ASSIGNMENT

1) “Manpower is the most costly input in most production systems.” Analyse this
statement.

Answer:
Manpower is the most costly input in most production systems. An ample supply of labour is
essential to any enterprise. The following rule of thumb is generally applied:
(a) The area should contain four times as many permanent job applicants than the
organization will require.
(b) There should be a diversification between industry and commerce-roughly 50/50.
Organizations often take advantage of a location with an abundant supply of workers. Labour
costs and/or skills are often a very important consideration for locating a facility. The type
and level of skill possessed by the workforce must also be considered. If a particular required
skill is not available, then training costs may be prohibitive and the resulting level of
productivity inadequate. In the call center business, the need of English speaking workers
becomes a factor in deciding the location of your business capacity. India has come on the
map for software development because it has a large number of skilled software personnel.
Microsoft, Texas Instruments, Cisco Systems, Oracle, etc., some of the best-known names in
software applications, have located facilities in India. Many countries, like China and India, are
turning out to be attractive locations for industries that require large contingents of unskilled
labour. Did u know? Hyundai Motors recently announced that India would be its hub for
supply of small cars and automobile components worldwide. Companies like Nike, Reebok,
etc., are setting-up supply chains in Asia and South America. Many US automobile
manufacturers are moving production facilities to Mexico. Though, this is often very
appealing, you need to bear in mind that conditions can change in time. For example, while
labour costs may be low in a certain geographic location now, this will change if the demand
for labour grows significantly. In considering the labour supply, the following points should be
considered.

(a) Skills available – size of the labour force – productivity levels.

(b) Unionization – prevailing labour – management attitudes.
(c) History of local labour relations – turnover rates – absenteeism, etc.

Some organizations have relocated from a high skill/high cost area to a low skill/low cost area
without any decrease in productivity. Sometimes it has been due to skill availability and
labourmanagement relations but often it has been the result of higher investment in
mechanization. Labour Costs of Manufacturing Workers in Different Countries
5. Location of other plants and warehouses: Organizations need to look at their plant
locations for the complete system point of view.

(a) Distribution and supply requirements require the support of sister-plants and warehouses
that complement the system.
(b) The system should be designed to minimize total system costs.
(c) The locations of competitor's plant and warehouses must also be considered (what do
they know, that you don't) the object being to obtain an advantage in both freight costs and
the level of customer service.

6. Climate: The recent typhoons in the Gulf of Mexico have indicated the need to look at
climatic conditions as a parameter for making location decisions. Example: Petrochemical
plants near Houston were seriously threatened by Hurricane Katrina. Japan has seismic
regions that could be extremely risky for large fixed investments in products that are
hazardous or dangerous or uses raw materials or produces by products that may have similar
impacts.

7. Governmental controls and regulations: Table 3.2 shows the composite ranking of the
business environment in 20 countries, based upon factors including government controls,
regulations and incentives and labour conditions. Labour conditions include skills, availability,
unionization and history of labour relations. Table 3.2:

1. Netherland 8. France 15. Austria

2. Britain 9. Switzerland 16. Australia
3. Canada 10. Sweden 17. Norway
4. Singapore 11. Finland 18. Ireland
5. U.S. 12. Belgium 19. Italy
6. Denmark 13. Newzealand 20. chile
7. Germany 14. Hong kong

Ranking of the Business Environment in 20 Countries, 1997-2001 In another ranking, this time
by the World Bank in their 'Doing Business in 2006' ratings, India was ranked 116 out of the
155 countries in the listing. New Zealand was number one, closely followed by Singapore.
According to this report, starting a business in India requires 11 procedures and around 72
days, the highest in the Asian region. Business in India requires 20 procedures. In 'rigidity of
employment' that relates to hiring and firing people, India ranks 62 on an index of 100.
Around 40 procedures and 425 days are required for a contract. Also, taxes must be paid 59
times during the year. Tax regulations, environmental regulations or various other kinds of
government policies and regulations can be important factors in the location decision. There
may be a more favourable investment climate in a particular geographical or political region
that may attract industry to invest in that region.

2) Why is it important to evaluate a site beforehand?

Answer:

1. Size of site: The plot of land must be large enough to hold the proposed plant along with
its utilities, waste and water treatment facilities, parking and access facilities and support
services. The size of the plot must also be large enough to provide sufficient space for
further expansion.
2. Utilities: The continuity of operations and the ability for uninterrupted production
depends on the adequacy of utilities. The ability to overcome recurring problems associated
with the supply of utilities needs to be evaluated and accountability assigned:
(a) Possible restrictions on power availability.
(b) Cost differentials at peak periods.
(c) Availability of water supply during a 'hot' summer.
(d) Quality of water-hard or soft, etc.
(e) Connection cost of services from main supply lines to the intended plant.
 Costs associated with the volume and reliability of power, water and fuel supplies must be
evaluated carefully. These costs are considerable and have to be borne over the life of the
assets.
3. Transportation facilities: Rail and road networks should be close to the proposed
plant to minimize the cost of creating private sidings to the rail lines and access roads. Some
indication can be gained by looking at the present road and rail network serving the local
community. The plant should also be easily accessible by car and public transport.
4. Land costs: These are non-recurring costs and of little importance in the
determination of the facility location. In general, the plant site will be one of the following
locations: city location; industrial areas or estates; or interior areas.

3) “Any facility will create an impact on the environment.” Elucidate.

Answer:
An environmental impact is defined as any change to the environment, whether adverse or
beneficial, resulting from a facility’s activities, products, or services.[2] In other words it is
the effect that people's actions have on the environment. For example, when volatile
organic compounds are released into the environment, the effect or impact is pollution in
the form of smog, in this case being negative. It can go the other way, as a person picking up
litter can have a beneficial impact on the local environment.

Negative Impacts
The primary impacts of concern in an energy dependent society often come as a result of
our energy use. Burning hydrocarbons like coal and oil to provide us with useful energy
results in the emission of carbon dioxide and other pollutants. Other activities causing harm
include improper waste disposal to bodies of water and soil, accidental spills of chemicals,
increased demand for resources as populations increase (especially due to consumerism),
and much more. The impacts that these have on the environment have become clear and
include:

Climate change including Global warming

Acid rain, photochemical smog and other forms of pollution
Ocean acidification
Displacement/extinction of wildlife
Resource depletion - forests, water, food
and more
There are many issues in the world that are causing one or more of these effects. The oil
sands, for instance, are of great concern to many these days as they essentially contribute
to each of the above impacts, see environmental impacts of oil sands.

For information on how the average person may be affecting the environment, visit CO2
footprint and anthropogenic effects.
Assessing Impacts
The environmental impact a specific action may have can be analyzed using a life cycle
assessment, which is the process of observing a product from its "cradle to grave" and
determining the impacts associated with it at each step.[3] These methods are somewhat
subjective and resource intensive.[2]

Emission inventories for example may quantify the emission of pollutants, while risk
assessments can analyze the effects these pollutants will have on the health of those within
the environment.

Process hazard analysis involves identifying and assessing potential impacts of unplanned
hazardous materials. A team may rank the possible hazards and focus on preventing those
that can cause the most harm.

4) "Well-planned facilities offer real added value improvements to the organization’s core
business.” Explain the statement.
Answer:

Facility planning or strategic facility planning recognizes that every decision made in
business planning has a direct impact on an organization’s real estate assets and needs.
In the real world of facility management, a plethora of activities falls under the facility
manager’s responsibility, causing frequent lapses into a reactive mode to respond to all the
requests, orders, regulations, deadlines, and demands of the organization.
Facilities are the critical components of an organization’s strategic facility planning since
they are the outcome of business decision-making processes and have a long-term impact
on the support for the achievement of the organization’s mission and vision.
Linking facilities to core business strategies are one of the imperatives of refined facility
management now and in the future. Even greater importance will be given to strategic
facility planning in the coming years as budgets continue to be squeezed, and worker
performance and productivity are key factors in the knowledge age.
Strategic facility planning facilitates the organization’s strategy by optimizing facilities to
satisfy the strategic relationships between the organization, products/services, and
facilities.
The strategic facility planning is a two-to-five year plan encompassing the entire portfolio of
owned and/or leased space that sets strategic facility goals based on the organization’s
strategic objectives.
Strategic facility planning helps facility managers do a better job and ensures that all
employees are working toward the same goals and objectives.
4 Steps of Facility Planning
A flexible and implementable strategic facility planning based on the specific and unique
considerations of your organization needs to be developed through a 4 step process.
4 step process of understanding the situation, facilities, conditions, and expectations,
analyzing the needs and changes required, planning, and then executing an approved plan
will be explained.
Numerous tools for each step of the four-step process will also be suggested.
Strategic Planning Process: 5 Stages
Pause

4 step process of facility planning are;

1. Understanding.
2. Analyzing.
3. Planning.
4. Acting.

1. Understanding
The first step, understanding, requires a thorough knowledge of your organization’s
mission, vision, values, and goals. Thoroughly understand the organization’s mission, vision,
values, and goals.
Many organizations follow a balanced scorecard of 4 key measurements: financial
performance, customer knowledge; internal business processes; and learning and growth.
The strategic plan focuses on the longer-term, big-picture needs, and vision of the
organization. Because the SFP meshes with the strategic business plan of each unique
organization, alignment is critical for success.
Facility managers must begin the development of the SFP by thoroughly understanding the
needs of the organization.
Through existing internal analysis and business imperatives, the work that an SFP team
completes is entirely dependent upon the organization’s specific needs and should address
both strategic and long-range planning.
Conversely, it should also address the evaluation of current facilities and the
conceptualization, planning, and implementation of new facilities.
A thorough understanding of the current situation is necessary to analyze the needs
properly and compare existing conditions to those needs.
Commonly, strategic plans provide a combination and range of recommendations to
maximize the value of a corporation’s assets.
The facility manager considers factors such as the organization’s mission, vision, culture and
core values; the current position of the business and its current real estate asset base; its
overall direction and the projects currently underway within the corporation; how the
business may change; and how those changes may affect the real estate needs of the
corporation.
Once these considerations are well understood, a business-driven approach is taken to
analyze the organization’s facilities and to set tangible goals and plan targets.
Often, organizations take a strictly cost-driven approach to their facilities.
Although they are quick to implement and are often cost-effective, this approach is
nevertheless lacking in vision, fails to adequately address the actual delivery of the business
goods and/or services, and has only a moderate long-term impact on improving the overall
performance of the business as a whole.
In contrast, a business-driven approach, despite necessitating a longer timeframe, delivers a
clear vision for the future, earns employee support, and enhances performance, which
strengthens the business competitively.
Using this business-driven approach, the team studies the real estate assets that the
corporation currently holds using gathered data, modeling tools, and scenario alternatives.
This data often includes lease and ownership data, building assessments, square footages,
space utilization standards, and location characteristics.
To provide a comprehensive plan, the facility manager and SFP team explore the various
business goals of each unit in the business and integrate these goals into the facility plan
analyses.
This input defines future space, and real estate needs to be based on overall corporate
goals starting with anticipated services, expected staffing changes, and potential new
technologies.
The team uses these needs to predict future headcounts, demographics, space utilization,
maintenance requirements, capital investment, and operating costs.
At this stage, a clear understanding of the goals of the SFP, as well as the approval process
and measures for success, will be complete and have the second stage follow.

2. Analyzing
Second, exploration of the range of possible futures and triggers is needed to analyze
your organization’s facility needs using analytical techniques — such as systematic layout
planning (SLP), strengths, weaknesses, opportunities and threats analysis (SWOT),
strategic creative analysis (SCAN), or scenario planning.
Use analytical techniques, such as SWOT analysis, SCAN, SLP, or scenario planning, to
explore the range of possible futures and the triggers used to analyze an organization’s
facility needs.
Once a clear definition of the business’ situation has been established, the facility manager,
planners, and designers begin to consider how to balance current facility needs with long-
term needs and issues.
These needs and issues may include workforce demographics, manufacturing
processes, organizational structure and culture, community and government regulatory
requirements, market position, and capacity rates and volumes. All of these combine to
define the individual elements of the SFP.
The comparison of the current inventory and conditions with the future needs provides the
gap that the SP will address.

Analysis Tools
Several tools (see Analysis Tools section) may be used to compare, analyze, coordinate, and
clarify this gap and the alternatives, scenarios, and recommendations that are made.

Scenario Planning
Scenarios are tools for thinking ahead to anticipate the changes that will impact your
organization. Scenarios can be considered instructive simulations of possible operating
conditions.
This approach might be used in conjunction with other models to ensure planners truly
undertake strategic thinking. Scenario planning may be particularly useful in identifying
strategic issues and goals.
1. Select several external forces and imagine related changes that might influence the
organization, such as the global marketplace, technology, change in regulations,
demographic changes, etc. Scan newspapers and Internet sources for key headlines
to suggest potential changes that may affect the organization. Utilize IFMA’s and
other association’s trend reports.
2. For each potential change, discuss three different future organizational scenarios
(including the best case, worst case, and all right/reasonable case), which may arise
within the organization as a result of each change. Reviewing the worst-case
scenario often provokes strong motivation for needed changes.
3. Suggest what the organization might do, or potential strategies, in each of the three
scenarios to respond to each change.
4. Planners soon detect common considerations or strategies that must be addressed
to respond to possible external changes.
5. Select the most likely external changes to affect the organization, over the next
three to five years, for example, and identify the most reasonable strategies the
organization can undertake to respond to these changes.
The product of this process is not a final, cut-in-stone document. Still, it provides insight into
how different decisions will affect the organization’s return on investment, cash flow, debt
load, work processes, and productivity of its employees.
Scenarios will guide decision-makers and provide advance consideration of the potential
impacts of different facility decisions.
Systematic Layout Planning (SLP)
The SLP method was developed by Muther (1973) to create conceptual block layouts.
The method successively adds complex data categories until a block layout has been
generated, making it a strategy to the tactical tool.
1. Document the present operation (Deliverable: flowcharts).
2. Define the activities and planning horizon (Deliverable: table).
3. Develop activity relationships (Deliverable: relationship diagram).
4. Develop a square footage requirements spreadsheet (Deliverable: spreadsheet).
5. Develop block plan layouts (Deliverable: block plan layout).
6. Development of an equipment layout (Deliverable: equipment layout).

SWOT Analysis
SWOT Analysis is another planning tool used to strategically evaluate the strengths,
weaknesses, opportunities, and threats in a project or a business venture.
SWOT uses business objectives and identifies both internal and external factors that are
either favorable or unfavorable to achieving that objective.
The four areas considered are;
 Strengths: attributes of the organization helpful to achieving the objective and
describing how they can be leveraged.
 Weaknesses: attributes of the organization harmful to achieving the objective and
how they can be minimized or neutralized.
 Opportunities: external conditions helpful to achieving the objective.
 Threats: external conditions harmful to achieving the objective.

Brainstorming (AGIR-a gang in a room)

This technique better ensures that various views and aspects are represented, particularly if
the individuals are chosen well. The downside may be too much input, which may yield
inconsistencies.
However, done properly, brainstorming provides an opportunity for creative, innovative
concepts that might otherwise be overlooked.
As such, it is suggested that a professional facilitator should conduct these types of sessions.
Strategic Creative Analysis (SCAN)
Strategic Creative Analysis is a process for strategic planning, decision making, and analyzing
case studies. An example of a strategic planning technique that incorporates a SWOT
analysis is SCAN analysis.
The process of SCAN is described in Exhibit 1. (Step 3. Includes the Top Rated Objective –
TRO).
Benchmarking
Benchmarking is a very useful SFP tool for comparing and measuring your organization
against others, anywhere in the world, to gain information on philosophies, practices, and
measures that will help your organization take action to improve its performance.
In summary, benchmarking is the practice of being humble enough to admit that others are
better at something and being wise enough to learn how to match and even surpass them
at it.
Benchmarking utilizes much of the organizational understanding gained in the first step of
SFP to compare practices and metrics to recognized leaders.
Networking with peer organizations, competitors, and especially for facility organizations,
visiting award-winning service organizations provides insight to bring back and adapt to
your operations.
Adaptation is the key—recognizing a good process or practice and use it in your specific way
within your organization is the essence of successful benchmarking.
For SFP to serve as the right mechanism to analyze and improve current facility operations,
a proactive approach to benchmarking practices and services of those organizations
recognized as industry leaders is needed.
Benchmarking may be undertaken as part of a broader process reengineering initiative, or it
might be conducted as a freestanding exercise.
Organizational Simulation
Organizational simulation is a prominent method in organizational studies and strategic
management. This tool aims to understand how organizations operate.
The organizational simulation can describe the coordination of facility operations based on
understanding and analyzing the impact of interrelated facility alternatives and activities.
This method can measure organizational performance and support strategic thinking.

3. Planning
Third, once the analysis is completed, plans for potential responses and periodic updates to
existing plans in response to changes in the market need to be developed to meet the long-
range needs of your specific organization.
Develop plans that meet the long-range needs of the organization.
At a minimum, the SFP should be reviewed annually and further updated periodically as
conditions require.
As a result of the analyses performed, decisions will become apparent, or recommended
courses of action can be supported by the completed analysis.
These recommendations will become the essence of the SFP.
To be organizationally mandated, most facility managers will need to present the
recommendations to senior management, obtain buy-in (often involving some negotiation
and adjustment to the plan), and get final approval and funding for the proposed plan.
IFMA uses and recommends the balanced scorecard methodology for integrating planning
into the organization’s objectives, but recognizes that every organization has selected
methods for business processes and facility management conforms to align with the
organization’s methodologies.
The following are major steps in setting up the plan:
 Document the primary objectives to be addressed (the gap) in the SFP.
 Evaluate sites, zoning, costs, labor, competition, and all factors critical for success.
 Conduct financial and risk analysis to focus on finding the maximum value.
 Develop alternatives with recommendations and priorities.
 Develop a process for marketing the recommended SFP to gain management
approval.
 Obtain financial and other approvals needed to launch the action phase.
It is important to note that once approved, and the SFP may continue to evolve and adapt
to changing conditions within and outside the organization. The flexibility of a good SFP will
accommodate the minor adjustments.

4. Acting / Action
Fourth, take action as planned to implement the strategic facility planning successfully.
Take actions as planned and implement the SFP. Feedback from actions taken can be
incorporated into the next plan and/or project to provide continuous improvement to
future SFPs.
After approval, the SFP is then ready for implementation.
Implementation of an SFP typically requires the development of a specific project or project
to deliver new, altered, or reconfigured space to meet the organizational need. This specific
project is a unique process that is supplemental to the SFP.
Specific project planning with take place outside the SFP to fulfill the detailed
implementation phase. Some projects, especially large new space projects, may be
managed by specialty or contract groups.
It is critical in these cases that facilities stay involved as a core team member, to ensure
integration of the planning and operational phases of the specific project.
Regardless of the tools used in the development of an SFP, the SFP should be viewed as a
living document that reports findings and makes considered recommendations for
implementing the plan within a realistic time frame, yet maintains the flexibility to adapt as
business requires.While implementation is in progress, flexibility to adapt to changed
conditions may be required.It is prudent to view an SFP as the “current SFP” since any major
change in market conditions, economic outlook, or other forces could require varying
degrees of change to the original document.
This is another reason that scenarios are very helpful—since they anticipate some of these
potential changes. The SFP is a major facility management tool used to support the
organization—alignment with the organizational vision, mission, goals, and objectives are
always critical for the success of the SFP.
Documentation of especially successful or problematic portions of the SFP, if noted, can
provide valuable feedback for the next iteration of planning.
The cyclical nature of planning and continuous improvement provides opportunities to learn
from each process. The following diagram is a process model developed for SFP
accomplishment.
This process model integrates the sequential activities, participants, deliverables, and inter-
relationships for an individual organization to be successful when implementing the 4-step
SFP process.
The process model includes three layers of participants (executive management, facility
manager, and staff) and roles illustrating who implements each of the tasks in the SFP
development process.
The SFP team needs to be closely connected to implement activities from the project launch
through to the final implementation phase, and hand-off for the development of the tactical
facility plans to support the organization’s business planning.
Major activities are aligned with the four-step process and include tasks such as data
gathering/benchmarking, analysis/synthesis, scenario development/forecasting, and SFP
implementation.The process model ends with the hand-off to a tactical facility plan, which
often is the facility management annual plan or budget.
Feedback through all phases for continuous improvement is shown with arrows in reverse.
It should also be noted that there are no hard and fast lines indicating when one phase ends
and the next starts. Plans flow at different rates due to different organizational
requirements and managerial direction. The precise transitions are unimportant but need to
follow your own organization’s requirements.
5) Explain the different types of facilities.
Answer:

The various types of facilities are briefly described below:

Heavy Manufacturing
Heavy manufacturing facilities are primarily plants that are relatively large and require a lot
of space and as a result, are expensive to construct.
Example: Automobile plants, steel mills and oil refineries.
Important factors in the location decision for plants include construction costs, modes of
transportation for shipping heavy manufactured items and receiving bulk shipments of raw
materials, proximity to raw materials, utilities, means of waste disposal and labour
availability. Sites for manufacturing plants are normally selected where construction and
land costs can be kept at a minimum and raw material sources are nearby in order to
reduce transportation costs. Access to rail-roads is frequently a major factor in locating a
plant. Environmental issues have increasingly become a major factor in plant location
decisions. Plants can create various forms of pool pollution and traffic pollution. These
plants must be located where the harm to the environment is minimised. Although
proximity to customers is an important factor for some facility types, it is less so for
manufacturing plants.

Light Industry
Light industry facilities are typically perceived as smaller, cleaner plants that produce
electronic equipment and components, parts used in assemblies, or assembled products.
Example: Making stereos, TVs, or computers, tool and die shop, breweries, or
pharmaceutical firms.
Several factors are important for light industry. Land and construction costs are not
generally as crucial, because the plants tend to be smaller and require less engineering. It is
not as important to be near raw materials, since they are not received in large bulk
quantities, nor is storage capacity required to as great a degree. As a result, transportation
costs are somewhat less important. Many parts and material suppliers fall into this category
and as such, proximity to customers can be an important factor. Alternatively, many light
industries ship directly to regional warehouses or distributors, making it less important to
be near customers. Environmental issues are less important in light industry, since burning
raw materials is not normally part of their production processes, not are there large
quantities of waste. Important factors include the labour pool, especially the availability of
skilled workers, the community environment, access to commercial air travel, government
regulation and land use requirements.

Warehouses and Distribution Centers

Warehouses are a category of their own. Products are not manufactured or assembled
within their confines, nor are they sold from them. They represent an intermediate point in
the logistical inventory system where products are held in storage. Normally a warehouse is
simply a building that is used to receive, handle and then ship products. They generally
require only moderate environmental conditions and security and little labour, although
some specialised warehouses require a more controlled environment, such as refrigeration
or security for precious metals or drugs. Because of their role as intermediate points in the
movement of products from the manufacturer to the customer, transportation and shipping
costs are the most important factors in the location decision for warehouses. The proximity
to customers can also be an important consideration, depending on the delivery
requirements, including frequency of delivery required by the customer. Construction and
land costs tend to be of less importance as does labour availability. Since warehouses
require no raw materials, have no production processes and create no waste, factors such
as proximity to raw materials, utilities and waste disposal are of almost no importance.

Retail and Service

Retail and service operations generally require the smallest and least costly facilities.
Examples include such service facilities as restaurants, banks, hotels, cleaners, clinics and
law offices and retail facilities such as groceries and department stores, among many
others. The single most important factor for locating a service or retail facility is proximity to
customers. It is usually critical that a service facility be near the customers who buy from it.
Construction costs are generally less important (especially when compared with a
manufacturing plant); however, land or leasing costs can be important. For retail
operations, for which the saying "location is everything" is very meaningful, site costs can be
very high. Other location factors that are important for heavy and light manufacturing
facilities, such as proximity to raw materials, zoning, utilities, transportation and labour, are
less important or not important at all for service and retail facilities.