PLANT LOCATION AND LAYOUT
CONCEPT:
A plant is a place where men, materials, money, equipment,
machinery etc. are brought together for manufacturing
products.
The problem of plant location arrives when starting a new
plant or during the expansion of existing plant.
Plant location means deciding a suitable location, area, place
where the plant or factory will start functioning.
SELECTION OF LOCATION IS IMPORTANT BECAUSE..
A good location may reduce the cost of production and
distribution up to certain extent.
If the site selection is not proper it will be a great loss of
investment.
Location of plant determines the nature of investment
costs and also the level of many operating costs.
It involves two major activities: 1) to select a proper
geographic region and 2) selecting a specific site within region.
Plant location determines the cost of:
1) getting suitable raw material
2) processing raw material to finished goods.
3) products distribution to customers.
Hardly any location can be ideal or perfect.
One has to balance between the factors affecting plant
location.
The fundamental object of location analysis is to maximize
the profits by minimizing the total cost of production
associated with the production process.
Total costs = Fixed costs + Operational costs
Fixed costs include expenditure on land, building,
machines and other equipment etc.
Operational costs are the expenditure incurred on inputs,
transformation process and the distribution of output etc.
RELOCATION OF PLANT BECAUSE OF..
Shift in the structure of markets
Changes in the nature and cost of transportation
Changes in the cost and availability of raw
materials
Undesirable labour situation
Relocation of various associate industries and
plants
Increasing competition
Changes in government policies
The Location of the plant can have a crucial effect
on the Profitability of a Project, and the scope for
future expansion.
Many factors must be considered when selecting
a suitable site,
FACTORS TO BE CONSIDER
Nearness to raw material
Transport facilities
Proximity to market
Availability of labour
Availability of fuel and power
Availability of water
Climate conditions
Financial and other aids
Land
Community attitude
Presence of related industries
Existence of hospital, school, bank etc.
Local bye-laws, taxes, etc.
Housing facilities
Security
Facility for expansion
REGULATIONS ON LOCATION
Problems because of concentration of industries
in few areas as:
Unbalanced industrial growth leads to unemployment in
other areas.
Increasing fixed, operating and living costs due to
concentration of industries.
Problems of pollution- air and water
Congestion and traffic in urban areas
Social and industrial inrests
GOVERNMENT POLICIES
Positive measures to encourage establishment
of industries in certain areas (backward areas).
Negative
measures
to
discourage
establishment of industries in areas having
concentration of industries.
MEASURES TAKEN TO MINIMIZE REGIONAL
UNBALANCE
Establishment of industrial estates to emphasis on
small scale industries.
Liberal issue of licences for starting industries in less
developed regions.
Rural electrification on large scale.
Concessional power, water and finance for backward
areas.
Special training facilities in under developed regions.
LOCATIONAL ECONOMICS
An ideal plant location is one which results in lowest production
cost and least distribution cost per unit.
The various cost which decides the location economics are:
- Land
- Building - rent
- Equipment
- Labor
- water, power and fuel
- raw material
- taxes etc..
Apart from these costs, community attitude, facilities and housing
facilities are also worth considering.
EXAMPLE:
Various costs and other considerations have been listed
below as regards to locations 1 and 2. Select the overall best
location.
Factors
Cost of
Location-1
(Rs.)
Location-2
(Rs.)
Land
100000
90000
Building
1200000
1300000
Water
5000
6000
Power
15000
17000
Labour
140000
120000
Fuel
40000
35000
Raw materials
140000
130000
Taxes
4000
2000
Total cost
1644000
1700000
Community facilities
Good
Excellent
Community attitude
Alright
Encouraging
Housing facilities
Good
Good
Cost of Living
High
Normal
RURAL V/S URBAN PLANT SITES:
Selecting a plant site in city,
o
Advantages:
o
o
o
o
o
o
o
It is very well connected by rail, road and air
Right labour force is available.
It provides a good market also.
Power and water is easily available.
It has good hospitals, marketing centers, schools, banks, etc.
Services of experts and specialists are easily available.
Many other small industries existing nearby can work as ancillaries
Security is there.
Disadvantages,
o
o
o
o
o
Land available for the building is limited in area.
Cost of land and building construction is high.
Expansion of industry may not be possible.
Local taxes are high
Labour salaries are high.
Union problems are more.
SELECTING A SITE IN RURAL AREA:
Advantages,
Plenty of land is available for building and expansion.
Unskilled labour is available which can be trained to suit the
requirement.
Taxes are low.
No union problems.
Disadvantages,
Rail, road and air links may not be adequate.
Power is problem sometimes.
Rural areas are far from selling markets.
Hospitals, banks and markets are not available
PLANT LAYOUT AND FACTORY BUILDING:
It means diposition of various facilities and services of the
plant within the area of site selected.
Plant layout begins with the design of the factory building
and goes up to the location and movement of a work table.
All the facilities like equipment, raw materials, machinery,
tools, workers, etc. are given proper place.
FACTORS AFFECTING
Type of manufacturing process
Plant location
Material handling
Factory layout
Provision of facilities
Future expansion
Safety and security
Flexibility
OBJECTIVES OF GOOD PLANT LAYOUT:
In a good plant layout,
Material handling and transportation are minimized and
efficiently controlled.
The materials and semi-finished goods should move fast
from one work station to another.
Suitable space are allocated to production centres and
service centres.
The movements made by the workers are minimized.
Waiting time of semi-finished products is minimized.
The working conditions are safer, better and improved.
There is increased facility for expansion.
Plant maintenance is easier.
SITUATIONS LEAD TO LAYOUT PROBLEMS
When starting a new plant
Changes in product design or new product
introduction
Changes in volume of production
Poor working conditions
Frequent accidents
PRINCIPLES OF PLANT LAYOUT:
(a) Overall Integration:
- It means integration of all the facilities in a logical
balanced manner.
(b) Minimum movement and material handling:
- It is better to transport materials in optimum bulk rather
than small amounts. Gravity should be used.
(c) Smooth and continuous flow:
- Bottlenecks should be removed by proper line balancing
techniques.
(d) Cubic space utilization:
-Besides using the floor space of a room, if the ceiling height is
also utilized, more materials can be accommodated in the same
room. Overhead material handling equipment save a lot of
valuable floor space.
(e) Safe and Improved environments:
- Working places safe, well ventilated and free from dust, noise
and other hazardous conditions increases the efficiency of the
workers.
(f) Flexibility:
- In automotive and other industries where models of product
change after some time, It is better to permit flexibility in plant
layout.
TYPES OF LAYOUT:
Process layout
Product layout
Combination layout
Fixed position layout
PROCESS LAYOUT:
It is also known as functional layout and is characterized by
keeping similar machines or similar operations at one
location or place.
For example, all lathe will be at one place, all milling
machines at another place and so on.
This type of layout is generally employed for industries
engaged in job order production.
Material 1
Material 2
Product 1
Product 2
Process Layout:
Advantages:
Flexibility
in allotment of work to equipment
and machines.
Better utilization of the available equipment.
Better product quality as supervisors and
workers attend to one type of machines and
operations.
Workers in one section are not affected by the
nature of the operation carried out in another
section.
Disadvantages:
Automatic material handling is very difficult.
More materials in process remains in queue for
further operations.
Completion of the same product takes more
time.
Production control becomes difficult.
It need more inspection and efficient coordination.
PRODUCT LAYOUT:
It is also known as line type layout. In this, various operations
on raw material are performed in sequence in which the raw
material will be operated upon.
This type of layout is preferred for continuous production.
Lathe
Lathe
Drill
Mill
Mill
Drill
Grinder
Advantages:
Less space requirement for the same volume of production.
Less in process inventory.
Automatic material handling is possible.
Simple production planning and control.
Smooth and continuous work flow.
Disadvantages:
Since a product defines layout, a change in product involves major
change in layout.
The pace rate of working depends on the output rate of the slowest
machine. It causes idle time for another machines.
It is difficult to increase production beyond the production lines.
COMBINATION LAYOUT:
It is the combination of process and product layout.
A combination layout is possible where an item being made
in different types and sizes.
In this case machinery is arranged in a process layout but the
process grouping is then arranged in sequence to
manufacture various types and sizes of products.
COMBINATION PLANT LAYOUT
L
ASSEMBLY
CELL 1
ASSEMBLY
CELL 2
ASSEMBLY
CELL 3
FIXED POSITION LAYOUT:
The fix position of the product is required in ship building,
aircraft manufacturing and big pressure vessel fabrications.
In other layouts the product moves past stationary
equipment, whereas in this case the reverse applies, men and
material are moved to material, which remains at one place
and it is completed at that place.
Advantages:
Maximum flexibility, one or more skilled worker can work to finish
the project.
FIXED POSITION LAYOUT
Fixed Position Layout
Single
large,
high
components or products.
cost
COMPONENTS
MATERIAL
Product is static. Labour, tools
and equipment come to the work
rather than vice versa.
LABOUR
PRODUCT
LABOUR
MATERIAL
COMPONENTS
