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Organizational factors and comprehensiveness
A complicating factor in the site selection approach described
in preceding chapters is the fact that companies approach the
location selection process with varying levels of sophistication,
comprehensiveness, and collaboration. Also, in some cases the
location process may be run by either the real estate department
or the logistics department, with little input from other aspects of
the company. Thus, sometimes rent and occupancy might take
more precedence in the location selection, while in other cases,
transportation costs and logistics may dominate the evaluation of
locations.
Likewise, the presence of a specific third-party logistics (3PL) partner
might dictate a location which otherwise does not meet objective
Increasingly, the total operating costs strategic goals. Typically, logistics and supply chain departments
of the supply chain force a review may report through operations to the chief operating officer, and
of the decision-making process, real estate may report through finance to the chief financial officer.
ensuring a more holistic approach in Each division may have individual performance measurement criteria
large companies. that do not adequately reflect overall corporate goals. Integration
of the two chains of command may not occur until higher corporate
levels compel an optimum result. These situations reflect corporate
culture that is not fully aligned in terms of overall vision or goals.
Increasingly, the total operating costs of the supply chain force
a review of the decision-making process, ensuring a more holistic
approach in large companies. In these cases, competing goals and
measures may be replaced with, for example, an initiative to minimize
total land cost and preserve future options for change. Even so,
many companies will still exhibit lack of coordination in their facility
location process.
Computer model use and sophistication
Computer models such as ILOG and CAPS, which optimize logistics
costs within performance criteria, interactively simulate transportation
linkages across modes and can determine the sensitivity of operations
60 Freight Facility Location Selection: A Guide for Public Officials
