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Plant facility, Plan and Location in SCM
November 15, 2014


When a company decides to build an industrial plant it needs to take care for the following things:

  • The plant should be near to port (if available) or it should be near to the exit point of that country.
  • Company should make sure that all production facilities including labor, raw material, etc. should be easily available in that vicinity.
  • Coverage area and infrastructure requirement should be properly designed before constructing a plant keeping provisions for future requirement as well.


Plant facility, Plan and Location in SCM



According to the above figure there are few points that needs to be considered which are as follows:

  • Plant / factory location. (as discussed previously)
  • OFD (Over flow distribution center) required or not. OFD is also a warehouse which is near or in the vicinity of the plant / factory.
  • Location of DCs should be designed in a way that it should easily cover the target regions within a country. Therefore, for DC’s market coverage is very critical and important.
  • LCL (Low container load) / FCL (full container load): This will be covered in later sections.
  • Strategic Alliances (already covered in previous section)
  • Again, carbon foot prints should be minimized.
  • Cross docks. Suppose, there are two points ‘A & B’ which comes after a factory. Suppose a factory send stocks for Point B, which comes after passing point A, and the container drops some of the stocks at point A as well during its transit to point B, so that A region also gets the supply of that stock, then this concept is called cross docks.
  • Master DC: Is the main DC which is further providing stocks to other small DCs.


Container load:

Container are the empty vessels that are attached to the vehicles carrying goods in it. There are two kind of container carrying goods:

  1. Low container load: This type of container contains goods of other companies as well. This kind of transportation may cause delay issues as the owner of the container will wait for other company’s stocks to be filled in till entire container is occupied.
  2. Full container load: In such kind of container the entire load is dedicated to one company and therefore has less issues as compared to the LCL. But at least 75% to 80% of the container should be filled up in order to increase the economy of scale.

Container are of different sizes, some of the mostly used containers are: 20, 40 and 60 feet containers.


OFD (Over flow distribution center):

OFD is a warehouse which is near or inside the vicinity of the plant / factory. Those stocks whose destination are not decided are stored in OFD, in order to avoid back freighting and inter depot transfer.


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