difference between plant layout and process layout

And businesses with more than one facility may need to consider how far to spread their locations in order to maximize market coverage. The location of competitors may also be a consideration. Other firms may gain a competitive advantage by locating their facilities so that customers can easily buy their products or services. When a factory or service center is close to customers, the firm can often offer better service at a lower cost. Other firms may find that locating near customers can provide marketing advantages. Instead, the firm will need to assess the difficulty and costs of distributing its goods to customers from its chosen location. For some firms it may not be necessary to be located near customers. Marketing Factorsīusinesses must evaluate how their facility location will affect their ability to serve their customers. In the case of the water-bottling company, a ready pool of relatively inexpensive labor was available due to high unemployment in the areas. Payroll costs can vary widely from one location to another due to differences in the cost of living the number of jobs available and the size, skills, and productivity of the local workforce. The availability and cost of labor are also critical to both manufacturing and service businesses, and the unionization of local labor is another point to consider in many industries. The business helps diversify the town’s economy and created 40 new, much-needed jobs. In Los Lunas, New Mexico, it made sense for Niagara Purified Drinking Water to produce purified bottled water in a 166,000 square foot building that was vacant. Bottlers are discovering that rural western communities in need of an economic boost make rich water sources.

Mining companies want to be near ore deposits, oil refiners near oil fields, paper mills near forests, and food processors near farms. The cost of shipping raw materials and finished goods can be as much as 25 percent of a manufacturer’s total cost, so locating a factory where these and other costs are as low as possible can make a major contribution to a firm’s success.Ĭompanies that use heavy or bulky raw materials, for example, may choose to be located close to their suppliers. Executives must assess the availability of raw materials, parts, equipment, and available manpower for each site under consideration. Access to these resources, or inputs, is a huge consideration in site selection. What factors determine where auto companies locate their operations? (Credit: Daniel Chou/ Flickr/ Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0)) Availability of Production InputsĪs we discussed earlier, organizations need certain resources to produce products and services for sale. plant recently produced it four millionth vehicle and now employs 9,000 employees in its six million square foot plant. Exhibit 10.6 Facing stiff competition from rival automobile companies and sagging demand among German consumers, Germany’s BMW (Bavarian Motor Works) opened a factory in Spartansburg, South Carolina.

Difference between plant layout and process layout