Manufacturing plant location selection in logistics network using Analytic Hierarchy Process
Abstract: In recent years,
numerous companies have moved their manufacturing plants to China to capitalize
on lower cost and tax. Plant location has such an impact on cost, stocks, and
logistics network but location selection in the company is usually based on
subjective preference of high ranking managers. Such a decision-making process
might result in selecting a location with a lower fixed cost but a higher
operational cost. Therefore, this research adapts real data from an electronics
company to develop a framework that incorporates both quantitative and
qualitative factors for selecting new plant locations.
Design/methodology/approach: In-depth interviews were conducted with 12
high rank managers (7 of them are department manager, 2 of them are
vice-president, 1 of them is senior engineer, and 2 of them are plant manager)
in the departments of construction, finance, planning, production, and
warehouse to determine the important factors. A questionnaire survey is then
conducted for comparing factors which are analyzed using the Analytic Hierarchy
Process (AHP).
Findings: Results show that the best location chosen by the developed
framework coincides well with the company’s primal production base. The results
have been presented to the company’s high ranking managers for realizing the
accuracy of the framework. Positive responses of the managers indicate
usefulness of implementing the proposed model into reality, which adds to the
value of this research.
Practical implications: The proposed framework can save numerous
time-consuming meetings called to compromise opinions and conflictions from
different departments in location selection.
Originality/value: This paper adapts the Analytic Hierarchy Process (AHP)
to incorporate quantitative and qualitative factors which are obtained through
in-depth interviews with high rank managers in a company into the location
decision.
Keywords: Facility location,
Analytic Hierarchy Process (AHP), Supply chain management, Delphi method,
Logistics network
Author: Ping-Yu Chang, Hsin-Yi
Lin
Journal Code: jptindustrigg150075