The History Of Plant Location Business Essay Example
The History Of Plant Location Business Essay Example

The History Of Plant Location Business Essay Example

Available Only on StudyHippo
  • Pages: 16 (4205 words)
  • Published: October 21, 2017
  • Type: Report
View Entire Sample
Text preview

Plant location involves choosing the most suitable site for a factory, aiming to achieve maximum efficiency and productivity. The decision of where to locate a factory is essential in this process.

Opting for an economic-based decision ensures a consistent supply of materials, skilled workers, an effective layout, efficient utilization of production capacity, and reduced production costs. While an ideal location does not guarantee success on its own, it plays a crucial role in ensuring smooth and efficient operation of the organization.

Hence, when deciding on plant location, all relevant economic factors must be taken into account.

When searching for a suitable location to establish a factory, it can be difficult to find one that has all the necessary facilities. However, it is important to choose the best option available and consider as many facilities as possible. The main priority

...

in this search should be finding a place where expenses for raw materials, production, and marketing of finished products are minimized.

DABUR

DABUR has distributors worldwide, including countries in North and South America, Australia, Asia, the Middle East, North and South Africa, and East and West Europe including Russia. In India alone, DABUR has a strong market presence with 50 C & F agents, over 5000 distributors, and more than 3.4 million retail stores. Energy conservation is also a major focus for DABUR who has been implementing various measures to conserve energy.

Successful execution of various energy conservation projects has resulted in a 13.8% decrease in the Company's energy measure in the 2008-09 fiscal entirely. What was notable was the fact that this decrease has come despite an 8-9% volume increase in fabrication, and an average 11.7% increase in cost of ra

View entire sample
Join StudyHippo to see entire essay

input fuels. The host of steps - key among them being usage of bio-fuels in boilers, generation of biogas and installation of energy efficient equipment - helped lower the cost of production, as well as reduce wastewater and improve hygiene conditions and productivity. Water and waste disposal: Dabur has also made continuous efforts towards technology absorption and innovation, which have contributed towards preserving natural resources.

These efforts include: Minimizing the use of H2O in the process through pre-concentration of herbal infusion and reducing concentration time. Implementing uniform heating in VTDs using hot water instead of steam, resulting in a 30% reduction in bulk wastage by utilizing non-stick coating and changing cooking methods. Improving water treatment through the introduction of a Reverse Osmosis (RO) system for DM water, reusing waste water from pump seal cooling and managing RO reject waste water. Implementing a water efficient CIP system with water recycling in fruit juice manufacturing. Developing in-house technology to convert fruit waste into organic manure using the Lactobacilus burchi culture. The Company has achieved numerous benefits including product improvement, cost reduction, product development, import substitution, cleaner environment, and waste management. Upholding the commitment to Health Safety and Environment, Dabur has established a policy focusing on People, Technology, and Facilities. A dedicated "Safety Management Team" has been established to prevent accidents at corporate and unit levels and educate and motivate employees on various aspects of Health, Safety, and Environment. The Company is also continuously monitoring its waste in compliance with pollution control regulations.The company's commitment to society also extends to efforts in conserving and maintaining the water levels of the land. One such effort is the implementation of rainwater

harvesting, which has achieved positive results and is leading the company towards becoming a Water-Positive Corporation.

Dabur initiated a Carbon Foot Print Study at the unit level with the aim of becoming a C positive Company in the future. Dabur is dedicated to sustainable development in all of its various operations. Dabur India Ltd is a leading FMCG Company in India, with revenues of US $1 billion (over Rs 5,000 Crore) and a Market Capitalization of US $4 billion (Rs 20,000 Crore). Leveraging over 127 years of quality and experience.

Dabur, a company with a wide distribution network, serves more than 2.8 million retail outlets in urban and rural markets. Additionally, Dabur products are available in over 60 countries. Competitors in the industry include Hindustan Unilever, Godrej Consumer, Colgate, Marico, and Emami. Barriers to entry vary based on the type of product ranging from unorganized agricultural goods to packaging materials. This text will discuss seven major obstacles including the financial requirements for entering the industry.

The amount of money needed will obviously differ depending on the country you are operating in, ranging from several lacs for metal caps to match of crores for polymer. The greater the capital requirement, the greater the need for an account that can handle this risk. Economies of scale also come into play here, as a large volume may be necessary for optimal efficiency, possibly requiring larger installations or a bigger workforce. Established organizations leverage their existing resources to respond to market forces and take advantage of opportunities in the target market.

It is crucial to explain the extent to which Economies of Scale play a role in your business and how you plan

to overcome this hurdle. A Cost AdvantageA - Although these exist with Economies of Scale, Scale is not necessary. Often, the first company to enter an industry or market can negotiate the best contracts with suppliers or distributors, putting new entrants at a disadvantage. Additionally, established companies have an advantage on the learning curve, allowing them to address cost issues more effectively. Product DifferentiationA - You have identified an opportunity to offer a product or service efficiently. If you succeed, your success will attract attention.

One challenge you may encounter is when another company with brand recognition and brand loyalty for their current products decides to compete with you. You will have to spend significant amounts on advertising and differentiating your products to compete with an established company's reputation. Distribution ChannelsA - The extent of this issue depends on how you plan to get the product to our manufacturing facilities. Existing suppliers with extensive manufacturing facilities or a strong distribution system will be able to effectively meet changing demand and quality requirements. Legal RestrictionsA - Some argue that the only obstacles that cannot be overcome with strategic planning and business acumen are those created by government regulations.

It is important to investigate and clarify any regulations, laws, taxes, etc. that will affect your business. Tax benefits or subsidies will provide a direct cost advantage. However, if you are entering a market with established competitors, expect a response. The competition has various options to react depending on their position in the market. These reactions can range from lowering prices to negotiating exclusive agreements with suppliers and distributors you may have worked with. You should spend time anticipating the

responses of existing businesses and determining how these responses will impact your organization.

Retail shop: Dabur India Ltd (DIL) has revealed the brand identity 'new-u' for its Retail Stores. This brand name and design represent the essence and aspirations of H Stores. The brand aims to cater to all customer needs in the beauty and wellness platform. It symbolizes the transformation that the stores will offer - something new, engaging, and innovative. The stores will offer products in various categories such as color cosmetics, fragrances, skincare and personal care, baby and household care, fashion accessories, general merchandise, Ayurvedic, herbal, and pharmaceuticals.

Warehouses: Dabur's storage is managed by Sadana Warehousing & Agencies Pvt. Ltd in Guwahati and Aggrawal Warehousing Corporation in Raipur.

MARUTI SUZUKI

The headquarters of Maruti Suzuki is located at Nelson Mandela route, Vasant Kunj. The manufacturing plants are in Gurgaon and Manesar. Maruti Suzuki India Limited (MSIL), formerly known as Maruti Udyog Limited, is a subsidiary of Suzuki Motor Corporation, Japan. Throughout more than two and a half decades, Maruti Suzuki has been the leading company in the Indian auto market. Both facilities have the capacity to produce over 1.5 million vehicles annually and have plans to expand to 1.75 million by 2013.A They offer a wide range of options with 15 brands and over 150 variations from the classic Maruti 800 to the latest Ertiga model.

The portfolio consists of a variety of vehicles from Maruti Suzuki, including Maruti 800, Alto, Alto K10, A-star, Estilo, WagonR, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Kizashi, Grand Vitara, Gypsy, and Ertiga. In August 2010, Maruti Suzuki made an environmentally friendly introduction by offering mill fitted CNG

option on 5 different models across vehicle sections. These models include Eeco, Alto, Estilo, Wagon R, and Sx4. By doing this, Maruti Suzuki became the first company in India to provide mill fitted CNG vehicles.

Suzuki Motor Corporation owns the largest subsidiary called the Company, which is the leader in car production and sales. Since December 14, 1983, the Company has manufactured and sold over 10 million vehicles. Maruti Suzuki, being the only Indian company to achieve this milestone, has surpassed 10 million sales since its establishment. In the fiscal year 2011-12, the company sold more than 1.13 million vehicles, including exporting 127,379 units. As of March 31, 2012, the Company has a workforce of over 9000 individuals. Maruti Suzuki proudly possesses the largest sales and service network among all automobile manufacturers in India.

Maruti Suzuki has consistently been recognized as the leader in customer satisfaction by the JD Power study for 12 years in a row. Along with serving the Indian market, Maruti Suzuki also exports vehicles to various countries across Europe, Asia, Latin America, Africa, and Oceania. The Gurgaon facility is located about 25 kilometers south of Delhi and spans over an expansive area of more than 300 acres. Within this facility are three fully integrated plants that together manufacture around 900,000 units annually.

The Manesar installation, spread over 600 acres and located approximately 25 kilometers south of Gurgaon, was inaugurated in February 2007. It consists of two fully integrated work plants with a yearly capacity of 5.5 lakhs units each. The completion of the third assembly line is expected in 2013. Both manufacturing facilities are highly automated, equipped with advanced robotics, modern pigment and dye

technology, as well as machining infrastructure. Although the various models can be assembled using the same processes, the flexibility between the plants helps to enhance productivity.

On one single line, various automobile models can be easily created. Automatic tool modifiers, centralized dyeing control systems, and advanced numerical control machines help facilitate quick transitions between models. The entire process, from blanking to rolling out, takes 12.5 hours, and a new vehicle is produced every 23 seconds. Waste disposal: In the year 2010-11, the Company initiated a clean development project with the United Nations Framework Convention on Climate Change (UNFCCC), resulting in the generation of C credits for the Company. Additionally, the Company is now sending its hazardous waste to the cement industry for co-processing, thereby reducing the need for hazardous waste disposal in secure landfills.

Since the implementation of EMS in 1999, the Gurgaon works has achieved a 32% decrease in per vehicle electricity consumption and a 62% decrease in per vehicle water consumption. Similarly, the Manesar works has achieved a 38% decrease in per vehicle electricity consumption and a 61% decrease in per vehicle water consumption since the base year of 2007-08. Maruti Suzuki has established common practices for all its employees, from shop floor associates to top management. This includes wearing the same uniform, eating together in the canteen, and having access to similar medical facilities. The company's open office system promotes transparency, facilitates faster communication, and creates a physical structure for a boundary-less organization, while also strengthening unity and teamwork.

The Company assigns all senior degree assignments based on its demand, vacancies, and the merits of individuals. When hiring at the workingman's level (skilled, semi-skilled, unskilled,

and learner), equal importance is given to candidates from all over the country. The Company adheres to the Government of India's laws regarding forced and child labor. It has also established an Anti-Forced and Child Labour Policy that applies to its entire operations. There were no reported incidents of forced or child labor in any of the Company's units in 2010-11. Maruti Suzuki shared its policies on Anti-Child Labour and Anti-Sexual Harassment with all its suppliers.

The providers were instructed to implement these policies at their terminal. Additionally, the Company is in the process of incorporating these policies into the purchase agreement with the providers.

Logistics: Maruti Suzuki India Limited (MSIL), India's leading car manufacturer, will invest an additional Rs 9,000 crores in research and development (R), warehousing, marketing, logistics, and design. The company aims to establish large regional warehouses that will cater to specific markets in each distribution zone.

Delivering Value: Approximately 86 percent of the company's domestic suppliers are located within a 100-km radius of the Gurgaon plant. These suppliers ensure a continuous supply of critical components such as body panels and bumpers.

The text describes Maruti Suzuki's sourcing and distribution process for its genuine parts system. Lone Surs from Ballabgarh in Haryana, Chennai, and distant countries of Madhya Pradesh are sourced as constituents. These constituents are ordered from sellers based on indents. Maruti Suzuki stockpiles the constituents in its central warehouse near its Gurgaon mill, while ensuring customer satisfaction. The company then distributes the constituents quickly into the aftermarket. Maruti Suzuki boasts the largest and most closely affiliated car trader and aftermarket network in the country. It has 877 sales stores in 619 cities and 2,855

workshops in 1,363 cities.

It also has 346 True Value Outlets (certified used auto trader web) that cover 202 cities! Most of the company's cars are transported to their destinations by trucks and trailers, with less than 10 percent being transported by rail. Slow and inadequate development has hindered rail infrastructure, which offers few options to car manufacturers in the country. Maruti's efficient supply chain network has gained the company numerous rewards, including the ability to accurately assess market demand, fulfill it quickly, and fully satisfy its multitude of customers. The company has over 250 Tier-I sellers and 20 global suppliers who ensure uninterrupted supplies. Maruti maintains a lean Just-In-Time inventory that is replenished hourly.

Its sellers are connected to Maruti's e-nagare system, an electronic supply chain system, where they provide the company with daily updates on supply demands and availability. Once the desired supplies are communicated, the sellers deliver them directly to the factory doorstep. Maruti's highly efficient supply chain system, known as e-nagare, has played a significant role in its success. The term "e-nagare" is derived from a Japanese word meaning continuity and flow. This system was implemented at the Gurgaon plant in 2003 after various trials with different supply chain methods.

This is a system pioneered by Maruti for Just-In-Time stock list, uninterrupted production, and a quick response to market fluctuations. It is suitable for sellers operating locally and within a three-hour theodolite clip from the mill. Eye On Quality, despite the difficult slog of an ambitious production agenda, Maruti has devised a plan called 'Shikhar' to maintain a crisp check on efficiency and productivity. The HR, production, and supply concatenation verticals of the company

have structured this plan to prevent any slide in quality.

Actually, Shikhar is an acute seller analysis, whereby the performance of those sellers who produce the most faulty equipment is measured. No Big-Name LSPs Maruti Suzuki's finished goods are carried across the state by over 100 LSPs who are on the company's panel. The car manufacturer avoids the trap of being enticed by well-known LSPs and instead prefers to cultivate smaller service providers who are enthusiastic about growing with the company and maintaining its strong supplier base. The company believes that major players are hesitant to abandon their established methods and learn new techniques.

Maruti Suzuki has a preference for employing service providers who are new to the industry. The company carefully trains and retains these providers and offers them long-term contracts. Additionally, Maruti Suzuki does not store the various components of its finished products in warehouses across the country. Instead, all these components are stored in a single main warehouse located in Gurgaon, Haryana. From this warehouse, the products are distributed to multiple traders through indents. Furthermore, Maruti Suzuki's warehouses are fully automated with state-of-the-art loading, unloading, picking, and transportation equipment.

The warehouse systems not only allow for online item identification and control of First-in-First-Out motion, periodic stock pickings, and inventory transportation cost analysis. Accurate forecasting Maruti ensures that its projections are neither too conservative nor too optimistic. This allows the company to maintain balance - it meets its own sales projections and customer expectations while also staying grounded in reality. The Persistent Innovator constantly seeks innovations and strives not to let a single new idea slip through the cracks.

In line with the current emphasis on green

enterprises, the company produces CNG and LPG vehicles. Research is underway for the future production of hybrid and electric cars. Maruti exclusively uses CFL bulbs in its factories and has invested heavily in a highly efficient water harvesting system. The company has a workforce of over 7,000 employees across its various offices nationwide; the Gurgaon factory alone employs over 3,000 workers.

The percentage of women in Maruti's various plants is on the rise, with more women being promoted as supervisors in the company. Maruti also operates an all-women Industrial Training Institute (ITT) in Gurgaon.

Rivals:

Tata Motors, Honda, Hyundai, Chevrolet, Toyota, etc. Finance: Mahindra & Mahindra Financial Services Ltd, a part of the $3.04 billion Mahindra group, has entered into an agreement with Maruti Udyog Ltd to provide finance for all of Maruti's production.

Maruti has partnered with SBI bank.

COCA-COLA

The headquarters of Coca-Cola is located in Udyog Vihar, Gurgaon. Coca-Cola has manufacturing plants in more than 57 locations in India. Employees: The Coca-Cola system directly employs over 25,000 people, including contractors. The system has also created indirect employment for over 150,000 people in related industries through its procurement, supply, and distribution system. Distribution: In India, the Coca-Cola system includes Coca-Cola India Pvt Ltd, which manufactures and sells concentrate and drink bases, and a company-owned bottling entity.

Hindustan Coca-Cola Beverages Pvt Ltd is one of the 13 authorized bottling partners of The Coca-Cola Company. They are authorized to fix, bundle, sell, and administer drinks under specific hallmarks of The Coca-Cola Company. Additionally, our extended distribution system is made up of clients, distributors, and retail merchants. Coca-Cola India Private Limited provides dressed ore and drink bases to these authorized bottlers,

who use them to manufacture our range of drinks. These bottlers independently develop local markets and distribute drinks to various businesses such as grocers, small retailers, supermarkets, and restaurants. Ultimately, it is through these clients that our drinks become available to consumers all across India.Water: Coca-Cola in India is actively involved in groundwater replenishment and water conservation efforts.

Disposal of waste: Coca-Cola has introduced a range of display racks that are 100% recyclable for use in both supermarkets and convenience stores. These racks serve multiple purposes including conveying Coca-Cola's commitment to sustainability and making the display cases easy to recycle as they are made of corrugated cardboard. Additionally, instead of relying on store managers to recycle or dispose of the temporary shelving, Coca-Cola employees will collect them. The goal is to encourage a closed-loop retail system where such materials are recycled, or ideally, reused.

Rivals: PepsiCo. Is a direct competitor of coca-cola

FACTORS RESPONSIBLE FOR LOCATION SELECTION

Plant site selection requires careful consideration. The choice of location often depends on the type of business. Several factors influence the selection of a plant site. These factors vary in their application depending on the nature of the operation and the product being produced. Factors that affect site selection based on the resulting product are divided into primary and secondary factors. Primary factors are essential requirements that must be met for the operation to function properly. Secondary factors are desirable but not necessary, and their absence can be resolved at a higher cost. Factors influencing plant location selection include the availability of raw materials, which are essential for manufacturing industries, and weight-losing industries such as...

, cement, sugar (1 quintal of sugar cane

is needed to produce 1 quintal of sugar) are found at the start of raw materials. On the other hand, industries that are not dependent on raw material sources, like the garment and electronics industries, can be established anywhere. Power resources are crucial for energy-intensive industries like aluminum and polyethylene bag industries, which are located near energy sources. The availability of labor is also important, especially for labor-intensive industries.

, the construction industry can bring in labor from other areas to a site. In addition to providing good working conditions within the mill, employees also require certain facilities outside.

Diversion installations, schools for kids, etc., have a particular role in transporting natural materials to factories and finished products to the market. For example, inexpensive water transportation has made it easier for jute mills to develop and concentrate in the Hooghly region. The availability of market facilities also influences industries, with many choosing to locate near large urban centers where potential buyers are easily accessible. The suitability of the climate also plays a significant role in plant location, as certain industries require specific climatic conditions for production, and climate directly impacts labor efficiency. Places with extreme weather conditions have a negative effect on labor efficiency and therefore do not attract industries.

The government has implemented policies to promote balanced regional development in India by selecting backward areas for the establishment of new industries. This initiative aims to boost the local economy and ultimately benefit the national economy. The government has influenced the location of these industries through licensing and freight rate policies, as well as by establishing public sector units in remote areas to attract other industries. Additionally, financial

institutions have been set up and subsidies provided to further support this effort. Competition between states is observed, as various states offer investment subsidies and sales tax exemptions to attract new businesses. Considering the current globalized world, environmental policy is crucial in controlling pollution. Therefore, understanding the environmental policy for the establishment location is another important factor to consider.

Rivals: having associations with competing industries can yield tangible benefits when competition is healthy. Challenges in procuring raw materials, labor disputes, and government regulations can be effectively addressed if competing units collaborate. Presence of complementary industries: the presence of complementary industries is advantageous for locating industries as it offers numerous benefits such as increasing the variety of raw materials at affordable prices, enhancing the labor market, attracting a range of infrastructure and sharing goodwill among newly established units in the same vicinity. Finance and research facilities: having sufficient capital is essential for the successful functioning of an organization. An area that provides facilities for raising capital attracts new industries.

In its functioning, a mill may encounter various types of jobs. Each new job is thoroughly analyzed and an appropriate solution is determined, thus making research facilities essential. For certain industries such as fertilizer units, cotton, and leather tanneries, a sufficient water supply is crucial to their operations.

These mills must be situated in areas with abundant water supply. Industrial units face fire hazards, which can originate internally or from neighboring units. In either scenario, adequate fire fighting facilities must be accessible. Local authorities impose taxes and restrictions for the provision of water, electricity, and other utilities.

They also collect various taxes from industrial units and impose restrictions on the placement

of new units in the public interest. Waste disposal is another consideration, as the chosen site for the facility should have provisions for proper waste management. This may include adequate sewage connections or access to a river or sea for liquid waste disposal, as well as enough vacant land for dumping solid waste. With the increasing globalisation, site selection is becoming more complex.

Globalization has resulted in: a stronger international economy, improved global communication, faster and more reliable travel and shipping, increased ease of movement of capital between countries, and the differentiation of high labor costs.

Decision

The current state of globalization is unprecedented and is associated with the rapid growth of global value chains as production processes become more geographically disconnected. Information and communication technology (ICT) allows for the fragmentation of value chains and the ability to perform activities in any location that can help reduce costs. The globalization of value chains leads to the physical fragmentation of production, where different stages are optimally located across various sites as firms source more inputs globally. This phenomenon is also known as international production sharing and vertical integration of production, and it is closely tied to the expansion of global production networks.

Globalization now includes foreign direct investment and trade in services, as many service activities have become internationalized, especially with the advancement of ICT enabling the production of location-independent services. The current economic integration is not just limited to OECD countries but also involves major emerging global players like Brazil, China, India, and Russia. The globalization of value chains is driven by various factors. One such factor is the aim to enhance efficiency,

as increasing competition in domestic and international markets compels firms to become more efficient and reduce costs. Achieving this goal can be done by sourcing inputs from more efficient manufacturers, either domestically or internationally, within or outside the firm's boundaries. Other significant motives include entering new emerging markets and gaining access to strategic assets that can enable the utilization of foreign knowledge.

Despite the expected advantages, companies engaging in global supply chains also face disadvantages and risks.

Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New