OPERATIONS MANAGEMENT- Plant Location and Layout




Plant Location is the right location for the manufacturing facility, it will have sufficient access to the customers, workers, transportation, etc. For commercial success, and competitive advantage following are the critical factors:

Overall objective of an organization is to satisfy and delight customers with its product and services. Therefore, for an organization it becomes important to have strategy formulated around its manufacturing unit. A manufacturing unit is the place where all inputs such as raw material, equipment, skilled labors, etc. come together and manufacture products for customers. One of the most critical factors determining the success of the manufacturing unit is the location.

Plant location decisions are strategic, long term and non-repetitive in nature. Without sound and careful location planning in the beginning itself, the new facility may pose continuous operating disadvantages, for the future operation. A right selection of a plant location can make and a wrong decision mar an organization. Location decision are affected by many factors such as technology used, the capacity, the financial position, the work force required and also by economic, political and social conditions in the various localities. The efficiency, effectiveness, productivity and profitability of the facility are also affected by the location decision. The facilities location problem is concerned primarily with the best location depending on the appropriate criteria of effectiveness.



    • Material- Quantity, quality, cost and regular supply.
    • Land- Site availability and cost, cost of construction, constructional regulations.
    • Equipment- Cost and availability.
    • Plant utilities- Water, electricity, gas, coal etc.
    • Labor- Availability, skill, wage rates etc.


    • Production analysis
    • Process analysis
    • Forecasting and scheduling
    • Production control
    • Maintenance
    • Cost control


    • Distribution- Distribution and storage facilities
    • Transportation- Facilities and cost
    • Present and future market potential
    • Local rates
    • Local taxes


    • Community attitude towards industry and company
    • Public and community services
    • Stockholder interests
    • Organizational decentralization policies.
    • Political situation
    • Environmental standards



  • Layout refers to the arrangement of facilities in a particular workstation. It may be plant layout, office layout, auditorium layout etc.
  • Plant Layout implies the physical arrangement of machines, equipment and other industrial facilities on the factory floor in such a manner that they may be handled efficiently.
  • Plant layout refers to the arrangement of physical facilities such as machinery, equipment, furniture etc. with in the factory building in such a manner so as to have quickest flow of material at the lowest cost and with the least amount of handling in processing the product from the receipt of material to the shipment of the finished product.
  • Layout is a Fundamental of every organization and enterprise.
  • Kitchen, Retailers, offices, service organization and all the enterprises have a specific layout.
  • Previously Layouts were based on intuition, experience and judgment.
  • With the complexities and competition now scientific methods are used.
  • The Layout comes in picture after the location has been finalized.
  • Development of good layout depends on decisions already taken on location, capacity, facility, manufacturing method and material handling techniques.



  • Provide space for machine / materials / storage / etc.
  • Flexible for future changes in capacity / Design / Process etc. ( Cellular design).
  • Accommodate future expansion.
  • Deals with government rules & regulations ( Municipal corporation / Labor law & rules).
  • Safety of employees / visitors / vendors is prime concern.
  • Achieve economy in operation.



  • It is long-term commitment.
  • It facilitates the production process, minimizes material handling, time and cost, and allows flexibility of operations.
  • It facilitates easy production flow, makes economic use of the building, promotes effective utilization of manpower, and provides for employees’ convenience, safety, comfort at work, maximum exposure to natural light and ventilation.
  • It affects the flow of material and processes, labor efficiency, supervision and control, use of space and expansion possibilities .



  • Overall simplification of production process in terms of equipment utilization, minimization of delays, reducing manufacturing time and better provisions for maintenance.
  • Overall integration of men, materials, machinery, supporting activities and many other considerations in a way that result in the best compromise.
  • Minimization of material handling cost by suitably placing the facilities in the best flow sequence.
  • Saving in floor space, effective space utilization and less congestion.
  • Increased output and reduced inventories in process.
  • Better supervision and control.
  • Worker convenience, improved morale and worker satisfaction.
  • Better working environment, safety of employees and reduced hazards.
  • Minimization of waste and higher productivity.
  • Avoid unnecessary capital investment.
  • Higher flexibility and adaptability to changing conditions.



  • Slow movement of materials through the plant.
  • High handling and transportation costs.
  • Crowded stock rooms and production departments.
  • Congested workplaces.
  • Inconveniently located service departments.
  • In-process materials are frequently damaged, misplaced or lost.



  • Principle of Overall Integration:
    All the plant facilities are integrated one single operating unit considering all the servicing necessary for operations.
  • Principle of Minimum Distance Moved:
    Attempts are made to minimize the movements as far as possible. However, the principle of overall integration should be considered while planning for the minimum distance moved.
  • Principle of Flow:
    A layout must arrange the work areas as far as possible, in the same way as the sequence of operations or processes. The basic idea is to move the work towards completion progressively without interference of backtracking with a minimum of interruption or congestion.
  • Principle of Cubic Space:
    Economy is obtained by using effectively available space- both vertical and horizontal.
  • Principle of Satisfaction and Safety:
    Satisfaction of working people is an important factor to be kept in mind. Similarly due consideration must be given to safely requirements.
  • Principle of Flexibility:
    The layout must be sufficiently flexible to take care of the necessity of rearranging the production facilities, when the need comes.