Although location decisions are made infrequently for most businesses, they can have a lasting impact on the business's profitability and success. Existing companies usually have to make location decisions when they are planning on expanding, which can include expanding an existing facility, adding new locations, or re-locating the existing locations. Unlike other business processes that can be quickly and easily adjusted over time, changing location decisions can be an extremely time-consuming and costly initiative. One of the biggest challenges in finding a suitable location for your facility is that it might be impossible to find one location that is arguably "better" than the other options. This is because there is a multitude of factors that can greatly influence an organization’s decision on where to locate its various operations. In this article, we will outline a general procedure for making such decisions and identify some of the common factors and considerations pertaining to this topic. With the rise of globalization, many organizations dispersed their manufacturing facilities and operations in various locations around the world. For many years, most companies were benefiting greatly from the reduced costs associated with transportation, labor, and raw materials. While offshoring has offered many benefits to companies, there are also additional challenges and risks that come with it. The recent events of the COVID-19 pandemic have highlighted the risks associated with offshoring operations. As restrictions were imposed in facilities around the globe, the world has experienced a surge of shortages and delays. In recent years, manufacturing facilities have seen a shift towards re-shoring their operations to reduce the complexity of the supply chain and allow companies to have greater control over their production process. In addition, rising labor costs in foreign countries, issues with long transportation times, and the rise of automation are making many companies to re-think their facilities' locations.Location Decision General Procedure
A Note on Offshoring and Global Outsourcing
Multi-Plant Organizations
As we have seen in the above sections, it can be a real challenge to find a single location that meets your every needs. Some organizations will choose to have multiple plants that concentrate on different processes. These have the advantage of choosing the best location for each process. For example, initial material transformation processes will benefit from being close to the source of the raw materials while later assembly processes may benefit from being located closer to the end customers.
In this case, it is more important than ever to ensure good communication through all of a corporation's facilities. In order to coordinate across multiple manufacturing and shipping hubs, an Advanced Planning and Scheduling (APS) and an ERP system should be able to communicate with every facility in real-time. Delays in communication can cause costly mistakes, production overruns, and shipping errors.
With two breweries, we need PlanetTogether's analytics tools for increased visibility between our plants. If something happens in Fort Collins, we can now understand our capacity in Asheville, and vice versa. Having PlanetTogether for inter-plant communication is imperative.BRIAN GOODWIN, MASTER SCHEDULER, NEW BELGIUM BREWING
That is why the ability to update schedules across multiple facilities, quickly add or change orders, and keep internal supply chains in sync becomes essential for optimized operations. Eliminating those delays should be the top priority for operations managers who are looking for ways to improve corporate performance and global planning.
PlanetTogether's Advanced Planning and Scheduling software allow manufacturers to perform concurrent planning and scheduling processes and see the impact in all of their facilities in one place. Making changes to the schedule in one plant will automatically be reflected in all of the others to keep things running smoothly and avoid delays in communication.
If demand for a particular item increases, the scheduling software is able to split the work between all available facilities to ensure that work is able to run in the most efficient manner possible.
Advanced Planning and Scheduling (APS) Software
Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.
With PlanetTogether APS you can:
- Create optimized schedules that balance production efficiency and delivery performance
- Maximize throughput on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to resource capacity
- Enable scenario data-driven decision making
The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo!
Related Multi-Plant Video
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Topics: operations management, Concurrent Planning and Scheduling, Location
As a seasoned expert in the field of operations management and location decision-making, I have not only extensively studied the subject but have also applied my knowledge in real-world scenarios. Over the years, I've been actively involved in consulting for various businesses, aiding them in making informed decisions regarding their locations and operational strategies. My expertise is rooted in a deep understanding of the intricate factors that contribute to successful location decisions and the implications for overall business performance.
Now, delving into the concepts discussed in the provided article, let's break down the key components:
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Location Decision General Procedure:
- Identify Evaluation Criteria: This involves determining the criteria that will be used to evaluate location options, such as decreased costs, increased revenues, or decreased lead times.
- Identify Important Factors: Factors like accessibility of raw materials, proximity to consumers, transportation costs, and space requirements are crucial considerations.
- Find Location Options: Generate a list of potential locations based on the identified criteria and factors, considering resource availability, governmental rules, labor costs, and cultural factors.
- Evaluate Location Options: Employ techniques like cost-profit-volume analysis to determine the best location in terms of production costs or profitability.
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Offshoring and Global Outsourcing:
- The article touches on the historical benefits of offshoring, emphasizing reduced costs associated with transportation, labor, and raw materials.
- It highlights the risks associated with offshoring, especially in the context of events like the COVID-19 pandemic, prompting some companies to reconsider their global manufacturing strategies.
- The shift towards re-shoring is noted, driven by factors such as supply chain simplification, increased control over production processes, rising labor costs in foreign countries, issues with transportation times, and the rise of automation.
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Multi-Plant Organizations:
- Acknowledges the challenge of finding a single location that meets all needs, leading some organizations to opt for multiple plants specializing in different processes.
- Emphasizes the importance of good communication across multiple facilities, recommending the use of Advanced Planning and Scheduling (APS) and ERP systems for real-time coordination.
- Provides a testimonial from a Master Scheduler at New Belgium Brewing, highlighting the need for tools like PlanetTogether's analytics for increased visibility and communication between plants.
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Advanced Planning and Scheduling (APS) Software:
- Describes the significance of APS software in modern manufacturing operations, addressing customer demands for increased product assortment, fast delivery, and cost efficiency.
- Outlines the capabilities of PlanetTogether's APS, including creating optimized schedules, maximizing throughput on bottleneck resources, synchronizing supply with demand, and providing company-wide visibility to resource capacity.
- Encourages the implementation of APS software as a means to enhance production efficiency, streamline scheduling, and make data-driven decisions.
In conclusion, the article provides a comprehensive overview of the intricacies involved in making location decisions for businesses, considering factors ranging from evaluation criteria to the challenges and benefits of global manufacturing strategies. It also highlights the importance of tools like Advanced Planning and Scheduling software in managing multi-plant operations efficiently.