Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

3.2.1 Location Selection: Systematic Reduction of Possible Locations / Partners

Intended learning outcomes: Disclose a procedure for systematic reduction of possible locations / partners. Present factors for location selection. Produce an overview on steps in location selection and evaluation of a concrete case, namely a joint venture partner in China.

The first topic is the choice of location for a production network. Instead of a purely theoretical treatment, a concrete case is discussed below, namely the evaluation of a joint venture in China by a European company active in plant construction.

It is best to conceive of location selection as a project, with the associated tasks of project initiation, project management, and project realization. Figure shows the steps in the concrete case mentioned above. Noticeable in this specific case is the long time period for location selection. Almost two years were required for the evaluation.

Fig.        Steps in location selection and evaluation of a joint venture partner in China.

In practice, there are many location factors critical to success, and each factor has criteria. For a comprehensive view, a comple­te set of factors with individual criteria is required. Evaluating the degree to which the criteria are fulfilled is then dependent on the strategy chosen in the specific case. Figure shows the location factors examined in this case.

Fig.        Factors for location selection.

In addition to four factors that relate to the actual location, three factors are shown that relate to the contemplated joint venture partner. The individual criteria in these three factors can implicitly also characterize — although not only — the location of the partner.

To proceed effectively and also efficiently, whereas as many loca­tions as possible are considered, they are reduced as rapidly as possible to a few candidates through examination of an appropriate sequence of location factors. One model for this is shown in Figure

Fig.        Systematic reduction of possible locations / partners.

This funnel was based on an idea in [AbNu08]. The location factors are considered in an order that allows systematic reduction of locations.

Continuation in next subsection (3.2.1b).

Course section 3.2: Subsections and their intended learning outcomes