Strategic Influences in Locating a Business

Document Type:Coursework

Subject Area:Medical

Document 1

Supply chain management can, therefore, be defined as the planning, organization and managing the movement of materials and goods to help in meeting the objectives and goals of the business. In the event that there is a hindrance on the flow of the supply chain, then the result will be inefficiencies. Such kind of hindrances should be eliminated as early as possible to allow the customer to be satisfied with the services. Supply Chain Management is a business system that allows for company’s internal resources integration that manages and works with the external supply chain. The supply chain management helps the company is optimizing and coordinating the movement of goods and materials through the supply chain thereby allowing an accurate and efficient order fulfillment, even if the orders of the customer are constantly changing (Stevenson, 2005).

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In contrast, non-tangible features that include characteristics such as availability, reliability, and security can be measured only on a nominal or ordinal scale. Generally, non-tangible factors are important when determining the location of the business. On the nature of the organization, the factors influencing the location of the firm can be divided into two • General Locational Factors: - These are the controllable and uncontrollable factors affecting all organizations • Specific Locational Factors: - Precisely needed by the manufacturing and services organizations General Location Factors The following are the general location factors that should be considered while setting up a business Controllable Factors • Proximity to markets: - It is the duty of the company to provide customers with what they need within the required time.

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The facility should be located close to the market depending on the product • Transportation facilities: - Having efficient transport ensures that raw materials are received in time and customers also receive the finished products on time. This majorly depends on the mode of transport for goods such as air, road, rail or water and pipeline. • Community infrastructure and amenities Facility Planning and Layout Design Facilities planning is an important component for organizations to keep up with trends in the market. Previous, it was considered a science but within the competitive global marketplace, facility planning is becoming a strategy. It is a strategy which is used so as to achieve supply chain excellence. It majorly looks at the design, layout, and accommodation of various components of the business environment (Gil et al.

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The main requirement for any facility planning project is on how it can adapt and become suitable for use. This implies that it critical to analyses each of them separately. The following are the stages that are involved in facility planning • Stage 1: - This is the external material movement to and from the location and it should be layout out within the location area • Stage 2: - It is the whole plan for blocked out layout as well as the general management plan for the total area • Stage 3: - Involves having a comprehensive layout for each of the definite piece of machinery, storage, and equipment area as well as specific management methods • Stage 4: - Involves connection of the approved plans, procurement as well as rearrangements Quantitative Approach to Location and Layout Modelling There are various models that can help in identifying the ideal location.

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The following are the popular models 1. Load-distance It is a measured model which is used in evaluating locations centered on their proximity factors. The aim is to choose the location that reduces the total weighted loads that move into and out of the organization (Jacobs et al. It takes into account plant location and markets as well as the goods to be moved. It is defined as the location that reduces the weighted distance between the supply distribution points and warehouse. Weighted factor rating method Here, factors are allocated weights based on the relative significance and weighted score for each of the sites and then the matrix is calculated. The site that has the highest weighted score is chosen as the best SL.

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No. It is a physical mapping system that outlines every step of the process for each of the business including product, marketing, R&D, and HR. Create Flow It involves analysis of each step in the process by finding ways on how to maximize the efficiencies and waste reduction. The Lean teams should optimize the flow in all aspects of the business and not just at the production arm. Establish Pull This involves looking at the customer perspective on the final product by looking effectively at the operations of the business in reverse to value stream maps. The idea of having the customer to pull the value is what revolutionized the manufacturing industry. The raw materials are delivered prior before they are needed on the assembly line and also the finished goods are also manufactured before they are shipped to the customers (Stevenson, 2005).

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It helps in improving Return-On-Investment by reducing the overhead cost substantially thereby limiting the quality of inspection and eliminating obsolete inventory. It, therefore, implies that the stock levels of raw materials and components together with work in progress and finished products can be kept at a minimum level. The whole concept of JIT production is different from the traditional production system that uses a push and pull system of production. The push system of production pushes the materials to the following phase of production regardless of whether time and resources are needed at the next level of production thereby creating a lot of inventory at each level of the production flow (Melo et al. Less time spent in reworking on the product Relevant Concepts, Models, and Theories of Warehousing Warehouse are large plain buildings which are used for commercial purposes in storing goods.

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There are some warehouses which are automated hence allowing goods to be moved from one place to another through an automated system conveyor and automated storage. Modern warehouses have been designed in a manner that they are both used for storage and retail purposes hence helping in cutting down the costs of the product (Melo et al. It is a concept that is used sharply by manufacturers so as to directly reach the consumers by avoiding or bypassing importers or middlemen. Warehouse model is one of the key components of supply chain management. Some of the common problems are inadequate space and inefficient use of available storage owing to poor layout. Managers should also worry for poorly configured warehouse due to inherent potential for negative impact on profits.

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A good layout helps in maximizing t6he usage of equipment and labor and make it easy to access all the items (Jacobs et al. Seasonality in Demand A serious challenge to the managers is seasonality of demand for goods. There are always challenges in fluctuation demanding due to the forces which are outside the control of the warehouse. • Economic benefit: - With the efficient operation, a warehouse allows for a wide range of economic benefits to the business. Various costs include outbound delivery costs, transportation costs, and shipping costs. • Social benefit: - It also serves various social benefits to clients, by keeping the stock safe for the time of emergencies such as delay in shipment or transportation. Concepts of Lead Time Optimization and Network Optimization Lead Time Optimization is the selection and management of inbound supply options in regard to highly uncertain demand and long production lead times, which is vital in achieving the significant supply chain savings.

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Lead time is the length of days between the time when an order is placed and the date that the goods will be available for use. Role of Forecasting and Linear Programming in Materials Planning Forecasting is the process of making estimates for the future state or events on the basis of data from the previous state. It is majorly used for sale forecasting, product demand, and financial forecasting. Information forecasting is an important planning tool that can help in estimating the future state, requires and even availability (Jacobs et al. Supply chain management requires information forecasting in terms of customer's demand forecasting. Forecasting on customer demand can help in facilitating advance planning for initiating actions that are related to procurement, production and even transportation so as to ensure that their demand is met within the specified time.

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It is also important to remember that once ab decision has been made, it is always difficult and costly to change the decision. This owes to the fact that the cost of moving an operation are often significant and one may run the risk of inconveniencing customers and the staff. This implies that it is important to get the location decision right first before starting a business. Generally, the decision to chose a location for the business relies on two major factors: supply factors and demand factors. The supply factors focus on the costs of operational within the location while the demand factors look mainly at the factors that affects customer service and revenues. U. S. Patent 7,761,319. Jacobs, F. R. Facility location and supply chain management–A review.

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