corporation
Toyota motor corporation is a world leader in automobile
manufacturing. Toyota use a product layout as a part of its just
– in – time( JIT ) production system.

o Type of Plant Layout:-

Toyota use production layout where the equipment
workstation and machines are arrange in sequence. Each
unit or product flow from same path from starting to finish.

o How layout support production strategy:-

1.Increase efficiency:-a good layout support this mood flow
of products and enhance the quality and take less time.

2.Waste reduction:- By optimising space and arranging

equipment in proper logical manner will reduce the wastage.

3.Enhance communication and coordination:- In Toyota

layout they also focus on the communication and
coordination part which is very important for smooth flow of
production and operation efficiency.
 4. Cost saving:- A efficient layout reduce operational cost by
reducing the waste factor and support cost effective
production strategy.

 Comparative Analysis:-