Analysis of Facility Relocation Strategies - the Criteria for Analysing Relocation Strategies in the New Economy

ANALYSIS OF FACILITY RELOCATION STRATEGIES

THE CRITERIA FOR ANALYSING RELOCATION STRATEGIES IN THE NEW ECONOMY

Author: Tafadzwa Magejo, MSc MSOM (UZ), BTech (Hons) Prod Eng, GradZweIE

Softex Tissue Products 202 Seke rd graniteside Harare

Mobile: +263 11 455 916 Tel: +263 4 770097 ext Email: tmagejo@artcorp.co.zw, tmagejo@yahoo.co.uk

Abstract

This paper presents an analysis of facility relocation strategies. The stimulants of facility relocation (what gives birth to facility relocation strategies) are presented. The various considerations that Production or operations managers (P/OMs) should make when taking a strategy to relocate their facilities. The various tools used by the P/OMs are stated but not discussed. This is a foundational guide to analyzing relocation strategies. Facility relocation strategies are considered as those decisions made by P/OM to move an existing facility to a new area due to the various reasons that may stimulate that movement. The conclusion of this paper is that the analysis of facility relocation strategies is important for business success and as such P/OMs must take time to analyze these strategies.

1.0 Introduction

Fixed capacity planning (FCP) is the first long term question with which production management is faced . This planning needs to be done thoroughly from the start. Fixed capacity planning involves the following issues:

Identifying a suitable location

Determining the size of the productive facility

Layout of the productive unit

Occupational safety etc

The issue of location strategies becomes a continuous problem to be addressed at every strategy session, even after setting up the facility. This is because the stimulants or the basis for facility location analysis are dynamic and business perspective changes along the way as well. As shall be seen later business strategy and facility location are heavily intertwined that is a change in strategy may mean a change in location. [Radical strategy formulations and radical innovations are examples of such strategies]. This continual evaluation of facility location strategies gives birth to facility relocation strategies. As indicated by Botes . It is of cardinal importance for any business that its production units or productive units be correctly located.

A wrong location can result in the business suffering for the rest of its existence or until a strategy to relocate is made. In the past many businesses have failed because a wrong location was chosen. As such a question of whether a productive unit is functioning in the correct location or not should be given constant attention. If it is not correctly located, new locations must be considered.

The biggest myth of the new economy is that location no longer matters. Most believe that as our business world becomes smaller due to technological innovation, boarders of regional and international industry will continue to disappear, business cycles will continue to speed up and the world will become a huge homogenous market place market place .

Economic changes in various regions and countries have been forcing many firms to reconsider their locations. Companies have shifted their headquarters from Zimbabwe to other regional countries some of these moves have been successful whilst others have been major flops. The P/OM in Zimbabwe or anywhere else is faced by the challenge of analyzing and coming up with a successful relocation strategy.

The investigation of new locations is the formulation of relocation strategies and measures to be taken during relocation. The subject of facility relocation should not be taken for granted in business. Thorough analysis criteria for facility relocation should be developed. These are some of the issues that have been drivers to the compilation of this research paper.

Key Words

Fixed Capacity Planning (FCP), Facility Re/location Planning (FRP), Re/Location analysis, New Economy

Research objectives

1. Present criteria for evaluating facility relocation strategies in the new economy.

2. Analyze the new thinking in relocation strategies.

Research Methodology

A wide range of published works reflecting on the latest thinking