UNIT- IV
PLANT LOCATION
Plant location refers to the selection of the location or the site for setting up a business or factory. Decision regarding plant location should be taken after detailed analysis of various factors because once taken, the decision cannot be changed. The business suffers huge loss if such a decision is changed after implementation.
Identifying an ideal location is very crucial. An ideal location is one where the cost of producing the item is kept low with large market share, low risk and the maximum social gain.
Key Takeaway
- Plant location refers to the selection of the location or the site for setting up a business or factory.
The factors influencing the location of industry can be divided into two broad categories i.e.-
(I) Geographical factors, and
(II) Non-geographical factors.
I. Geographical Factors:
Following are the important geographical factors influencing the location of industries.
1. Raw Materials: The significance of raw materials in manufacturing industry is so fundamental that it needs no emphasizing. Indeed, the location of industrial enterprises is sometimes determined simply by location of the raw materials. Modem industry is so complex that a wide range of raw materials is necessary for its growth.
Further we should bear in mind that finished product of one industry may well be the raw material of another. Industries which use heavy and bulky raw materials in their primary stage in large quantities are usually located near the supply of the raw materials.
2. Power: Regular supply of power is a pre-requisite for the localisation of industries. Coal, mineral oil and hydro-electricity are the three important conventional sources of power. Most of the industries tend to concentrate at the source of power.
3. Labour: No one can deny that the prior existence of a labour force is attractive to industry unless there are strong reasons to the contrary. Labour supply is important in two respects (a) workers in large numbers are often required; (b) people with skill or technical expertise are needed. Although, the location of any industrial unit is determined after a careful balancing of all relevant factors, yet the light consumer goods and agro-based industries generally require a plentiful of labour supply.
4. Transport: Transport by land or water is necessary for the assembly of raw materials and for the marketing of the finished products. As industrial development also furthers the improvement of transport facilities, it is difficult to estimate how much a particular industry owes to original transport facilities available in a particular area.
5. Nearness to Market: The entire process of manufacturing is useless until the finished goods reach the market. Nearness to market is essential for quick disposal of manufactured goods. It helps in reducing the transport cost and enables the consumer to get things at cheaper rates.
6. Water: Water is another important requirement for industries. Many industries are established near rivers, canals and lakes, because of this reason.
7. Site: Site requirements for industrial development are of considerable significance. Sites, generally, should be flat and well served by adequate transport facilities. Large areas are required to build factories. Now, there is a tendency to set up industries in rural areas because the cost of land has shot up in urban centres.
8. Climate: Climate plays an important role in the establishment of industries at a place. Harsh climate is not much suitable for the establishment of industries. There can be no industrial development in extremely hot, humid, dry or cold climate.
II. Non-Geographical Factors:
The non-geographical factors are those including economic, political, historical and social factors. These factors influence our modern industries to a great extent. Following are some of the important non- geographical factors influencing the location of industries.
1. Capital: Modem industries are capital-intensive and require huge investments. Capitalists are available in urban centers.
2. Government Policies: Government activity in planning the future distribution of industries, for reducing regional disparities, elimination of pollution of air and water and for avoiding their heavy clustering in big cities, has become no less an important locational factor. The state policy of industrial location has a greater hand in the establishment of a number of fertiliser factories, iron and steel plants, engineering works and machine tool factories including railway, shipping, aircraft and defence installations and oil refineries in various parts in the new planning era in free India.
3. Banking Facilities: Establishment of industries involves daily exchange of crores of rupees which is possible through banking facilities only. So the areas with better banking facilities are better suited to the establishment of industries.
4. Insurance: There is a constant fear of damage to machine and man in industries for which insurance facilities are badly needed.
Key Takeaways:
- The factors influencing the location of industry can be divided into two broad categories i.e. Geographical factors, and Non-geographical factors.
- Geographical factors can be in the form of raw materials, climate, water, market, soil, etc
- Non-geographical factors can be in the form of Government policies, Capital, Industrial Inertia, Organizational efficiency, etc
A. Weber’s theory of Industrial Location
Alfered Weber, a German economist, was the first economist who gave scientific exposition to the theory of location and thus filled a theoretical gap created by classical economists. He gave his ideas in his Theory of Location of Industries’ which was first published in German language in 1909 and translated into English in 1929. His theory, which is also known as ‘Pure Theory’ has analytical approach to the problem. The basis of his theory is the study of general factors which pulls an industry towards different geographical regions. It is thus deductive in approach. In his theory he has taken into consideration factors that decide the actual setting up of an industry in a particular area.
Weber’s Problems:
Weber was faced with many serious problems. He wanted to find out why industries moved from one place to another and what factors determined the movement. After considerable thinking, he came to the conclusion that certain causes responsible for this migration could be Regional Factors (Primary Causes) and Agglomerative and De-agglomerate factors (Secondary Factors).
i. Regional Factors (Primary Causes):
In so far as regional factors were concerned, these, among other things, included cost of the ground, buildings, machines, material, power, fuel, labour, transportation charges and amount of interest that the capital would have earned. According to Weber, transportation costs play a vital role in the location of an industry. Each industry will try to find location at a place where transportation charge is minimum, both in terms of availability of resources and place of consumption. According to him, transportation costs depend on the weight to be transported, distance to be covered, the type of transportation system available and the extent to which it is in use, the nature of the region i.e., whether rocky, plain, connected or unconnected with roads etc. the kinds of the roads in the area where the goods are to be transposed, nature of care and facilities required in handling the goods.
Locational Figure:
While discussing regional factors, Weber has discussed the idea of locational figure. According to him, every industry will try to see that it is located at a place where raw materials are available nearest to the place of consumption.
Classification of Material:
Weber, before proceeding further, has classified raw material into different categories whivh are enumerated below:
(a) Ubiquities material which is suitable everywhere e.g., bricks, clay etc., and
(b) Localised material e.g., iron ore, mineral etc. which is available in certain regions and not everywhere. Obviously the later play a bigger and important role than the former. He has also categorised raw material as ‘Pure’ and ‘Weight Losing’ raw material is one which impart its whole weight to the products e.g., cotton, wool etc. and weight losing materials are those in which only a part of the material enters into the weight.
Laws of Transportation:
While discussing the theory of location, Weber has also discussed laws of transportation. According to him material index measures the total weight to be moved. From material index, he understood the portion of the weight of localised material to the weight of the product. According to him, “All industries whose material index is not greater than one and whose locational weight therefore, are not greater than two lie at the place of consumption.”
Causes of Deviation of Location: Weber wondered why the industries deviate from the centre of least transport costs. One such reason could be differences in the labour costs. This labour cost can be cheap either because of differing levels of efficiency and of wages of labour or because of differing levels of efficiency in the organisation and the technical equipment which the labour is required to use. Labour cost can go up and come down due to distribution of population as well. Weber himself has said that, with a high index of labour costs, a large quantity of labour costs will be available for comparison with correspondingly high critical isophanes, and therefore we shall find a high potential attracting powers of the labour locations and vice versa.
According to Weber’s theory, if the behaviour of each industry in respect of labour cost is to be measured than it is necessary to calculate the proportion of labour costs per ton of weight to be moved.
ii. Agglomerative and Deagglomerate Factory (Secondary Causes):
An agglomerative factor, according to Weber, is a factor which provides an advantage in production or marketing of a commodity, simply because industry is located at one place. On the other hand, De-agglomerate factor is one which gives such advantage because of decentralisation of production.
Agglomerative factors include gas, water etc. and are conducive for concentration of industry and deagglomerate factors include land values and taxes and lead to decentralisation. Pulls of agglomerative factors are index of manufacture and locational weight. According to Weber ratio of manufacturing cost of locational weight is co-efficient of manufacture. According to Weber Agglomeration is encouraged with high co-efficient and deglomeration with low. According to him, we shall do well to bear in mind that labour orientation is one form of deviation from the minimum point; agglomeration to another. When agglomerative forces appear in an industry oriented towards labour, there takes place a competition between the agglomerative deviation and the labour deviation, a struggle to create, locations for agglomeration, as compared with labour locations, both bearing upon the foundations of the transportational ground work.
Split in Location:
Weber has considered the possibility of location of an industry at more than open one, particularly when production in an industry can be carried independently at more than one place. According to him in fact single location is an exception and split a rule. It is essential, according to him that all productive processes must go on at one and the same place and it is better that these be carried out at different stages and at number of places. Split is to occur in two stages. In the first stage it is elimination of waste and in the second working up of pure material.
Locational Coupling:
Weber along with split in location has also given the idea of locational coupling, meaning thereby that different types of industries can be coupled in one and the same locality. According to him it is just possible to combine production of different articles in one plant because of the availability of several raw materials from the same source.
This coupling can be possible either due to economic or technical reasons. It is also possible due to connection through material e.g., if the by-product of one industry happens to be raw material for another then the two industries may select a single place of location. Locational coupling can also be due to market connection between two industries. In such a case product of one industry may enter into another industry without being used as material or half-finished product.
Criticism of Weber’s Theory
Weber’s Theory of Industrial location has been put to several criticisms.
Some such points of criticism are:
1. Unrealistic Assumptions: According to critics of this theory, Weber has unrealistically over-simplified the theory of industrial location. Many assumptions in the theory are unrealistic. According to them Weber has taken only two elements for determining the cost of transportation namely weight and distance. He has not given due to place to the type of transport, quality of goods to be transported, topography, character of region etc.
2. Labour Centres Notion Defective: Weber’s ideas about labour centres have also not been accepted. He has started with the presumption that there are fixed labour centres with unlimited supplies of labour in each of them. Obviously both these assumptions are not correct. There cannot be fixed labour centres, because each industry creates new labour centres. Similarly, there can never be unlimited supplies of labour in any centre.
3. Ideas about Fixed Points of Consumption: It is argued that Weber’s this idea does not work well with the market conditions in a competitive structure. Consumers are always scattered all over the country and thus consumer centres always shift with a shift in industrial population. There can therefore be no fixed point of consumption.
4. Vague Generalisations: Weber, while expounding his theory of industrial location, has introduced, it is believed, certain vague generalisations. He has given no due place to non-economic factors of industrial location, which play a big role in this regard. Who can deny that there are certain historical and social forces which go a long way while deciding industrial location of an industry, but he has completely ignored them, which has made his theory very unrealistic?
5. Not a Deductive Theory: Andreas Predohl is of the view that Weber’s Theory is only selective and not deductive. According to him he has made an artificial distinction between general and special factors which influence location of an industry. Such a distinction, in fact, has no logical significance. According to Weber transport costs and labour costs are only general costs. He has failed to explain why capital costs and management costs cannot be included or covered under it.
6. Defective Method of Analysis: Weber has tried to classify material into ubiquities and fixed material. Again the division is arbitrary. According to Robinson who does not know that in actual practice materials are drawn from a large number of alternative fixed points.
7. Overburdened with Technical Considerations: Dennison is of the view that Weber’s theory is heavily over burdened with technical considerations. It has not laid due stress on costs and prices and has over stressed technical coefficients. According to him, “The most important criticism about Weber’s analysis is that it is lamentably removed from all considerations of costs and prices and it is formulated mainly in terms of technical coefficients.”
B. Sargant’s theory of Industrial location
Sargant Florence has given his theory about industrial location. He was of the opinion that some of Weber’s assumptions are unrealistic. His main consideration is that occupational distribution of population should be the primary factor for taking into consideration the location of an industry. His theory is mainly based on inductive analysis. While explaining location factor of an industry, he has taken into consideration location factor and co-efficient of localization. According to him, it is an index of the degree of concentration of an industry in a particular region.
In calculating index to find out the location factor the first one is divided by the second and if the quotient is one, the location factor is said to unity and it can be said that the industry is evenly tribute over the whole country. If quotient is above unity, then the conclusion can be that the region under reference has higher share of industry.
Co-Efficient of Localisation:
It indicates an industry’s tendency for localisation anywhere in the country. It is primarily concerned with a particular industry and not a particular region. It will thus be a single figure for the industry and also for the country as a whole.
Co-efficient of localisation can be found with the help of following formula:
(a) Percentage age of all workers found in each region;
(b) Percentage age of the workers of industry in question in each region;
(c) Positive deviations of (b) from (a) are to be added;
(d) Sum thus derived is to be divided by 100.
On the basis of coefficients, it becomes possible to divide the industries into three categories namely high, medium and low. Thus, coefficient helps in classifying industries according to their dispersion or concentration.
Critical Assessment of the Theory
1. The theory is not in a position to explain the causes responsible for the choice of location of an industry. It can only help in finding out the existing state of industrial distribution in a country. It is said that the theory is only the investigation of status quo and nothing beyond that.
2. While finding out coefficient of localisation, the unit is political region, which it is said cannot be much justified in discussing an economic theory. Therefore, the unit should be economic region.
3. According to this theory number of workers is the only one factor as the indicator of concentration of an industry, but there is no logic in choosing this one factor alone for finding out concentration of an industry.
4. According to Florescence co-efficient of location for all the countries is the same. But it cannot be the same because distribution of workers in each country varies according to local conditions.
5. While formulating his theory, he has not given due place and consideration to various forces of concentration which have direct bearing on the location of industrial units namely the role of external economies or tax incentives etc.
Value of the Theory
Like Weber’s theory, this theory also suffers from some defects, about which a mention has already been made. But the theory has its advantages too. The theory is of considerable use for studying location dynamics in any country. These indices help in guiding the trends of industrial development in a country.
Then another advantage is that coefficient of localisation helps in deciding the types of industries that may be dispersed under a scheme of regionalism. It then becomes possible to diversify industries with a medium coefficient of localisation over a wide area, according to factor equipment in each area.
Key Takeaways:
- There are two popular theories of Industrial Location: Weber’s and Sargant’s. The basis of Weber’s theory is the study of general factors which pull an industry towards different geographical regions. It is thus deductive in approach.
- The basis of Weber’s theory is the study of general factors which pulls an industry towards different geographical regions. In his theory he has taken into consideration factors that decide the actual setting up of an industry in a particular area.
- While explaining location factor of an industry, Sargant has taken into consideration location factor and co-efficient of localization.
In the words of George R. Terry, “Plant layout involves the development of physical relationship among building, equipment and production operations, which will enable the manufacturing process to be carried on efficiently.”
Accordingly to Richard Muther, “Plant layout is the arrangement of machines, work areas and service areas within a factory.”
A plant layout study is an engineering study used to analyze different physical configurations for a manufacturing plant. [http://www.mbaofficial.com]
There are three main types of plant layout: Functional or Process Layout, Product or Line Layout and Stationary Layout. Two other types of layout are- Combination and Fixed Position Layout.
However, the choice of one or the other type of layout depends upon the machines and techniques used in the production.
- Process Layout:
It is also known as the functional layout and is characterized by keeping similar machines or similar operations at one location. In other words, separate departments are established for each specialized operation of production and machines relating to that function are assembled there. For example, all lathe machines will be in one place, all milling machines at another and so on.
Advantages of Process Layout:
i. Wide flexibility exists as regards allotment of work to equipment and workers.
ii. The production capacity is arrange in flexible sequence and fixed-rate capacity with line balancing. Alteration or change in the sequence of operations can easily be made as and when required without upsetting the existing plant layout plan.
iii. It ensures better quality products because the supervisors and workers attend to one type of machines and operations.
iv. Different job orders make the work more interesting for workers.
v. Workers in one section are not affected by the nature of operations carried out in another section.
vi. Unike product layout, the breakdown of one machine does not interrupt the entire production flow.
vii. This type of layout requires lesser financial investment in machines and equipment.
viii. Under process layout, better and efficient supervision is possible because of specialization in operation.
Disadvantages of Process Layout
i. Automatic material handling is extremely difficult because fixed material handling equipments like conveyor belt cannot be used.
ii. Completion of the same product takes more time.
iii. Raw material has to travel larger distances for getting processed to finished goods. This increases material handling and associated costs.
iv. It is not possible to implement the group incentive schemes based on the quantity of the manufacturing of the product.
v. This type of layout requires more floor space than the product layout because a distinct department is established for each operation.
vi. Compared to line layout, inventory investments are usually higher in case of process layout. It increases the need for working capital in the form of inventory.
vii. Under process layout, cost of supervision is high because the number of employees assigned to each supervisor is less than the result in the reduced supervisory span of control and the work is checked after each operation.
2. Product Layout:
It is also known as line (type) layout. It implies that various operations on a product are performed in a sequence and the machines are placed along the product flow line i.e. machines are arranged in the sequence in which a given product will operate upon. This type of layout prefers for continuous production i.e. involving a continuous flow of in-process material towards the finished product stage.
Advantages of Product Layout:
i. Automatic material handling, lesser material handling movements.
ii. It is time and cost effective.
iii. Product completes in lesser time. Since materials are fed at one end of the layout and the finished product collects at the other end, there is no transportation of raw materials backward and forward. It shortens the manufacturing time because it does not require any time-consuming interval transportation until the completion of the process of production. Line balancing may eliminate idle capacity.
iv. The smooth and continuous flow of work. This plan ensures a steady flow of production with the economy because bottlenecks or stoppage of work at different points of production is got to eliminate or avoid due to the proper arrangement of machines in sequence.
v. Less in-process Inventory. The semi-finished product or work-in-progress is the minimum and negligible under this type of layout because the process of production is direct and uninterrupted.
vi. Effective quality control with reduced inspection points. It does not require frequent changes in machine set-up. Since the production process integrates and continuous, Defective practice can easily discover and segregate. This makes inspection easy and economical.
vii. Maximum use of space due to straight production flow and reduced need for interim storing.
Disadvantages of Product Layout
i. Since the specific product determines the layout, a change in product involves major changes in layout and thus the layout flexibility considerably reduces.
ii. The pace or rate of working depends upon the output rate of the slowest machine. This involves excessive idle time for other machines if the production line does not adequately balance.
iii. Machines being scattered along the line, more machines of each type have to purchase for helping a few as stand by, because if one machine in the line fails, it may lead to shut down of the complete production line.
iv. It is difficult to increase production beyond the capacities of the production lines.
v. As the entire production is the result of the joint efforts of all operations in the line, it is difficult to implement individual incentive schemes.
vii. Since there are no separate departments for various types of work, supervision is also difficult.
viii. Under this system, labor cost is high because:
1) Absenteeism may create certain problems because every worker is a specialist in his work or he specializes on a particular machine. To overcome the issue of absenteeism, surplus workers who are generalists and can fit on several machines will have to be employed.
2) Monotony is another problem with the workers. By doing work of repetitive nature along the assembly line, they feel bored
3) As machines play the dominant role in production under this system, workers have no opportunity to demonstrate their talent.
4) Noise, vibrations, temperature, moisture, gas, etc. may cause health hazards. In this way, labor costs are high.
3. Static Product Layout or Project Layout or stationary Layout:
The manufacturing operations require the movements of men, machines, and materials, in the product layout and process layout generally the machines are fixed installations and the operators are static in terms of their specified work stations. It is only the materials which move from operation to operation for processing. But where the product is large in size and heavy in weight, it tends to be static e.g. shipbuilding. In such a production system, the product remains static and men and machines move to perform the operations on the product.
Advantages of stationary layout
i. Flexible: This layout is fully flexible and is capable of absorbing any sort of change in product and process. The project can complete according to the needs of the customers and as per their specification.
ii. Lower labor cost: People are drawn from functional departments. They move back to their respective departments as soon as the work is over. This is economical if several orders are at hand and each one is in a different stage of progress. Besides, one or two workers can assign to a project from start to finish. Thus it reduces labor cost.
iii. Saving in time: The sequence of operations can change if some materials do not arrive or if some people are absent. Since the job assignment is so long, different sets of people operate simultaneously on the same assignment doing different operations.
iv. Other benefits: They are:
1) It requires less floor space because machines and equipment are in moving position and there is no need for fixing them.
2) This arrangement is the most suitable way of assembling large and heavy products.
Disadvantages of stationary layout
i. Higher capital investment: Compared to the product or process layout, capital investment is higher in this type of layout. Since several assignments are taking, investment in materials, men, and machines makes at a higher cost.
ii. Unsuitability: This type of layout is not suitable for manufacturing or assembling small products in large quantities. It is suitable only in the case where the product is big or the assembling process is complex.
4. Combination Layout
A combination of process and product layouts combines the advantages of both types of layouts. Moreover, pure product or process layouts are rare in today’s business world. Most of the manufacturing sections are arranged in process layout with manufacturing lines scattered wherever the conditions permit. A combination layout is possible where an item is made in different types and sizes. In such cases machinery is arranged in a process layout then arranged in a sequence to manufacture various types and sizes of products. No matter whether the product varies in size and type, the sequence of operations remain the same or similar.
A combination layout is also useful when several items are produced in the same sequence but none of the items are produced in bulk and thus no item justifies for an individual and independent production line. For example, files, hacksaws, circular metal saws, wood saws, etc. can manufacture on a combination type of layout.
Advantages of Combination Layout
A combination layout brings a compromise solution by combining the benefits of both product and process layouts thus will be more economical and flexible.
5. Fixed Position Layout
This type of layout is the least important for today’s manufacturing industries. In this type of layout, the major component remains in a fixed location, as it is too heavy or too big, whereas the materials, parts, tools, machinery, manpower and other supporting equipments are brought to this location.
Advantages of Fixed Position Layout
i. Material movement reduces.
ii. Capital investment minimizes.
iii. The task is usually finished by a gang of operators, hence continuity of operations is ensured.
iv. It is possible to assign one or more skilled workers to a project from beginning to end, to ensure continuity of work.
v. It involves least movement of materials.
vi. There is maximum flexibility for all sorts of changes in product and process.
vii. Several quite different projects can be taken within the same layout.
viii. Production centers are independent of each other. Hence, effective planning and loading can be made. Thus, the total production cost will reduce.
ix. It offers greater flexibility and allows the change in product design, product mix, and production volume.
Disadvantages of Fixed Position Layout
i. Highly skilled manpower is required.
ii. It usually involves a low content of work-in-progress.
iii. There appears to be low utilization of labor and equipment.
iv. It involves high equipment-handling costs.
v. Movement of machines and equipments to the production center may be time-consuming.
Key Takeaways
- There are three main types of plant layout: Functional or Process Layout, Product or Line Layout and Stationary Layout.
- Other types of layout are Combination and Fixed Position Layout.
- In Process Layout, separate departments are established for each specialized operation of production and machines relating to that function are assembled there.
- Product Layout implies that various operations on a product are performed in a sequence and the machines are placed along the product flow line i.e. machines are arranged in the sequence in which a given product will operate upon.
- A Combination Layout is a combination of process and product layouts, combining the advantages of both types of layouts.
- In Fixed Position Layout, the major component remains in a fixed location, as it is too heavy or too big, whereas the materials, parts, tools, machinery, manpower and other supporting equipments are brought to this location.
Advantages of a good layout
The advantages of a good layout can be studied from the point of view of workers, labour cost, other manufacturing costs, production control, supervision and capital investment.
A. Advantages of layout to worker
1. Reduction in the effort of the worker.
2. Fewer material handling operations.
3. Extension of the process of specialization.
4. Ensuring maximum efficiency.
5. Better working condition and reduction in the number of accidents.
B. Advantages of layout in labour costs
1. Reduction in the number of workers.
2. Increase in production per-man-hour.
3. Reduction in the length of haul.
4. Minimum lost motions between operations.
C. Advantages of layout in other manufacturing costs
1. Maintenance and tool replacement costs are reduced.
2. Spoilage and scrap is minimized.
3. Greater saving in the waste of raw material consumption.
4. Improved quality of product due to reduction in the number of handling.
5. Saving motive power.
6. Effective cost control.
D. Advantages of layout in production control
1. Provision of adequate and convenient storage facilities.
2. Better conditions for receipts, shipment and delivery.
3. Increased pace for production.
4. Achievement of production targets unfailingly.
5. Reduction in the number of stock-chasers who are employed to get the work done on time.
E. Advantages of layout in supervision
1. Helps in easing the burden of supervision.
2. Reduces the level of inspection and this minimizing the cost of inspection.
F. Advantages of layout in capital investment
1. Investment in machinery and equipment is reduced because of increase in production per machine, utilization of idle machine time and reduction in the number of operations per machine.
2. Permanent investment is kept at the minimum
3. Floor space and shop areas required for manufacturing are reduced.
4. Reduction in the number of material handling equipment, work-in-process and reduced stock of finished products.
Thus, an efficient layout is necessary for achieving the objectives of the business i.e., higher production, turnover and profits by minimizing the cost of manufacturing.
Disasvantages of Layout
A bad layout results in unnecessary handling of materials and movement of men and equipment. Actually, the quality of the product may come down due to damage suffered in production process thus reducing the value added. Further, loss due to breakage, pilferage, deterioration, etc., add to costs being incurred. All these factors increase the cost of manufacturing. Disadvantages of plant layout are:
1. Maintenance cost is high.
2. Inflexible to changes.
3. Expensive.
4. Breakdown of a machine leads to stoppage in production.
5. Repetitive tasks lead to frustration and stress in workers.
Key Takeaways
- A good layout benefits workers and lays impact on labour cost, other manufacturing costs, production control, supervision and capital investment.
- A bad layout results in unnecessary handling of materials and movement of men and equipment.
Some of the major factors which affect plant layout are: (1) Policies of management (2) Plant location (3) Nature of the product (4) Volume of production (5) Availability of floor space (6) Nature of manufacturing process and (7) Repairs and maintenance of equipment and machines.
(1) Policies of management: It is important to keep in mind various managerial policies and plans before deciding plant layout. Various managerial policies relate to future volume of production and expansion, size of the plant, integration of production processes; facilities to employees, sales and marketing policies and purchasing policies etc.
(2) Plant location: Location of a plant greatly influences the layout of the plant.
(3) Nature of the product: Nature of the commodity or article to be produced greatly affects the type of layout to be adopted. In case of process industries, where the production is carried in a sequence, product layout is suitable. On the other hand in case of intermittent or assembly industries, process type of layout best suited. Production of heavy and bulky items need different layout as compared to small and light items. Similarly products with complex and dangerous operations would require isolation instead of integration of processes.
(4) Volume of production: Plant layout is generally determined by taking into consideration the quantum of production to be produced.
(5) Availability of floor space: Availability of floor space can be other decisive factor in adopting a particular mode of layout. If there is a scarcity of space, product layout may be undertaken. On the other hand more space may lead to the adoption of process layout.
(6) Nature of manufacturing process: The type of manufacturing process undertaken by a business enterprise will greatly affect the type of layout to be undertaken.
(7) Repairs and maintenance of equipment and machines: The plant layout should be designed in such a manner as to take proper care with regard to repairs and maintenance of different types of machines and equipment being used in the industry. The machines should not be installed so closely that it may create the problems of their maintenance and repairs.
Key Takeaways
- Some of the major factors which affect plant layout are: Policies of management, Plant location, Nature of the product, Volume of production, Availability of floor space, Nature of manufacturing process and Repairs and maintenance of equipment and machines.
References:
- Tulsian, P.C. Business Organization and Management, Pearson Education, India (2002). Pp. 671
- Dam, B.B., Choudhury, R.N., Nag, R & Dam, L.B. Company Law, Gayatri Publications, Guwahati, Assam (2020).
- Wason, V. Textbook of Business Studies, S.Chand, New Delhi (2010)
