Location Layout and Physical Facilities Chapter 16 Location

Location, Layout, and Physical Facilities Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 1

Choosing a Location The right region of the country n The right state in the region n The right city in the state n The right site in the city n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 2

Logic of Choosing a Location Copyright 2006 Prentice Hall Publishing Company 3

Choosing the Region: Sources of Information n U. S. Census Bureau - http: //www. census. gov/ Ø American Community Survey Ø Economic Census Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 4

Choosing the Region: Sources of Information American Demographics n Ameri. Stat n STAT-USA n Demographics USA n Lifestyle Market Analyst n Markets of the U. S. for Business Planners n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 5

Choosing the Region: Sources of Information Rand Mc. Nally's Commercial Atlas and Marketing Guide n Sourcebook of County Demographics n Sales and Marketing Management’s Survey of Buying Power n Editor and Publisher Market Guide n Small Business Development Centers n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 6

Geographic Information Systems (GIS) n n Computerized programs combining mapdrawing with database management capability. Census Bureau’s TIGER file. Search through a database and then plot the results on a map. Visual display reveals otherwise hidden trends. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 7

Selecting the State Factors to consider: n Proximity to markets n Proximity to needed raw materials n Labor supply needs n Wage rates n Business climate n Tax rates n Internet access Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 8

Sample State Evaluation Matrix Location Criterion Total Score Weight 10 -high 1 -low Score 5 -high 1 -low Weighted Score (weight x score) Florida Georgia South Carolina Quality of labor force Wage rates Union activity Energy costs Tax burden Educational/ Training Assistance Start-up incentives Quality of life Availability of raw materials Other Assign to each location criterion a weight that reflects its relative importance (10 high to 1 low). Then score each state on a scale of 1 (low) to 5 (high). Calculate the weighted score (weight x score) for each state. Finally, add up the total weighted score for each state. The state with the highest total weighted score is the best location for your business. Copyright 2006 Prentice Hall Publishing Company 9

Selecting the City Population trends and density n Competition n Ø Clustering Ø Index Chapter 16 Location & Layout of Retail Saturation (IRS) Copyright 2006 Prentice Hall Publishing Company 10

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. where C = Number of customers in the trading area RE = Average expenditure person for the product RF = Total square feet of selling space allocated to the product Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 11

Selecting the City Population trends and density n Competition n Ø Clustering Ø Index of Retail Saturation (IRS) Ø Reilly’s Law of Retail Gravitation Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 12

Reilly’s Law of Retail Gravitation An estimate of a site’s ability to attract customers. where BP = Distance in miles from location A to break point d = Distance in miles between locations A and B Pa = Population surrounding location A Pb = Population surrounding location B Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 13

Selecting the City Population trends and density n Competition n Ø Clustering Ø Index of Retail Saturation (IRS) Ø Reilly’s Law of Retail Gravitation Costs n Local laws and regulations n Compatibility with community n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 14

Selecting the City Quality of life n Transportation networks n Police and fire protection n Public services n Location’s reputation n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 15

Retail and Service Location Considerations n Trade area size Ø Retail compatibility Ø Degree of competition Ø Transportation network Ø Physical, cultural, or emotional barriers Ø Political barriers Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 16

Retail and Service Location Considerations continued n n Customer traffic Adequate parking Room for expansion Visibility Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 17

Retail and Service Location Options Central Business Districts (CBDs) n Neighborhood locations n Shopping centers and malls n Ø Neighborhood shopping centers Ø Community shopping centers Ø Regional shopping centers Ø Power centers Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 18

Shopping Centers and Malls n n Neighborhood Shopping Centers Ø 3 to 12 Stores; anchor is supermarket or drugstore Community Shopping Centers Ø 12 to 50 stores; anchor is department or variety store Regional Shopping Malls Ø 50 to 100 stores; anchor is one or more major department stores Power Centers Ø Combines drawing power of a mall with convenience of neighborhood shopping center Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 19

Retail and Service Location Options continued Near competitors n Outlying areas n Home-based businesses n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 20

Manufacturing Locations n Foreign trade zones Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 21

Figure 16. 2. How a Foreign Trade Zone (FTZ) Works. Small Company Without FTZ Duty Paid Store Imported Parts and Materials Assemble Package With FTZ No Duty Paid Manufacture Process Mix Copyright 2006 Prentice Hall Publishing Company aid U. S. P ty u D Sales No Du ty P aid Exports id a U. S. P y t Du Sales No Du ty P aid Exports 22

Manufacturing Locations Foreign trade zones n Empowerment zones n Business incubators n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 23

Business Incubators n n Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents. Have spawned more than 20, 000 successful businesses across four decades. More than 950 in operation across the U. S. , and a new one opening, on average, every week. They work!! Firms that “graduate” from incubators have a success rate of 87%. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 24

Source: National Business Incubation Association Copyright 2006 Prentice Hall Publishing Company 25

Layout: External Factors Adequate size to accommodate business needs. n Create the proper image or “personality” for the business in the customer's eyes. n Entrances must invite customers to come in. n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 26

Layout: External Factors continued Create effective window displays and change them often; they can be powerful sales tools. n Must comply with Americans with Disabilities Act. n Pay attention to the business sign, the most direct method of reaching potential customers. n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 27

A Business Sign n n n Tells potential customers who you are and what you're selling. Must comply with local sign ordinances. Should be visible, simple, and clear. Should be changed periodically to avoid becoming part of the background. Should be legible both day and night. Must be maintained properly. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 28

Building Interiors n Ergonomics is an integral part of any design. n Proper layout and design pays off in higher productivity, efficiency, or sales. Careful selection of colors can create the desired impressions among customers and employees. Proper lighting is measured by what is ideal for the job being done. n n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 29

Layout for Retailers The arrangement of merchandise and fixtures. n “The stage on which a retail company functions” – Paco Underhill. n Well-designed layout takes customers past plenty of displays of items they may buy on impulse. n Ø 65% to 70% of purchase decisions are made after a customer enters a store. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 30

Three Layout Patterns n Grid Ø Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently. Ø Supermarkets and self-service discount stores. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 31

Grid Layout Copyright 2006 Prentice Hall Publishing Company 32

Three Layout Patterns n Free-Form Ø Free-flowing; informal; creates “friendly” environment; flexible. Ø Small specialty shops. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 33

Free-form Layout Copyright 2006 Prentice Hall Publishing Company 34

Three Layout Patterns n Boutique Ø Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment. Ø Small department stores. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 35

Boutique Layout Copyright 2006 Prentice Hall Publishing Company 36

Layout Guidelines n n n Know your customers buying habits and plan your layout accordingly. Display merchandise as attractively as your budget will allow. Display complementary items together. Use music to set the mood. Recognize the value of floor space; never waste valuable selling space with nonselling functions. Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 37

Rent and Sales Allocation by Floor Copyright 2006 Prentice Hall Publishing Company 38

Rent Allocated by Traffic Aisle Copyright 2006 Prentice Hall Publishing Company 39

Space Values for a Small Store Copyright 2006 Prentice Hall Publishing Company 40

Factors to Consider in Manufacturing Layouts Type of product n Type of production process n Ergonomic considerations n Economic considerations n Space availability within the facility n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 41

Manufacturing Layouts n Product layout Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 42

Product Layout Copyright 2006 Prentice Hall Publishing Company 43

Manufacturing Layouts Product layout n Process layout n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 44

Process Layout Copyright 2006 Prentice Hall Publishing Company 45

Manufacturing Layouts Product layout n Process layout n Fixed position layout n Functional layout n Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 46