Plant location
The term "plant location" describes the region and specific site chosen for the construction of a
factory or business.
Yet, the decision is only made after weighing the costs and advantages of other substitute sites.
Once made, it is a strategic choice that cannot be reversed. The location should be chosen based
on its unique requirements and conditions, and only if it can be changed without suffering a
significant loss. Each unique plant stands alone as a case. A businessman should make an effort
to choose the best or ideal location.
What is ideal location?
A site is desirable if it has a high market share, low cost of goods, low risk, and high potential for
social benefit. It is the location with the greatest net advantage or with the lowest production and
distribution costs per unit. Small-scale business owners can employ locational analysis to help
them achieve this goal.
Locational analysis
Locational analysis is a dynamic process where an entrepreneur evaluates and contrasts the
suitability of potential sites in order to choose the ideal location for a certain firm.
The following factors aid in location analysis:
A)Demographic analysis
B) area analysis
C)Competitive analysis
D)Site economics
The following are the key factors to take into account when choosing a suitable location:
a) Environmental or climatic factors.
b) Accessibility and proximity to the suppliers of raw materials.
c) Transport expenses—both for acquiring raw materials and for distributing or selling completed goods
to their final consumers.
d) Market Access: Small enterprises offering goods or services in retail, wholesale, or both should be
situated close to densely inhabited regions.
e) Accessibility to infrastructural facilities is crucial, particularly for small-scale businesses, including
developed industrial sheds or sites, link roads, proximity to railway stations, airports, or sea ports, and
the availability of electricity, water, public utilities, civil amenities, and means of communication.
f) The accessibility of technical managers who are trained and competent as well as skilled and unskilled
labour.
g) Financial and banking organisations are close by.
h) Locations with links: The development of commercial or industrial sectors results in savings and lower
costs for transportation overheads and other expenses.
This section presents the basic ideas of plant location selection considering the unstable supply
of raw materials such as cotton , wool etc. In the textile industry, unexpected conditions, such as
natural disasters, abnormal climate, or the abandonment of cultivation, sometimes lead to
shortfalls in the supply of raw materials. In this case, RAYMOND should search for alternative
sources for raw materials in other regions. We take this supply shortage situation into account for
a supply vulnerability factor, that is, the possibility of replacing raw material feedstock using
alternative sources. It can be said that if the possibility is small, the supply vulnerability is high.
To take advantage of the opportunities and to set up a cost-effective manufacturing base,
Raymond has chosen to locate its manufacturing plants in the following locations:
1. Jalgaon, Maharashtra: This plant was established in 1988 to manufacture denim fabric with a
capacity of around 10 million meters per annum.
2. Vapi, Gujarat: This plant was established in 1993 to manufacture worsted suiting fabric with a
capacity of around 17 million meters per annum.
3. Chhindwara, Madhya Pradesh: This plant was established in 1995 to manufacture denim
fabric with a capacity of around 11 million meters per annum.
4. Vadodara, Gujarat: This plant was established in 1996 to manufacture worsted suiting fabric
with a capacity of around 20 million meters per annum.
5. Kolhapur, Maharashtra: This plant was established in 1998 to manufacture denim fabric with
a capacity of around 10 million meters per annum.
The strategic location of these plants ensures that the company has access to skilled manpower,
efficient infrastructure and a wide distribution network. This allows Raymond to maintain a
competitive edge in the market and to produce quality products at competitive prices
Limitations
The Raymond Textile Industry faces several limitations due to locational planning. Some of
these limitations include:
1. Accessibility: Accessibility is an important factor in determining the success of any business.
Raymond Textile Industry, being located in a remote location, is relatively inaccessible for the
customers, which can impact the overall sales and customer satisfaction.
2. Infrastructure: The lack of adequate infrastructure in the region can limit the growth of
Raymond Textile Industry. Poor roads and other infrastructure can lead to difficulties in
transportation of goods and materials, resulting in higher costs and delays.
3. Investment: Due to the remote location of Raymond Textile Industry, it can be difficult to
attract potential investors. The lack of investment can limit the potential for expansion and
growth of the industry.
4. Labour: The remote location of Raymond Textile Industry can make it difficult to find and
attract skilled labour. This can limit the potential of the industry to innovate and develop new
products and services.
5. Resources: The remote location of Raymond Textile Industry can also limit its access to
resources such as raw materials and capital. Without these resources, it can be difficult for the
industry to operate at an optimum level.
Recommendations
Invest in technology: Raymond Textile Industry should invest in technology to stay ahead of the
competition. This can be done by investing in digital solutions, such as cloud computing and big
data, to optimize its operations and enhance its product offerings. Additionally, Raymond Textile
Industry should also focus on investing in research and development in order to create new
products and services.
Raymond shall setup its factory in various other locations such as Kutch, Vishakhapatnam so
that it would low the cost of transportation to get raw material from the ports to the factories and
vise versa