Location Analysis

Location analysis is an important decision now-a-days and without location analytics it was difficult to take decision based on location. The physical location of business activities is an important part in the supply chain strategy of any organization. Poor location is among the chief causes of all business failures. Simply just finding the cheapest site is typical a recipe for disaster.

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Location analysis is needed for both local and foreign operations. Businessmen often make a common mistake which is not to go for location analysis for local firms. Local firms need location analysis to get better insight of their target customers, factory relocation, effective marketing, and competitor position in the market.

Location Analysis

Location analysis is mostly important for the companies which are planning to move to global market. Whenever you enter in a new market, you don’t have any idea about the customer of that particular area. Marketing research and Geographical Information System (GIS) help companies to make better business decisions. There is a growing realization that by adding geographic location data with business data and mapping it properly, organizations can drastically enhance their insights into tabular data. Often maps and spatial analytics provide a whole new context that is simply not possible with tables and charts data.

This perspective can almost immediately help users discover new understandings and more effectively communicate and collaborate using maps as a common language. Where this geographic aspect has been largely absent from business analytics solutions, many companies would like to integrate it into their operations. Over the last few years, a few progressive organizations have integrated maps and spatial analytics with their business data using GIS technology and netted powerful results.

For an efficient supply chain

Business data combining with GIS data approach has not become widespread because of the expense of custom integration with enterprise systems and because the capabilities of GIS are beyond the technical knowledge of the business analytics users. For an effective and efficient supply chain, location decisions for a facility may be the most critical and most difficult decisions. Facility location decisions are fixed and difficult to change even in the intermediate term.

Change in customer demands, transportation cost or component prices will not change the location of a facility. Inefficient locations for facilities can result in excess costs incurred throughout the lifetime of the facilities. Long-term Planning Long term conditions for which a facility will operate will be subject to considerable uncertainty at the time of decision proposals.

Recognizing the inherent uncertainty associated with future conditions is important. Location of the facilities and the shipment pattern between the facilities and the customers should minimize the combined facility location and shipment costs subject to a requirement that all customer demands be met. Integrated location gives the relationship between facility location, customer allocation to facilities and vehicle steering.

The core objective here is to minimize the sum of fixed facility location costs, shipment costs from the supply point to the facilities, the variable facility throughput costs and the routing costs to the customers. Integrated Location model with risk pooling effect minimizes the sum of fixed facility location costs, direct transportation costs to the customers.