FACTORS INFLUENCE THE SELECTION OF PLANT LOCATION

PRESENTED BY : SHIKHA SINGH

ROLL NO :160617009

UNDER THE GUIDANCE OF :

DR MAHALAKSHMI RATHNANAND

DEPARTMENT OF PHARMACEUTICS

MCOPS MANIPAL UNIVERSITY

CONTENTS

• Definition

• Introduction

• Factor affecting plant location

• Conclusion

• References

1

DEFINITION

• A plant is a place where men, materials, money, equipment, machinery, etc are brought together for manufacturing products.

• Plant location refers to the establishment of an industry at a particular place.

2

INTRODUCTION

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

An ideal location is one where

Cost of the product is kept to minimum

With a large market share

Least risk & maximum social gain

It is the place of maximum net advantage or which gives lowest unit cost of production and distribution.

3

FACTORS AFFECTING THE PLANT LOCATION Nearness to raw materials.

Transport facilities

Nearness to market

Availability of labour

Availability of fuel & power

Availability of water4

Climatic condition Financial & other aids Land Community attitude Presence of related industries Existence of hospital, marketing centres, schools,

banks post offices, etc Local bye-laws, taxes, building ordinance, etc Housing facilities Facilities for expansion Security

5

NEARNESS TO RAW MATERIALS

It will reduce the cost of transportation of raw materials from the vendors end to the plant

When the supplier of raw material is near the facility, then the immediate supply of the raw materials will be available

6

TRANSPORT FACILITIES

Money is spent in transporting raw material as well as finished goods

Depending on the size of a raw materials and finished goods

A suitable method of transportation such a road, rail, water or air is selected & accordingly plant location is decided

The cost of transportation must be fairly small compared to the total cost 7

NEARNESS TO MARKET

It reduces the cost of transportation as well as the chances the finished products getting damage to the goods while transport

Moreover a plant being near to the market can catch a big share of the market & can render quick service to the customers

8

AVAILABILITY OF LABOUR The labour should be stable, with proper

attitude towards work and available at reasonable rates.

Should be managed in such a way that the chances of boycotts, strikes or lockouts are less and the facility is able to achieve low labour cost per unit production.

9

AVAILABILITY OF FUEL & POWER

• Because of the wide spread use of electric power, in most cases fuel has not remained a leading factor for plant location

• Electric power should be available continuously, in proper quantity and at reasonable rates.

10

AVAILABILITY OF WATER

Water is used for processing, drinking, and sanitary purposes

For a pharmaceutical industry, water should be available in adequate quantity and should be of proper quality

Pharmaceutical industry should not be located in an area known for its water shortage 11

CLIMATIC CONDITION

Due to development of HVAC (heating, ventilation & air conditioning), climate of a region doesn’t present much of a problem. However, usage of HVAC needs capital

Facilities located in humid areas should consider the relative humidity of the place & its effects on the product. Thus regulating the relative humidity is also important.

12

FINANCIAL & OTHER AIDS

Some states gives aids in the form of loans, feed money, subsides, machinery, etc to attract industrialists

Special economic zone has economic law which is different from typical country’s economic laws

SEZ offer tax breaks to foreign investors

SEZs are located within country’s national borders aims to increase trade, increase investments, job creation & effective administration 13

LAND

Topography, area, shape of the site, cost, drainage and other facilities as well as the probability of floods and earthquake influence the selection of site.

14

PRESENCE OF RELATED INDUSTRIES Like packaging industry or a firm which

produces raw materials could be helpful to the new industry which could get the raw materials from the nearby firm.

15

EXISTENCE OF HOSPITALS, MARKETING CENTERS, SCHOOLS , BANKS ETC

For the future benefits of the staffs and their family.

16

HOUSING FACILITIES

Accommodations are given to the employees of higher rank, thus there should be housing facilities in the selected site.

17

FACILITIES FOR EXPANSION

While selecting the land for a plant site, it should be seen that there’s plenty of land for future expansion of the industry

18

LOCATION OF A FACTORY IN A BIG CITY

Generally factories are located in big cities for obvious reasons of skilled labour, market for both raw material and end products

ADVANTAGES:

All types of skilled man power is available

Repair, maintenance and service facilities for various utilities are available in abundance

Big markets for sale of products available 19

CONTI…

Many similar industries /plants exist in nearby areas.

Housing facilities for workers and employees .

Police and fire protection facilities available in near by areas.

DISADVANTAGES:

Insurance and taxation rates are high

Due to higher living standards, cost of consumer goods and wages rates are high

Cost of land is more if needed for expansion of the plant etc

Possibilities of expansion are minimum due to scarcity of land 20

LOCATION OF AN INDUSTRY IN SMALL TOWN

ADVANTAGES:

Less labour trouble

Lower rents in comparison to big cities and urban areas

Noise not much problems

DISADVANTAGES:

Lack of skilled labour

Lack of facilities for staffs

Police and fire protection less satisfactory

Transportation & marketing facilities not satisfactory as required 21

REFFERENCES

O.P. Khanna’s, Industrial Engineering and Management 17th Edition Dhanpat Rai Publications, Edition: 2010 ISBN: 9788189928353, page no.

Cvs Subrahmanyam Pharmaceutical Production & Management, Vallabh Publications / Prakashan, 1st edition, ISBN: 8185731403, page no.

23