productive quality - location and logistics Flashcards
what is the main aim of choosing a location?
to achieve a balance between three related objectives:
- the cost of the operation
- the customer service that the business wants to provide
- the potential revenues that can be achieved from the location
what are supply factors to do with location?
- labour costs
- land costs
- energy costs
- transport costs
- community factors
what is the supply factor of labour costs?
- Labour costs vary from region to region, but the biggest difference is between the UK and low labour cost countries overseas
what is the supply factor of land costs?
- Sometimes the land will be purchased, but more often it will be rented along with the business buildings and facilities
- Rentals can vary enormously depending on the location and the facilities provided
- Government grants and other incentives are also often available to reduce the land costs of locating in poorer regions.
what is the supply factor of energy costs?
Some businesses use substantial amounts of energy (e.g. gas, electricity) but they should be able to negotiate a good price for their energy needs regardless of location in the UK
what is the supply factor of transport costs?
- Transport includes the cost of getting inputs into the business and also the cost of getting products delivered to customers
- Need to be close to its source of supply if the cost of transporting raw materials is high or difficult
what is the supply factors of community?
The costs of a business location can be influenced by many non-financial factors, but which can still be significant when making the choice. These include:
* Local amenities & services (e.g. schools, professional services)
* Local government attitude to supporting business (including financial assistance)
* Language
* Political stability
what are the demand factors?
- customer convenience
- labour skills
- site suitability
- image
- expansion potential
what is the demand factor of customer convenience?
Many businesses need to be located where customers find it quick, easy and cheap to access the service being provide
what is the demand factor of labour skills?
Where specialist skills are required, this can be a big issue. For example, technology firms tend to locate themselves in areas where there is well-established expertise (e.g. M4 corridor and Cambridge in the UK)
what is the demand factor of site suitability?
A site may need to have some particular characteristics to maximise customer satisfaction and revenues
what is the demand factor of image?
This is more intangible, but often important.
Some customers associate a product with a certain area and prefer to buy from there
what is the demand factor of expansion potential?
- Future production capacity often has to be taken into account
- A location might tick many other boxes, but if it provides limited scope for expansion then it might be rejected
- If a location restricts output, then revenues are potentially damaged
what is supply chain management?
The integration of the procurement of supplies, production, warehousing and transportation
what are the key factors in logistics?
- Warehousing-Storage depots (do firms have their own?)
- Customer requirements (are products perishable?)
- Information systems (ICT system that connects departments and other businesses)
- Transportation - how should products be delivered? (road, rail, air etc.)