1. Choosing the Right Location and Layout
a decision is the action an executive must take when he has information so incomplete that the answer does not suggest itself…Admiral Radford

2. SCORE Business Plan
Marketing Plan Market research Economics Product Customers Competition Niche Strategy Promotion Promotional Budget Pricing Sales Forecast

3. SCORE Business Plan Production Location Legal Environment Personnel
II. Operational Plan
Production
Location
Legal Environment
Personnel
Inventory
Suppliers
Credit Policies
Managing Your Accounts Receivable
Managing Your Accounts Payable

4. Location- Source of Competitive Advantage
Choosing the Region
Choosing the State
Proximity to markets
Proximity to needed
Raw materials
Wage Rates
Labor Supply Needs
Business Climate
Tax Rates
Internet Access
Total Operating Costs

5. Location (cont’d) Choosing the City Choosing the Site Competition
Population Trends
Competition
Clustering (concentrations of interconnected companies, specialized suppliers, and service providers)
Compatibility with the community
Local laws and regulations (zoning: a system that divides a city into small cells or districts to control the use of land, buildings and sites)
Transportation networks
Police and fire protection
Cost of utilities and public services
Quality of life
Choosing the Site

6. Location (cont’d) Criteria for Retail and Service Businesses
Trade area size
Retail compatibility
Degree of competition
Index of retail saturation
Reilly’s Law of Retail Gravitation
Transportation network
Physical, racial, or emotional barriers
Political barriers
Customer traffic
Adequate parking
Reputation
Room for expansion
Visibility

7. Location (cont’d)
Retail compatibility: the benefits a company receives by locating near other businesses that sell complementary products and services or generate high volumes of traffic

8. Location (cont’d)
Index of retail saturation: a measure of the potential sales per square foot of store space for a given product within a specific trading area: ratio of a trading area’s sales potential for a product or service to its sales capacity
IRS= (CxRE)/RF, where
IRS is index of retail saturation
C is number of customers in trading area
RE is average retail expenditure per person
for the product in the trading area
RF is total square feet of selling space
allocated to the product in the trading area

9. Location (cont’d)
Reilly’s Law of Retail Gravitation: a business’ ability to draw customers is directly related to the extent to which customers see it as a ‘destination’ and is inversely related to the distance customers must travel to reach it.
BP=d/1+SQRPb/Pa, where
BP, distance from location A to break pt
d, distance between locations A and B
Pb, population surrounding B
Pa, population surrounding A

10. Location (cont’d) Location Options for Retail and Service Businesses
Central Business District
Neighborhood locations
Shopping Centers and Malls
Near Competitors
Outlying Areas
Home-Based Businesses

11. Location (cont’d) Shopping Centers and Malls Theme or festival centers
Neighborhood shopping centers
Community shopping centers
Power centers
Theme or festival centers
Outlet centers
Lifestyle centers
Regional shopping malls
Super regional shopping malls

12. Location (cont’d) Evaluation criteria for mall:
Is there a good fit with other products sold in the mall?
Who are other tenants? Which are anchor stores?
Demographically, is the center a good fit for your products/services?
How much foot traffic does the mall generate? The specific site?
How much vehicle traffic does the mall generate? (major population center, volume of tourists, volume of drive-by traffic)
What is mall’s vacancy rate? Turnover rate?
How much is rent and how is it calculated?
Is the mall successful?

13. Location (cont’d) Location Decision For Manufacturers
Foreign Trade Zones: specially designated area in or near a customs port of entry that allows resident companies to import materials and components from foreign countries; assemble, process, manufacture or package them and then ship the finished product back out while either reducing or eliminating tariffs and duties.
Empowerment Zones: an area designated as economically disadvantaged in which businesses get tax breaks on the investments they make within zone boundaries.
Business Incubators: an organization that combines low-cost, flexible rental space with a multitude of support services for its small business residents

14. Layout and Design Considerations
Size
Construction and External Appearance (simple, clean and current, variety)
Entrances
Americans with Disabilities Act
Signs
Building Interiors-ergonomics: the science of adapting work and the environment to complement employees’ strengths and to suit customers’ needs
Lighting and Scent

15. Layout: Maximizing Revenues, Increasing Efficiency or Reducing Costs
Retailers grid layout

16. Layout (cont’d)
Retailers free-form layout

17. Layout (cont’d)
Retailers boutique layout

18. Layout (cont’d)
Retailers Space Values for a Small Store

19. Layout for Manufacturers
Factors in Manufacturing Layout:
Type of product
Type of production process
Ergonomic considerations
Economic considerations
Space availability within the facility

20. Layout (cont’d) Types of Manufacturing Layouts
Product Layouts: according to the sequence of operations performed on a product
Process Layouts: according to the general function they perform, without any regard to the particular product or customer
Fixed-Position Layouts: in which materials do not move down a production line but rather, because of size or bulk, are assembled on the spot
Functional Layouts: combinations

21. Layouts (cont’d) Ergonomic work centers
Minimum distances between work stations and processes
No unnecessary rehandling of materials
Minimum handling between operations
Minimum storage
Materials delivered just in time
Materials efficiently removed from the work area
Maximum visibility to spot problems and improve safety
Orderly materials handling and storage
Good housekeeping; minimum clutter
Maximum flexibility
Maximum communication
Principles of Lean Manufacturing
Planned materials flow pattern
Straight-line layout whenever possible
Straight, clearly marked aisles
Backtracking kept to a minimum
Related operations located close together
Minimum amount of in-process inventory on hand
Easy adjustment to changing conditions
Minimum materials handling distances
Minimum of manual handling of materials and products
Ergonomic work centers

22. Layout (cont’d) Dell Victoria’s Secret Heavy lifting
Flexible manufacturing
Teamwork
Speed testing
Lean inventory
Victoria’s Secret
‘Landing Strip’
Central hub
Classier color scheme
Bring catalog to life
A menu of choices