Finding out the best location to place your logistics Center after finalizing the region is another important factor within supply Chain Management

 

“Finding out the best location to place your logistics Center after finalizing the region is another important factor within supply Chain Management”.

 

 

 

 

 

 

Prepared by:

Ashan Silva

(Chartered Marketer)

AFNI (UK), CMILT (UK), ACIM (UK),

Ex. MSc (Strategic Marketing), Ex. MBA, CIM(UK), MBA, DBA(ABD) 

 

 

The location of the organization is one the prime factor in the supply chain management. When the organization finalise the region, the next step is to finalise the location in that region. Specially like city, area, etc.  

Two major factors need to be considered to finalize the location,

1.       Infinite set approach

2.       Feasible set approach

Infinites approach does not have any restrictions on site availability (by using geometric reasons) to when you want to find the most suitable location for your project.

If we take feasible approach, it has only limited suitable locations and had to choose a place within those limited locations.  

So, from above, infinite approach is always allowing organization to choose their best location.

We have Simple models to find out the best location by considering some simple factors such as follows,  

·         Facility near to customers.

·         Facility near to suppliers.

·         Facility between customers and suppliers.

 

   Source: - Donald waters “Logistics” an introduction to supply chain management

 The best negotiation location will give us the center of gravity of the supply and demand.

 

  Source: - Donald waters “Logistics” an introduction to supply chain management

Said coordinates can be find out by using following simple formula,

Through following example, we can work this out and the best location for this organization to place their logistic centre. if we take following suppliers and stores which the company is planning to store their finish goods,

X & Y                                                      - Coordinates of supplier and warehouse/stores

W                                                            - Expected supply or demand

Location	X	Y	Supply/Demand
supplier M	80	12	35
supplier N	88	29	58
supplier S	19	75	72
Stores A	80	22	20
Stores B	83	44	19
Stores C	61	79	21
Stores D	16	90	40

 

Through above scenario if we try to find out the best place to locate their logistics house. 

 

Through the result of the above example, we can find out a reasonable location to place their logistic center.

But this will not be the best result what we are looking for when we consider all practical factors in the ground. Factors such as actual road distance, traffic conditions, etc. Because most of the time it is not the distance matter a lot, it is the travel time. So, we can fine tune this calculation by using actual distance rather straight-line distance.

 

Will try to explain that with examples through another separate article.  

   

 

 

 

 

 

 

 

 

 

 

THANK YOU

18^th June 2022