Logistic Facilities

1. Facility

A facility is a place or building used for a particular activity or industry. Facility

location and specifications are important for production logistics, product
distribution, and customer support. Location has a major impact on the overall risk
and profit of the company. Companies make location decisions according to selling
demands, plants capacity, labor productivity, exchange rates, costs, or local
attitudes.

Facility decision considerations

Purpose or mission of the facility

Principle of locational gravitation
Economic factors
Sociopolitical criteria

Purpose of the facility

The types of facilities depend on their purpose or mission which can be:

Production facility
Distribution centers
Service centers
Inventory storages

Types of facilities

Production facilities

The mission of the production facility is to receive raw materials, working stock,
and fabrication components and convert them into finished products to be
provided to the customer. Its location is between the sources of raw materials,
working stock, vendors, transportation from the production point to the market
zones.

The site requires manufacturing resources, material inventory, order processing

and communications.
Distribution centers

The mission of the distribution center is to receive consignments of finished

products from the production point and store them to replenish retail outlets in the
market area.

These sites provide:

1. Replenishment support to retail outlet inventories of the product.

2. Stock of spare components and repair parts,
3. Wholesale transactions to retailers,
4. Intermediate maintenance capabilities.

COUNTRY DECISION

Political risk, government rules, attitudes, incentives

Cultural and economic issues
Location of markets
Labor talent, attitudes, productivity, costs
Availability of supplies, communications, energy
Exchange rates and currency risk

GEOGRAPHIC DATABASE IN GIS

Census data by block, tract, city, county, congressional district, metropolitan area, state, zip
code
Maps of every street, highway, bridge, and tunnel
 Utilities such as electrical, water, and gas lines
All rivers, mountains, lakes, forests
All major airports, colleges, hospitals

There are different Geographical Information Systems to locate and analyze places and
markets. Google Earth offers the possibility to see those places. If you want to get more
information download the program and watch the tutorials.

REGION/COMMUNITY DECISION

Corporate desires
Attractiveness of the region (culture, taxes, climate, etc.)
Labor availability, costs, and attitudes toward unions
Cost and availability of utilities
Environmental regulations of state and town
Government incentives and fiscal policies
Proximity to raw materials and customers
Land/construction costs

GEOGRAPHIC INFORMATION SYSTEMS

Geographic information systems are an important tool to help firms make successful, analytical
decisions to find a location. A geographic information system (GIS) stores and displays
information of a geographical location. For instance, retailers, banks, food chains, gas stations,
and print shop franchises use geographically coded files from a GIS to conduct demographic
analysis. So, having the combination of population, age, income traffic flow, and density figures
with geography, a retailer can pinpoint the best location for a new store or restaurant.

SITE DECISIONS

Site, size and cost

Air, rail, highway, waterway systems
Zoning restrictions
Proximity of services/supplies needed
Environmental impact issues