The History Of Plant Location Business Essay


Plant location is the function of determining where the plant should be located for maximum operating economy and effectiveness. The selection of a place for locating a plant is one of the problems. A selection on pre economic considerations will ensure an easy and regular supply of raw materials, labor force, efficient plant layout, proper utilization of production capacity and reduced cost of production. An ideal location does not by itself guarantees success, but it certainly contributes to the smooth and efficient working of an organization.

The need for selection of the location arises:

when the business is newly started,

The existing business unit has outgrown its original facilities and expansion is not possible, therefore, a new location has to be found out.

The volume of business or the extent of market necessitates the establishment of branches

A lease expires and the landlord does not renew the lease

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When a company thinks that there is a possibility of reducing manufacturing cost by shifting from one location to another

Other social or economic reasons, like inadequate labor supply, shifting of the market, etc

The selection of the location has to be made after considering all the economic factors which have a bearing on it. It may be impossible to find a place which abounds in all the facilities that are required to start a factory. But the best among them must be chosen which enjoys as many facilities as possible.

The guiding principle in the search should be a place where the cost of the raw material and of fabrication plus of the cost of marketing of finished products will be minimum.


The corporate office of Dabur is located at Kaushambi Ghaziabad and its registered office is located at Asaf Ali Road, New Delhi.

The manufacturing facilities are located in:

Sahibabad, Uttar Pradesh

Jaipur, Rajasthan



Baddi, Himachal Pradesh

Pantnagar, Uttaranchal

Birganj, Nepal

Narendrapur, West Bengal

Katni, Madhya Pradesh

Its distributors are spread across the globe which include countries of central, north and south America, Australia, Asia, middle east, north and south Africa, east and west Europe and in Russia.

Dabur has a wide and deep market penetration with 50 C&F agents, more than 5000 distributors and over 3.4 million retail outlets all over India.

Conservation of Energy: Dabur has been undertaking a host of energy conservation measures. Successful implementation of various energy conservation projects have resulted in a 13.8% reduction in the Company's energy bill in the 2008-09 fiscal alone. What was noteworthy was the fact that this reduction has come despite an 8-9% volume increase in manufacturing, and an average 11.7% increase in cost of key input fuels.

The host of measures - key among them being use of bio-fuels in boilers, generation of biogas and installation of energy efficient equipment - helped lower the cost of production, besides reduce effluent and improve hygiene conditions & productivity.

Water and disposal of waste: Dabur has also made continuous efforts towards technology absorption and innovation, which have contributed towards preserving natural resources. These efforts include:

Minimum use of water in process by pre-concentration of herbal extract and reduction in concentration time

Uniform heating in VTDs by hot water as against steam earlier, resulting in 30% reduction in bulk wastage by using non-stick coating and formulation change

Improvement in water treatment plant through introduction of RO (Reverse Osmosis) system for DM water, reutilization of waste water from pump seal cooling and RO reject waste-water management

Introduction of water efficient CIP system with recycling of water in fruit juice manufacturing

Development of in-house technology to convert fruit waste into organic manure by using the culture Lactobacilus burchi

The Company has achieved a host of significant benefits in terms of product improvement, cost reduction, product development, import substitution, cleaner environment and waste disposal, amongst others.

Renewing the commitment to Health Safety and Environment, Dabur has formulated a policy focusing on People, Technology and Facilities. A dedicated "Safety Management Team" has also been put in place to work towards the prevention of untoward incidents at the corporate and unit level, besides educate & motivate employees on various aspects of Health, Safety and Environment.

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The Company is also continuously monitoring its waste in adherence with the pollution control norms. In pursuance of its commitment towards the society, efforts have also been initiated to conserve and maintain the ground water level. The efforts include implementation of rainwater harvesting, which has delivered encouraging results and has put the company on the path to becoming a Water-Positive Corporation.

Dabur also initiated a Carbon Foot Print Study at the unit level with an aim to become a carbon positive Company in years to come.

At Dabur, we are committed to sustainable development throughout our diverse operations.

Dabur India Ltd is one of India's leading FMCG Companies with Revenues of US$1 Billion (over Rs 5,000 Crore) & Market Capitalisation of US$4 Billion (Rs 20,000 Crore). Building on a legacy of quality and experience of over 127 years. The company has a wide distribution network, covering over 2.8 million retail outlets with a high penetration in both urban and rural markets. Dabur's products also have a huge presence in the overseas markets and are today available in over 60 countries across the globe.

Competitors: Hindustan unilever, godrej consumer, colgate, marico and emami

Entry barriers: Given the variety of items procured from unorganized agricultural produce to localize packaging material. Risk factors also varies from item to item. Seven major barriers are discussed.

Capital Requirements - The costs of becoming established in the industry. Obviously the amount will vary depending on your area of interest, from several lacs for metal caps to couple of crores for polymer. The greater the capital requirement, the greater the need for explanation for accepting this risk. 

Economies of Scale - Depending on your area of business, a high volume may be necessary for you to be efficient. Achieving this high volume may require larger facilities or a large labor force. Existing organizations are going to have the benefit of having the resources in place to react to whatever market forces have created the opportunity you have identified. It is essential to explain to what extent Economies of Scale are a factor in your business and how you plan to overcome this barrier. 

Cost Advantage - Although these do exist with Economies of Scale, Scale is not necessary. Many times the first entrant into an industry or market will be able to negotiate the best contracts with suppliers or distributors. These relationships leave new comers at a disadvantage. Also, first entrants or existing businesses have an advantage on the learning curve that allows them to pursue cost issues more effectively.

Product Differentiation - You have identified an opportunity to provide a product or service profitably. If you are successful, your success is going to attract attention. One problem you will face is when another firm with name recognition and brand loyalty for their current offerings decides to follow you. You will have to spend large amounts on promoting and differentiating your offering to combat an established firm's goodwill.

Distribution Channels - The extent of this concern depends on how you are planning to get the product to our manufacturing facilities. Existing suppliers with spread out manufacturing facilities or well-set distribution system will be in a position to effectively cater to varying demand and quality parameters 

Legal Restrictions - Many claim that the only barriers that can not be overcome with shrewd planning and business sense are those created by government. It is necessary to investigate and explain any ordinances, laws, taxes, etc. that will have an impact on your business. Tax benefits or subsidies will result in direct cost advantage. 

Retaliation - If you are entering the market of other established businesses, do not expect your company to be welcomed without response. There are a host of responses available to the competition depending on their market position. Reactions can range from price slashing to negotiating exclusive arrangements with suppliers and distributors you would have worked with. Time must be spent anticipating the reactions of existing businesses and determining the impact these reactions will have on your organization.

Retail store: Dabur India Ltd (DIL) through its 100% subsidiary H&B stores Ltd has unveiled its brand Identity 'new-u' for the Retail Stores.

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The brand name and design 'new-u' reflects the essence and ambitions of H&B Stores - a brand which will cater to all the requirements of a customer on the beauty and health platform. It symbolizes the transformation that the stores will offer its patrons - something new, engaging and innovative. The stores will offer products in different categories, including color cosmetics, fragrances, skin and personal care, baby & family care, fashion accessories, general merchandise, Ayurvedic, herbal and pharmaceuticals.

Warehouses: Dabur's warehousing is looked after by Sadana Warehousing & Agencies in Guwahati and Aggrawal Warehousing Corporation in Raipur.


The head office of Maruti Suzuki is located at Nelson Mandela road, Vasant Kunj.

The manufacturing plants are located in Gurgaon and Manesar

Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation, Japan. Maruti Suzuki has been the leader of the Indian car market for over two and a half decades. Both the facilities have a combined capability to produce over a 1.5 million (1,500,000) vehicles annually. The company plans to expand its manufacturing capacity to 1.75 million by 2013. 

The Company offers 15 brands and over 150 variants ranging from people's car Maruti 800 to the latest Life Utility Vehicle, Ertiga. The portfolio includes Maruti 800, Alto, Alto K10, A-star, Estilo, WagonR, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Kizashi, Grand Vitara, Gypsy and Ertiga. In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4. With this Maruti Suzuki became the first company in India to introduce factory fitted CNG vehicles.

In terms of number of cars produced and sold, the Company is the largest subsidiary of Suzuki Motor Corporation. Cumulatively, the Company has produced over 10 million vehicles since the roll out of its first vehicle on 14th December, 1983. 

Maruti Suzuki is the only Indian Company to have crossed the 10 million sales mark since its inception. In 2011-12, the company sold over 1.13 million vehicles including 1,27,379 units of exports. 

The Company employs over 9000 people (as on 31st March, 2012). Maruti Suzuki's sales and service network is the largest among car manufacturers in India. The Company has been rated first in customer satisfaction in the JD Power survey for 12 consecutive years. Besides serving the Indian market, Maruti Suzuki also exports cars to several countries in Europe, Asia, Latin America, Africa and Oceania.

Facilities: The Gurgaon facility spread over 300 acres is located around 25 kms south of Delhi. This facility houses three fully integrated plants. Together the three plants churn out around 9 lakhs units annually. The 600 acre Manesar facility located around 25 kms south of Gurgaon facility was inaugurated in February 2007.  The Manesar facility houses two fully integrated plants with a capacity of 5.5 lakhs units annually. The third assembly line is in advanced stage of completion and is expected to be completed in the year 2013.

Both manufacturing facilities are highly automated with advanced robotics, contemporary paint, and weld and machining infrastructure. While the different models can be assembled on same lines, inter plant flexibility helps to increase productivity. On a single line diverse car models can be made conveniently. Automatic tool changers, centralized weld control systems and advance numerical control machines help for quick change over between models.

The total process from blanking to rolling out takes 12.5 hrs and in every 23 seconds one vehicle is rolled out.

Disposal of waste: in 2010-11, the Company registered a clean development project with the United Nations Framework Convention on Climate Change (UNFCCC) which would generate carbon credits for the Company. In another significant development, the Company has started sending its hazardous waste to the cement industry for co-processing, thus minimizing the need for depositing hazardous waste in secured landfills.

Electricity and water: The Gurgaon plant has achieved 32% reduction in per vehicle electricity consumption and 62% in per vehicle water consumption since the implementation of EMS in 1999. The Manesar plant has achieved 38% reduction in per vehicle electricity consumption and 61% in per vehicle water consumption since the base year, 2007-08.

Labour: Since inception, Maruti Suzuki has instituted common practices for all its employees. All employees right from shop floor associates to the top management wear the same uniform, eat together in the canteen, and are entitled to similar medical facilities. The open office system of the Company ensures transparency, aids faster communication and creates the physical structure for a boundary-less organization besides strengthening the feeling of oneness and team-work. All senior level appointments are made on the basis of the Company's need, vacancies and merit of individuals. For hiring at workmen level (skilled, semi-skilled, unskilled and apprentice), equal weight age is given to candidates from across the country.

Government policy: The Company abides by the Government of India legislations with regard to forced and child labour. The Company has also formulated an Anti-Forced and Child Labour Policy that covers its entire operations. No incidence of forced or child labour was reported in any of the Company's units in 2010-11. Maruti Suzuki's policies on Anti-Child Labour and Anti-Sexual Harassment were shared with all its suppliers. The suppliers were encouraged to implement these policies at their end. Further, the Company is in the process of making these policies an integral part of the purchase agreement with the suppliers.

Logistics: Maruti Suzuki India Limited (MSIL), the leading car maker in the country, will invest Rs 9,000 crores more in India, most of it in research and development (R&D), warehousing, marketing, logistics and design. The company is planning to set up giant regional warehouses, which will cater to sectoral markets in each of the distribution zones. 

Delivering Value

A large tranche of the company's domestic suppliers, around 86 percent of them, are located within a 100-km radius of the Gurgaon factory. The vendors keep up an unending supply of critical components like body panels, bumpers etc. with only tyres sourced from Ballabgarh in Haryana, Chennai and remote areas of Madhya Pradesh. Vast supplies of components, based on indents, are ordered from the vendors; keeping a watchful eye on customer satisfaction, Maruti stockpiles its components (which form a part of Maruti's Genuine Parts system) and distributes them swiftly from its central warehouse located close to its Gurgaon factory, into the aftermarket.

The Transport Mix

Maruti Suzuki is said to possess the largest and most closely connected auto dealer and aftermarket network in the country. The company has 877 sales outlets in 619 cities, with 2,855 workshops in 1,363 cities. It also has 346 True Value Outlets (certified used car dealer network) which cover 202 cities! Most of the company's cars are moved to their destinations by trucks and trailers, with less than 10 percent being transported by rail. Poor and snail-slow development has hamstrung rail infrastructure, which thus offers few options to auto manufacturers in the country.

Demand Fulfillment

Maruti's trim and efficient supply chain network has netted the company many rewards, notably the ability to assess market demand accurately, fulfill it speedily and to the entire satisfaction of its legions of customers. The company has 250 plus Tier-I vendors and 20 global suppliers who ensure continuous supplies. Maruti maintains a spare Just-In-Time inventory which is replenished on an hourly basis. Its vendors are connected to the company's much-lauded e-nagare system, which is an electronic supply chain system, through which the vendors inform the company on a day-to-day basis of diverse requirements and provision of supplies. Once informed of desired supplies, the vendors deliver the material to the factory doorstep.

The E-nagare Factor

Much of the credit for this uber efficiency is due to Maruti's much-discussed 'e-nagare' supply chain system. E-nagare is a Japanese word which defines continuity and flow. It was installed at the Gurgaon plant in 2003 after several experiments with various supply chain strategies. This is a system which has been pioneered by Maruti for Just-In-Time inventory, uninterrupted production and quick response to market fluctuations. It is suitable for vendors who operate in the vicinity of the plant and within a three-hour transit time from

the factory.

Eye On Quality

Despite the hard slog of an ambitious production schedule, Maruti has devised a program called 'Shikhar' to keep a sharp check on efficiency and productivity. The HR, production and supply chain verticals of the company structured this program to halt any slide in quality. Actually, Shikhar is an incisive vendor analysis, whereby the performance of those vendors who produce the most defective equipment is measured.

.No Big-Name LSPs

Maruti Suzuki's finished goods are carried across the country by more than a 100 LSPs who are on the panel of the company. The automaker avoids the pitfall of being lured by big name LSPs and prefers to nurture small-time service providers who are eager to grow with the company and form its rock-solid service provider base. The company believes that large big players are loth to shed their time-tested methods and learn new techniques. Hence it prefers to hire service providers who have just made a foray into the business, moulds them carefully and encourages them to stay with the company, with the additional carrot of long-term contracts!

Wider Net

Maruti does not transport or store the various components of its finished goods in warehouses across the country. It has a single main warehouse in Gurgaon, Haryana, in which the components of its finished cars are stored. From this warehouse, products are distributed by indents to multiple dealers. Maruti Suzuki's warehouses are fully automated with the latest loading, unloading, pick-up and carry equipment. The warehouse systems also enable on-line material identification and capture First-in-First-Out movement, periodic stock taking and inventory carrying cost analysis.

Accurate Foretelling

Maruti ensures that its projections are neither too conservative nor too optimistic. This enables the company to maintain equilibrium - it fulfills its own sales projections and customer expectations and at the same time, never loses sight of ground realities.

The Persistent Innovator

It constantly seeks innovations and tries not to let a single new idea run into the sands. In keeping with the times when green initiatives are being emphasized, the company manufactures CNG and LPG vehicles. Research is in progress for the production of hybrid and electric cars in the future. Maruti uses only CFL bulbs in its factories and has invested heavily in a very effective water harvesting system.

The company employs 7,000 plus workers in its various offices across the country; the Gurgaon plant alone has 3,000 plus employees on its rolls. The percentage of women in its various plants is increasing with more women being promoted as supervisors in the company. Maruti also runs an all-women ITT (Industrial Training Institute) at Gurgaon.


Tata motors, Honda, Hyundai, Chevrolet, Toyota, etc.

Finance: Mahindra & Mahindra financial services Ltd, part of the $3.04 billion Mahindra group has signed an agreement with maruti udyog Ltd to provide finance to all of the latter's production. Maruti has also tied up with SBI bank.


Its head office is located at udyog vihar, Gurgaon

Coca-cola's manufacturing plants are located in more than 57 regions across India.

Employees: The Coca-Cola system in India directly employs over 25,000 people including those on contract. The system has created indirect employment for more than 1,50,000 people in related industries through its vast procurement, supply and distribution system.

Distribution: In India, the Coca-Cola system comprises of a wholly owned subsidiary of The Coca-Cola Company namely Coca-Cola India Pvt Ltd which manufactures and sells concentrate and beverage bases and powdered beverage mixes, a Company-owned bottling entity, namely, Hindustan Coca-Cola Beverages Pvt Ltd; thirteen authorized bottling partners of The Coca-Cola Company, who are authorized to prepare, package, sell and distribute beverages under certain specified trademarks of The Coca-Cola Company; and an extensive distribution system comprising of our customers, distributors and retailers. Coca-Cola India Private Limited sells concentrate and beverage bases to authorized bottlers who are authorized to use these to produce our portfolio of beverages. These authorized bottlers independently develop local markets and distribute beverages to grocers, small retailers, supermarkets, restaurants and numerous other businesses. In turn, these customers make our beverages available to consumers across India.

Water: coca-cola is one of the few companies in India who has made contribution to recharging groundwater and uses less water.

Disposal of waste: Coca Cola has launched a series of 100% recyclable merchandise display racks for use in both grocery and convenience stores.  The racks have a few purposes.  One function is to communicate to consumers that Coca-Cola is taking sustainability more seriously.  Another goal is to make the display cases easy to recycle:  they are made out of corrugated cardboard. 

Furthermore, rather than relying on store managers to recycle or dispose of the temporary shelving, Coca-Cola employees will round them up.  The objective is to nudge Coca-Cola and its distributors toward a closed-loop retail program where such materials are recycled, or even better, reused.

Competitors: PepsiCo. Is a direct competitor of coca-cola


Plant site selection requires careful consideration. Location decisions often depend on the type of business. Plant site selection is influenced by several factors. These factors are different in practice its application for a plant with another plant, according to the product produced. Factors affecting the selection of sites in terms of the resulting product are as follows:

Primary factors, ie factors that must be met, if not, then the operation can not function properly. 

Secondary factors, ie factors that should be there, otherwise the operation can still be resolved at a cost of more expensive.

Factors influencing the selection of plant location are as follows:

Raw materials are basic requirements for manufacturing industries. Weight-losing industries e.g., cement, sugar (to quintals of sugarcane is needed to produce 1 quintal of sugar) are located near the source of raw material. On the other hand, foot-loose industries are independent of raw material sources, e.g., garment and electronics industries, and can be established practically anywhere.

Power resources are important for energy-intensive industries such as aluminum and polythene bags industries which are located near the energy sources.

Labour supply is another important factor particularly for the labour-intensive industry, e.g., construction industry. To an extent, labour can be brought. to a site from other regions.

Civic amenities for workers: besides good working conditions inside the factory the employee's require certain facilities outside. Recreation facilities, schools for children, etc.

Means of transportation and communication play a special role in bringing raw material to the factory and finished products to the market, e.g., cheap water transport has facilitated the development and concentration of jute mills in the Hooghly region.

Market facility also influences industries, many of which are located near large urban centers because the potential buyers are easy available.

Suitability of climate: the climate has its own importance in the location of a plant because some industries require particular climatic conditions for their production and climate affects labor efficiency. Extreme climatic conditions adversely affect labor efficiency and such places do not attract industries.

Government policy: in the name of the balanced regional development many backward regions in India have been selected for the location of new industries, which would generate the regions economy and on a larger canvas the national economy. The government has been influencing the plant location through licensing policy, freight rate policy, establishing a unit of public sector in a remote area and developing it to attract other industries and by setting up of financial institutions and providing subsidies.

Competition between states: various states offer investment subsidies and sales tax exemptions to new units.

Environmental Policy: In current globalized world pollution, control is very important; therefore understanding of environmental policy for the facility location is another critical factor.

Competitors: an association with competing industries confers real benefits when competition is healthy. Problems in procurement of raw material, labour troubles, and government restrictions can be effectively tackled if he competing units work together.

Existence of complementary: the existence of complementary industries is favourable to the location of industries as it provides many benefits as: increase in the variety of raw materials at low costs, improvement in labor market, attract variety of repair plants and goodwill can be shared by the new units established in the same locality.

Finance and research facilities: adequate capital is essential for the successful working of an organization. A place where facilities for raising capital are available attracts new industries. In the course of its working a factory may encounter a number of problems. Whenever, a new problem crops up it is examined and a suitable solution is found out. As a result research facilities are essential.

Water: some industries require a plentiful supply of water for their working like the fertilizer units, cotton, leather tanneries, etc. these factories must be located in places where water is available in abundance. Industrial units are exposed to fire hazards. A fire may break out from within or neighbor units. In either case, adequate fire fighting facilities must be available.

Taxes and restrictions: local authorities collect charges for the supply of water, electricity and other facilities. They also collect various taxes from the industrial units. They impose restrictions on the location of new units in the public interest.

Disposal of waste: the site selected for the location of the plant should have provision for the disposal of waste. For liquid wastes, satisfactory sewer connections or a river or sea should be available. Fr solid waste, their must be enough vacant land for dumping them.

Along with the globalization, the selection of sites is becoming increasingly complicated. Globalization has led to:

Market economy 

Better international communication 

Travel and shipping faster and more reliable 

Ease of movement of capital flows between countries 

Differentiation of high labor costs.


The pace and scale of today's globalization is without precedent and is associated with the rapid emergence of global value chains as production processes become increasingly fragmented geographically. Information and communication technology (ICT) has made it possible to slice up the value chain and perform activities in any location that can help reduce costs. The globalization of value chains results in the physical fragmentation of production, where the various stages are optimally located across different sites as firms find it advantageous to source more of their inputs globally. This phenomenon has also been referred to in the literature as international production sharing and vertical integration of production and is closely linked to the growth of global production networks.

Globalization also increasingly involves foreign direct investment and trade in services, with many service activities becoming internationalized, especially since ICT has enabled the production of many services independent of a specific location. Another distinctive feature of current economic integration is that it is no longer restricted to OECD countries, but also involves large emerging global players like Brazil, China, India and Russia.

The globalization of value chains is motivated by a number of factors. One is the desire to increase efficiency, as growing competition in domestic and international markets forces firms to become more efficient and lower costs. One way of achieving that goal is to source inputs from more efficient producers, either domestically or internationally, and either within or outside the boundaries of the firm. Other important motivations are entry into new emerging markets and access to strategic assets that can help tap into foreign knowledge. Notwithstanding these anticipated benefits, engaging in global value chains also involves costs and risks for firms.