Facility Location and Material Handling: Meaning, Importance, and Principles

What does Facility location mean?

Facility location is actually a term used in operation management, facility location or location analysis is done so that the better uses of the location can be understood. The company by understanding the materials and production process done nearby the location can save ample time in production process and also save a lot in terms of transportation cost. And also, the company can find out optimum position for the location of the company so that all the factors that are needed will be not a long distance from the company.

Some of the benefits in location analysis include:

1. You get a thorough knowledge of all the factors involved in the production, and ways through which the materials that are needed in the production can easily be accessed.
2. When you do a proper location analysis for your facility you will also come across alternate substitute materials that are readily available and will cost less.
3. You can save a lot on transportation cost for materials, labour, import and export.
4. The materials will be available at a comparatively low cost.
5. The best way to get a task done is by finding out ways through which the task can be done. Location analysis helps you in those aspects.
6. Allows to you differentiate between practical positions to place your facility. Like for example, you cannot build a hazardous facility in a residential area.
7. Gives you access to cheap labour, and needed raw materials like water electricity and many more.
8. Helps in a smooth running of an organization, by seeing to that all that is possibly needed is readily and easily available.
9. Also has very easy access to production, distribution and sale of the products.
10. Allows you to outperform your competitor’s facilities

Once you have found the optimal location then you will very easily overcome all the issues that you are likely to face and have a smooth running of an organization. When you plan accordingly, you will also be prepared to face some minor hindrances.

Material Handling

Expressed in simple language, materials handling is loading, moving and unloading of materials. To do it safely and economically, different types of tackles, gadgets and equipment are used, when the materials handling is referred to as mechanical handling of materials. Since primitive men discovered the use of wheels and levers, they have been moving materials mechanically. Any human activity involving materials need materials handling.  However, in the field of engineering and technology, the term materials handling is used with reference to industrial activity. In any industry, be it big or small, involving manufacturing or construction type work, materials have to be handled as raw materials, intermediate goods or finished products from the point of receipt and storage of raw materials, through production processes and up to finished goods storage and dispatch points. 

A material handling as such is not a production process and hence does not add to the value of the product. It also costs money; therefore, it should be eliminated or at least reduced as much as possible. However, the important point in favours of materials handling is that it helps production. Depending on the weight, volume and throughput of materials, mechanical handling of materials may become unavoidable. In many cases, mechanical handling reduces the cost of manual handling of materials, where such material handling is highly desirable. All these facts indicate that the type and extent of use of materials handling should be carefully designed to suit the application and which becomes cost effective. Based on the need to be of optimum design and application specific to different type of industries, materials handling can be as diverse as industries them self.

Some definitions are:

1. The American Materials Handling Society is: Materials handling is the art and science involving the moving, packaging and storing of substances in any form
2. Materials handling is the movement and storage of materials at the lowest possible cost through the use of proper methods and equipment.
3. Materials handling is the moving of materials or product by any means, including storage, and all movements except processing operations and inspection.
4. Materials handling is the art and science of conveying, elevating, positioning, transporting, packaging and storing of materials.

All the functions of materials handling have been referred to which are conveying, elevating, positioning, transporting, packaging and storing. Storage or warehousing is very much a part of materials handling. Materials handling uses different equipment and mechanisms called Materials Handling Equipment.

The essential requirements of a good materials handling system may be summarized as:

1. Efficient and safe movement of materials to the desired place.
2. Timely movement of the materials when needed.
3. Supply of materials at the desired rate.
4. Storing of materials utilizing minimum space.
5. Lowest cost solution to the materials handling activities

Functional scope of materials handling within an industry covers the following:

1. Bulk materials as well as unit materials handling. Bulk handling is particularly relevant in the processing, mining and construction industries. Unit materials handling covers handling of formed materials in the initial, intermediate and final stages of manufacture.
2. Industrial packaging of in-process materials, semi-finished or finished goods, primarily from the point of view of ease and safety of handling, storage and transportation. However, consumer packaging is not directly related to materials handling.
3. Handling of materials for storage or warehousing from raw materials to finished product stage.

Importance of Materials Handling

The foremost importance of materials handling is that it helps productivity and thereby increases profitability of an industry. Many enterprises go out of business because of inefficient materials handling practices. In many instances it is seen that competing industries are using same or similar production equipment, and one who uses improved materials handling system stays ahead of their competitors.

A well-designed materials handling system attempts to achieve the following:

1. Improve efficiency of a production system by ensuring the right quantity of materials delivered at the right place at the right time most economically.
2. Cut down indirect labour cost.
3. Reduce damage of materials during storage and movement.
4. Maximize space utilization by proper storage of materials and thereby reduce storage and handling cost.
5. Minimise accident during materials handling.
6. Reduce overall cost by improving materials handling.
7. Improve customer services by supplying materials in a manner convenient for handlings.
8. Increase efficiency and sale ability of plant and equipment with integral materials handling features.

Material Handling Principles

A principle is a general rule, fundamental, or other statement of an observed truth. The Material Handling Principles are fundamental truths of material handling that have been found to exist. The "principles" of material handling are often useful in analyzing, planning and managing material handling activities and systems. At the very least they form a basic foundation upon which one can begin building expertise in material handling.

These principles that serve as a starting point to identifying potential problems and assessing need are:

1. Orientation Principle - Study the system relationships thoroughly prior to preliminary planning in order to identify existing methods and problems, and physical and economic constraints, and to establish future requirements and goals.
2. Flexibility Principle - Use methods and equipment which can perform a variety of tasks under a variety of operating conditions.
3. Planning Principle - Establish a plan to include basic requirements, desirable options, and the consideration of contingencies for all material handling and storage activities.
4. Simplification Principle - Simplify handling by eliminating, reducing, or combining unnecessary movements and/or equipment.
5. Systems Principle - Integrate those handling and storage which are economically viable into a coordinated system of operation including receiving, storage, production, assembly, packaging, warehousing, shipping, and transportation.
6. Gravity Principle - Utilize gravity to move material wherever possible, while respecting limitations concerning safety, product damage, and loss.
7. Unit Load Principle - Handling product in as large a unit load as practical.
8. Safety Principle - Provide safe material handling equipment and methods which follow existing safety codes and regulations in addition to accrued experience.
9. Space Utilization Principle - Make effective utilization of all cubic space.
10. Computerization Principle - Consider computerization in material handling and storage systems when circumstances warrant for improved material and information control.
11. Standardization Principle - Standardize handling methods and equipment wherever possible.
12. Layout Principle - Prepare an operational sequence and equipment layout for all viable systems solutions, and then select the alternative system which best integrates efficiency and effectiveness.
13. Ergonomic Principle - Recognize human capabilities and limitations by designing material handling equipment and procedures for effective interaction with the people using the system.
14. Cost Principle - Compare the economic justification of alternative solutions in equipment and methods on the basis of economic effectiveness as measured by expense per unit handled.
15. Energy Principle - Include energy consumption of the material handling systems and material handling procedures when making comparisons or preparing economic justifications.
16. Maintenance Principle - Prepare a plan for preventive maintenance and scheduled repairs on all material handling equipment.
17. Environmental Principle - Minimize adverse effects on the environment when selecting material handling equipment and procedures.
18. Reliability Principle - Provide reliable and dependable material handling equipment from manufacturers who have demonstrated quality and longevity in the industry.
19. Mechanization Principle - Mechanize the handling process where feasible to increase efficiency and economy in the handling of materials.
20. Accessibility Principle - Readily have access to the knowledge, expertise, professionalism, and industry leadership.

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Sandeep Ghatuary

Finance & Accounting blogger simplifying complex topics.

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