Meaning: Establishment of an industry at a Meaning: Establishment of an industry at a particular place.particular place.

It refers to the choice of region and the selection It refers to the choice of region and the selection of a particular site for setting up a business or of a particular site for setting up a business or factory.factory.

Location of an organization plant or service Location of an organization plant or service facility is a permanent fixture and has facility is a permanent fixture and has considerable expenditure.considerable expenditure.

Thus, the selection has to be done after Thus, the selection has to be done after considering all relevant aspects.considering all relevant aspects.

Situations leading to location Situations leading to location selection questionselection question

Planning of a new plant or service facilityPlanning of a new plant or service facility Addition to existing businessAddition to existing business Relocation or modification of existing Relocation or modification of existing

facilities to remove drawbackfacilities to remove drawback To get advantage of better infrastructure To get advantage of better infrastructure

or incentives from the government sourcesor incentives from the government sources

Advantages of a good locationAdvantages of a good location

Cost advantagesCost advantages Reduced raw material costsReduced raw material costs Reduced distribution costsReduced distribution costs Competitive advantagesCompetitive advantages Improved profitsImproved profits

Plant Location

Localization/ Centralization (Concentration of similar type

of industries at some particular place)

Delocalization/ Decentralization (Spreading of

similar type of industries at different places)

Issues in Selection of LocationIssues in Selection of Location

Selection of the RegionSelection of the Region Selection of Locality (Rural/ Urban/ Selection of Locality (Rural/ Urban/

Suburban)Suburban) Selection of the Site (Advantages of low Selection of the Site (Advantages of low

labour costs, low land costs, etc.)labour costs, low land costs, etc.)

Factors affecting choice of locationFactors affecting choice of location Proximity to raw materials.Proximity to raw materials. Nearness to customers.Nearness to customers. Nearness to potential market.Nearness to potential market. Transportation and communication Transportation and communication

facilities.facilities. Supply of labour.Supply of labour. Land/ Building costs (Buy, build or rent).Land/ Building costs (Buy, build or rent). Availability of operating requirements and Availability of operating requirements and

provisions (electricity, disposal of wastes, provisions (electricity, disposal of wastes, drainage, etc.)drainage, etc.)

Energy costs (water, electricity, gas, etc.)Energy costs (water, electricity, gas, etc.)

Continued…...Continued…... Availability of housing, other amenities and Availability of housing, other amenities and

services.services. Safety requirements.Safety requirements. Possible Expansion.Possible Expansion. Suitability of land, climate and other natural Suitability of land, climate and other natural

factors.factors. Other factors like availability of low interest Other factors like availability of low interest

loans, special grants, tax incentives etc.loans, special grants, tax incentives etc.

What is a Factory…..????What is a Factory…..????

A plant consisting of one or more buildings with facilities A plant consisting of one or more buildings with facilities for manufacturingfor manufacturing

An industrial building, where laborers manufacture goods An industrial building, where laborers manufacture goods or supervise machines processing one product into or supervise machines processing one product into another.another.

A factory is a system which brings manufacturing steps A factory is a system which brings manufacturing steps together in one place to increase efficiency.together in one place to increase efficiency.

Factory planning refers to the arrangement Factory planning refers to the arrangement of physical facilities such as machinery, of physical facilities such as machinery, equipment, furniture etc. with in the factory equipment, furniture etc. with in the factory building in such a manner so as to have building in such a manner so as to have quickest flow of material at the lowest cost quickest flow of material at the lowest cost and with the least amount of handling in and with the least amount of handling in processing the product from the receipt of processing the product from the receipt of material to the shipment of the finished material to the shipment of the finished product.product.

Factory planning is the very heart of Factory planning is the very heart of productivity.productivity.

As with any other project, experience and As with any other project, experience and skill can produce rapid and effective results.  skill can produce rapid and effective results. 

There is no universal template because There is no universal template because one solution does not fit allone solution does not fit all..

Can you tell Can you tell why…….???????why…….???????

A successful factory plan must consider:A successful factory plan must consider: work done;work done; flow and routing of output;flow and routing of output; equipment size, capability and capacity equipment size, capability and capacity

considering product mix;considering product mix; crew sizes and skills;crew sizes and skills; inventory and cycle time goals;inventory and cycle time goals; material handling and safety.  material handling and safety. 

Factory Planning

Extension or change of existing

enterprise

Reestablishment of a factory

Purpose of Factory PlanningPurpose of Factory Planning

Favorable production and manufacturingFavorable production and manufacturing Suitable working conditionsSuitable working conditions Good surface and space utilizationGood surface and space utilization High flexibility of buildings, plants and High flexibility of buildings, plants and

mechanismsmechanisms

Purchasing, a branch of Logistics, means Purchasing, a branch of Logistics, means buying raw materials and other necessary buying raw materials and other necessary commodities for manufacturing products.commodities for manufacturing products.

Purchasing is a formal process of buying Purchasing is a formal process of buying goods and services.goods and services.

Purchasing denotes the function of and Purchasing denotes the function of and responsibility for procuring materials, responsibility for procuring materials, supplies and services.supplies and services.

The purchasing function involves more The purchasing function involves more than obtaining the best price. It also than obtaining the best price. It also involves buying the best value, which involves buying the best value, which means buying:means buying:

the right quantity and qualitythe right quantity and quality at the best priceat the best price from suppliers who are reliable and from suppliers who are reliable and

provide good serviceprovide good service

ObjectivesObjectives

To maintain uninterrupted flow of materials To maintain uninterrupted flow of materials to support the company operations. to support the company operations.

To buy the best value: a combination of To buy the best value: a combination of right quality at the best price with the best right quality at the best price with the best supplier service supplier service

To develop and maintain good buyer-seller To develop and maintain good buyer-seller relationship. relationship.

To find reliable alternative sources of To find reliable alternative sources of supply.supply.

FunctionsFunctions

coordinating purchase needs with user departmentscoordinating purchase needs with user departments identifying potential suppliersidentifying potential suppliers conducting market studies for material purchasesconducting market studies for material purchases proposal analysisproposal analysis supplier selectionsupplier selection issuing purchase ordersissuing purchase orders meeting with sales representativesmeeting with sales representatives negotiatingnegotiating contract administrationcontract administration resolving purchasing-related problemsresolving purchasing-related problems maintenance of purchasing recordsmaintenance of purchasing records

2. Select the Suppliers

4. Follow up

1. Determine Needs

3. Negotiate the Purchase

Store KeepingStore Keeping

Receiving, storing and issuing materials, Receiving, storing and issuing materials, parts, factory supplies at minimum costparts, factory supplies at minimum cost

It is serving facility, inside an org., It is serving facility, inside an org., responsible for proper storage of the responsible for proper storage of the material and then issuing it to respective material and then issuing it to respective departments on proper requisitiondepartments on proper requisition

Protecting the goods storedProtecting the goods stored Store room, storekeeperStore room, storekeeper

Objectives of Store keepingObjectives of Store keeping

Easy location of the items in store.Easy location of the items in store. Proper identification of items.Proper identification of items. Speedy issue of material.Speedy issue of material. Efficient utilization of space.Efficient utilization of space. Reduction in need of material handling Reduction in need of material handling

equipment.equipment.

Duties involved in Store keeping Duties involved in Store keeping

To receive materials.To receive materials. To protect them while in storage from To protect them while in storage from

damage and unauthorized removal.damage and unauthorized removal. To issue the materials in right quantities, To issue the materials in right quantities,

at the right time and to the right place.at the right time and to the right place. To provide these services promptly and at To provide these services promptly and at

least cost.least cost.

ASSORTMENT FUNCTION

ASSORTMENT FUNCTION

SECURITY FUNCTION

SECURITY FUNCTION

SPECULATION FUNCTION

SPECULATION FUNCTION

IMPROVING FUNCTION

IMPROVING FUNCTION

BALANCE FUNCTION

BALANCE FUNCTION

FUNCTIONS OF STORE

KEEPING

FUNCTIONS OF STORE

KEEPING

TYPES OF STOREKEEPINGTYPES OF STOREKEEPING

Storekeeping

Centralized Storekeeping

Decentralized Storekeeping

Centralized StorekeepingCentralized Storekeeping

It means the spatial summaryIt means the spatial summaryof all storekeeping functionsof all storekeeping functionsand all stored materialsand all stored materialsunder uniform line.under uniform line.

Advantages-Advantages-

an easement of the goods an easement of the goods received, care,received, care,preservation, inventorypreservation, inventorydetermination and-determination and-examination.examination.

DECENTRALIZED DECENTRALIZED STOREKEEPINGSTOREKEEPING

During the During the decentralized decentralized storekeeping the storekeeping the materials materials used at the place of the user used at the place of the user are stored in the form of are stored in the form of temporary storage facilities temporary storage facilities (buffer camp).(buffer camp).

Advantages Advantages are the higher are the higher flexibility, the more exactflexibility, the more exactarrangement of the individualarrangement of the individualmaterials in the productionmaterials in the productionareas and the shorter routes ofareas and the shorter routes oftransportation.transportation.

Why Store Keeping……????Why Store Keeping……????

Receiving, handling and speedy issue of material.Receiving, handling and speedy issue of material. Custodian of goods stored against damage and Custodian of goods stored against damage and

pilferage.pilferage. To ensure regular supply of materials .To ensure regular supply of materials . Effective utilization of store space.Effective utilization of store space. To provide service to the organization in most To provide service to the organization in most

economical way.economical way. To keep the details of the items available in store up to To keep the details of the items available in store up to

date.date. Proper identification and easy location of items.Proper identification and easy location of items. Physical checking of stocks.Physical checking of stocks.

Stores SystemStores SystemCLOSEDCLOSED OPENOPEN

All materials are stored in closed/ All materials are stored in closed/ controlled area.controlled area.

Stores are maintained in the form of Stores are maintained in the form of suitable/ convenient locations.suitable/ convenient locations.

Only store personnel is permitted in Only store personnel is permitted in the area.the area.

Every individual has access to the Every individual has access to the storage facility.storage facility.

Materials can enter or leave the Materials can enter or leave the storage area by authorized storage area by authorized documents only.documents only.

After the receipt of the material, it is After the receipt of the material, it is delivered to the respective delivered to the respective department to expedite the department to expedite the production activity.production activity.

Maximum physical securityMaximum physical security Chances of pilferage high.Chances of pilferage high.

Tight accounting control of inventory Tight accounting control of inventory material.material.

Less emphasis on accounting Less emphasis on accounting control of the material.control of the material.

VARIOUS SECTIONS IN VARIOUS SECTIONS IN STOREKEEPINGSTOREKEEPING

Receiving SectionReceiving Section Stores SectionStores Section Issue SectionIssue Section Accounting SectionAccounting Section Stock Taking Checking SectionStock Taking Checking Section