INTRODUCTION TO FACILITIES SIZE, LOCATION, AND LAYOUT

INTRODUCTION

Site selection for a new factory or distribution center is a complicated and arduous process and must be based on the strategic vision of the organization, the requirements of the supply chain, and the needs of the customer. Determined both quantitatively and qualitatively, proper site selection usually involves upper management, since the level of success of the new facility will have a major impact on the bottom line of the organization.

The purposes for site selection are relocation, expansion, and / or decentralization. Motivations for selecting a site can vary depending on the purpose (e.g., the urgency of the matter may eliminate some complex quantitative assessment or some site research), but we will treat the process in the aggregate, touching on generic steps taken to make a good decision.

Many stakeholders will give different reasons for selecting a site for a new industrial facility. When the word gets out that your organization is in the market, several individuals and companies eager to help you find the right location will be in contact. The Chamber of Commerce, realtors, local and state governments, and developers will offer substantial incentive packages to locate in their location.

The objective of all site selections is to turn a property or an existing facility into a weapon of competitive advantage. As Figure 1 indicates, an organization must transition from a big-picture analysis of its strategies and mission (macro analysis), to an assessment of addressable locations (micro analysis), to the construction phase. Though construction can happen without the comprehen- sive analysis discussed in this chapter, competitive advantage is rare when the upfront evaluation work is not done completely.

Among the more common mistakes made by corporations when selecting a site are:

• Proceeding with a site search without a plan for the new facility: Do not start looking until you know what you are looking for. You must establish criteria for the site’s requirements. This will tell you what size warehouse your organization needs, what its footprint should look like, what the column spacing should be, dock and road requirements, etc. From this information, the site selection process can be narrowed to those properties that will accommodate the foot- print of the original building design, as well as any planned expansions. Do not try to fit a round peg into a square hole. Immediately eliminate sites that do not accommodate the facility as designed.

• Allowing premature publicity: There are advantages and disadvantages to keeping your search for a site confidential as long as possible. Announcing your plan to the public may result in free publicity, support from local communities, and a head start on employee recruiting. On the other hand, announcing your intentions may drive up land prices, open the door to an onslaught of people and organizations hoping to influence your decisions, and feed the rumor mill in a way that might be detrimental to the company.

• Failure to use a good criteria checklist: The only way to find a site that fits your specific needs is through the use of a detailed customized criteria checklist. If you are using a one-page document, you’ve left out a lot of important details. To be an effective tool, the checklist must be as comprehensive as you can make it, and should include both long-and short-term econom- ical, community, and quality of life factors.

• Failure to align project plans with future requirements and technological trends: Do not build for today or tomorrow; build for 2, 5, or even 10 years from now. How will the new facility accommodate increased sales, need for crossdocking, and different product lines? These are questions to be answered before you move, rather than after occupying the building.

• Failure to accurately estimate the true cost of doing business at each proposed location: The lowest cost site may not be the most economical place to do business. Your comparison of sites must include a thorough and detailed analysis of projected production costs. Do not let yourself be surprised by the cost of services and utilities like water, electricity, waste disposal, local special taxes, or site security. These factors can have a dramatic long-term cost impact on the bottom line.

• Giving consideration to intangibles at the wrong time: The purpose of the macro analysis is to precisely determine how best to utilize the site for competitive advantage. Allowing personal preferences about location and style only serves to shift the emphasis of the process from strategic and organizational requirements.

• Failure to use consultants to supplement staff skills: Collecting data on possible sites, accurately projecting operating costs, and evaluating incentive packages is a time-consuming process that cannot be rushed. Few owners have the time or in-house resources to do this job correctly. Facilities-planning consultants can collect the data and provide an unbiased source of advice on each facet of the site-selection process. With a wide breadth of knowledge and accessibility to time-saving planning tools, consultants make for an efficient and effective means of moving the process forward.