UNIT-2

PLANT LOCATION

Plant location is the process of determining a geographical site for a firm’s operations achieving maximum operating
economy and effectiveness. The degree of significance for the selection of location for any enterprise mainly depends
on its size and nature.

Need for location decisions

 When business is newly started

 When a business firm wants to expand its markets by adding new locations to the existing
systems

 When an organization experiences growth in demand of its products or services and the
existing facility or plant not able to expand in the existing location to meet the demand.

 Shift in markets may cause firms to relocate

Importance of plant location

 Location of the plant partially determines the operating and capacity costs. It determines the
nature of investment cost to be incurred and also the level of many operating costs

 Each prospective location implies a new allocation of capacity to respective market area

 Location fixes some of the physical factors of the overall plant design etc., heating and
ventilation requirements, storage capacity for raw materials taking into consideration their
local availability, transportation needs for raw materials and finished goods, power needs,
cost of labour, taxes, land construction etc.,

 Location helps to deliver the product at a cheaper price and thus helps a combat
competition.

Objectives of plant location

 Reduced capital investment and operating cost

 Ensuring effective plant layout

 Coordination with government policies

 Employee welfare and public needs

 Security
Factors influencing Plant location

● Factors related to buying

○ Nearness to raw materials

The cost obtaining raw materials is an influencing factor on location. The importance of nearness to raw materials
varies greatly with the nature of the business.

○ Accessibility to raw materials

The presence in abundance of any material is not sufficient in itself finalizing the location. The location must also be
easily available

 Factors related to manufacturing

○ Availability of labour

Labour supply refers to the number of skilled and unskilled persons who are available for the kind of work to be done.

○ Nearness to source of power

The sources of energy for running the wheels of industry have a decisive influence in a plant location and the
development of industrial centres.

○ Availability of services

Services include gas, electricity, water, drainage, disposal of wastes, communication etc. These services should be
available with considerable quantity.
PLANT LAYOUT

Meaning

Plant layout is the physical arrangement of industrial facilities. It involves the allocation of space & the arrangement of
equipment in such a manner that overall operating costs are minimized.

Objectives of plant layout

1. Economies in materials facilitate the manufacturing process & handling of semi- finished & finished
goods.

2. Proper & efficient utilization of available floor space.

3. To avoid congestion & bottlenecks.

4. Provision of better supervision & control of operations.

5. Careful planning to avoid frequent changes in layout which may result in undue increase in cost of
production.

6. To provide adequate safety to the workers from accidents.

7. To meet the quality & capacity requirements in the most economical manner.

8. Provision of medical facilities & cafeteria at suitable & convenient places.

9. To provide efficient material handling system.

10. To suggest the improvements in production process & work methods.

Principles of plant layout

1. Principle of integration (of 5M‘s)

2. Principle of minimum distance

3. Principle of cubic space utilization (both horizontal & vertical space).

4. Principle of flow( must be forward no backtracking)

5. Principle of maximum flexibility

6. Principle of safety, security & satisfaction

7. Principle of minimum handling.

Factors affecting plant layout

1. Nature of product- e.g. some products need air-conditioned plants.

2. Size of output-

For bulk-product/line layout For small-functional layout

3. Nature of manufacturing system- For intermittent-functional layout For continuous-product/line

layout

4. Localization of plant- e.g. there will be different transportation arrangement if site is located near
railway line.

5. Machines or equipment- e.g. heavy machines need stationary layout

6. Climatic conditions, need of light, temperature also affect design of layout.

Types of plant layout

o Product layout

o Process layout

o Fixed Position/ Stationary layout

o Cellular or group layout

o Service Facility Layout

o Combined Layout
 1. Product layout

A product layout groups different workstations together according to the products they work on. Workstations in a
product layout can quickly transfer small batches of semi-finished goods directly to the next station in a production line.
Product layouts can be ideal for smaller manufacturing businesses with lower volume than their large corporate
competitors.

Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow. Here machines are
arranged according to the needs of product & in the same sequence as the operations are necessary for manufacture.
E.g. ‗back office‘ of services such as banks and insurance companies.

Fig 2.1 Product Layout

Advantages of Product Layout

 High rate of output

  Low unit cost

 Labor specialization

 Low material handling cost

 High utilization of labor and equipment

 Established routing and scheduling

 Short processing time

Disadvantages of Product Layout

 Creates dull, repetitive jobs

 Poorly skilled workers may not maintain equipment or quality of output

 Fairly inflexible to changes in volume

 Highly susceptible to shutdowns

 Needs preventive maintenance

 Require large capital investment

2. Process layout

A process layout groups workstations together according to the activities being performed, regardless of which products
each workstation is working on. Workstations produce higher volumes of output at a time before sending semi-finished
goods in bulk to the next area, which may be located as close as the other end of a building or as far as another facility
on the other side of the globe.

Layout that can handle varied processing requirements. Here all machines performing similar types of operations are
grouped together at one location in the process layout. Thus here facilities are grouped together acc. To their functions.
E.g. all drilling machines are located at one place known as the drilling section.
Fig : 2.2 Process Layout

Advantages of Process Layouts

 Can handle a variety of processing requirements

 Machines breakdown doesn‘t result in shutdown.

 Equipment used is less costly

 Wide flexibility in production facilities.

 Each production unit of system works independently.

 High utilization of facilities

 Variety makes the job interesting.

Disadvantages of Process Layouts

 In-process inventory costs can be high

 Challenging routing and scheduling

 Equipment utilization rates are low

 Material handling is slow and inefficient & is more.

 More space is required

 Longer processing time

 Backtracking may occur.

 3. Stationary layout:

Fig 2.3 Stationary Layout

Stationary Layout in which the product or project remains stationary, and workers, materials and equipment are moved
as needed. Eg. Construction of DAMS. The product, because of its size and/or weight, remains in one location and
processes are brought to it.

4. Cellular or group layout

Cellular layout is based on the group technology (GT) principle. Therefore, it is also called as group layout. This layout
is suitable for a manufacturing environment in which large variety of products are needed in small volumes (or
batches). The group technology principle suggests that parts, which are similar in design or manufacturing operations,
are grouped into one family, called part-family.

For each part-family a dedicated Cluster of machines (called machine cell) are identified. Generally, all the processing
requirements of a particular part-family are completed in its corresponding machine ceil. In other words, the intercell
transfer UT part should ideally be zero."

The cellular layout is thus a combination of process and product layout. Therefore, it possesses the features of both.
Cellular manufacturing system (CMS) involves decomposition of manufacturing system into subsystems of similar
parts/machines. CMS allows batch production to give economic advantages similar to those of mass production with
additional advantages of flexibility, normally associated with job shop production systems
Fig 2.4 Cellular Layout

Service facility Layout

The fundamental difference between service facility and manufacturing facility layouts is that many service facilities
exist to bring together customers and services. Service facility layouts should provide for easy entrance to these
facilities from freeways and busy thoroughfares. large, well organized and amply lighted parking areas and well-
designed walkways to and from parking areas are some of the requirements of service facility layouts.

Combined Layout

The application of the principles of product layout or fixed location layout in their strict meanings is difficult to come
across. A combination of the product and process layouts, with an emphasis on either, is noticed in most industrial
establishments. Plants are never laid out in either pure form. It is possible to have both types of layout in an efficiently
combined form if the products manufactured are somewhat similar and not complex.

○ Readily accessibility to repair shop

The factor is important mainly in case of small scale industries with plenty of orders on hand and a breakdown of its
machinery will incur loss in business and being down its image.

○ Availability of amenities

A location which provided good external amenities – housing, shops, community services, communication systems – is
often more attractive than one which is more remote. One important amenity in connection to the transport such as
buses, trains etc.

○ Transport and communication

The next important factor is transport cost. It is possible to obtain raw materials and market finished goods only with
the help of an effective transport network.
 ○ Safety Requirements

Some production units may present, or may be believed to present potential dangers to the surrounding neighborhood
for example nuclear power stations, chemical and explosives factories are often considered dangerous.

○ Adequate firefighting facilities

Fire may originate from within or outside the plant. Internal fire can be controlled with firefighting appliances but it’s
difficult to control agencies causing fire from outside.

○ Availability of Educated Personnel and Research facilities

New industries as well as the development and expansion of those already established hinge on research and
investigation to develop products and improve methods.

○ Ability to build and expand plant capacity

A plant has to be built in such a way that the manufacturing processes are carried on with minimum expenditure of time
and material. Political Stability

○ Political stability

A government influences the development of industry by providing political stability and also subsidies.

○ Suitable soil, climate and topography

Soil and climate have direct bearing upon the type of activity that can be undertaken in any area in its early
development

○ Association with other industries

Some manufacturers select locations which are near complementary or subsidiary industries.

○ The momentum of an early start

As a rule, people are likely to have faith in an industry that is being stated in a locality where similar ventures have been
successful already.
 ○ Regional regulations

It is important to check at an early stage that the proposed location does not infringe any local
regulations

 Factors related to selling

o Nearness and accessibility to market

o The advantages of being near to a market are numerous. A

manufacturer can ensure quick and uninterrupted supply of his
products at all the times.

o Characteristics of people

All manufacturers exist to supply markets with goods which people buy.

o Special grants, regional taxes and import / export barriers

Certain government and local authorities often offer special grants, low interest loans for
setting up industries in particular locations.