ADDING A NEW FACILITY LOCATION

Operations management is a very broad field of study and you have covered a lot of material in the first half of the course.

QUESTION

Using a real service or manufacturing operation that you have experience with, evaluate the elements that they would have to consider to expand their operation to another facility.

Factors for Geographic Selection for the Service Industry Flexibility of a location relates to the degree in which service can react to changing economic situations. Location decisions are long-term commitments to capital investments, so the selection of the best location must be determined by such items as local future economic, demographic, cultural, and competitive changes. Competitive positioning is a method that a company can use to establish their market position based on its competitors. Multiple locations can be a great tool to set a competitive position and establish a market awareness. Demand management is the ability to control the quantity, quality, and timing of demand by locating near a growth market. Focus can be developed by offering the same service at many locations. For example, many multi-site service companies develop a standard facility that can be duplicated at many locations (the cookie-cutter approach). Competitive clustering is reacting to customer behavior when they need to select among many competitors (Fitzsimmons & Fitzsimmons, 2011). Factors for Geographic Selection for the Manufacturing Industry An offshore factory manufactures products at low cost with minimum investment in technical and management resources. These are normally export assembled products and much less expensive that locally manufactured and assembled parts. The main objective is to take advantage of lower labor costs. A source factory has plant management heavily involved in supplier selection and production planning. Usually this kind of plant has a low volume production cost and availability of skilled workers. A server factory is designed to take advantage of government incentives, low exchange risk, tariff avoidance, reduced taxes and logistics. A contributor factory goes beyond the server factory by being involved in product development and engineering, production planning, procurement decisions and supplier relationships. An outpost factory is selected to be in an area that has many advanced suppliers, research facilities, and access to the most current information on technologies and products. A lead factory is the main source of product and process innovation and competitive advantage for the entire organization. It is very involved with market penetration, and identifying customers for new products (Leong, Wisner, & Tan, 2012). Reference: Fitzsimmons, J., & Fitzsimmons, M. (2011). Service management: Operations, strategy, and information technology (7th ed.). New York, NY: McGraw-Hill Irwin. Leong, G., Wisner, J., & Tan, K. (2012). Principles of supply chain management: A balanced approach (3rd ed.). Mason, OH: South-Western.