Importance of Location Planning The problem that affects all organizations is the following: if they work in the wrong location, their performance is poor, but moving can be very difficult. The only solution, of course, is to choose the best location in the first place. The right location will not guarantee success, but the wrong location will certainly guarantee failure. This is why you do not find night clubs in residential areas where a lot of people are retired; big patrol stations on country lanes where they cannot attract passing customers, factories in city centres where their costs are too high, or oil refineries far away from ports as their transport would cost too much. Location decisions are invariably difficult. Families often have problems finding somewhere to live that satisfies all their needs, but this is trivial compared with a decision about where to open a new logistics centre, hospital, university, amusement park, airport, factory or any other major facility. Because the decisions are difficult, you can see many examples of organisations that locate in the wrong place and go out of business. Some organisations forget that location decisions are for the long term and are tempted by short-term benefits, such as development grants, temporary rent reductions or tax breaks. Such sweeteners can be attractive, but they rarely form the basis of good decisions. Frequent mistakes: ● Unprepared site selection team Successful companies are able to bring multi-disciplinary teams together to enable and implement an effective location strategy. They have found that to limit risk and avoid surprises, it is critical to address certain technical, analytical, and financial elements early in the site selection study. An effective team will possess core competencies in the areas of human resources, cost accounting, logistics, tax, engineering, construction, and in some cases, environmental issues. Neglecting to assemble the right mix of stakeholders and experts early in the process increases the risks of project delays and poor location selection. ● Incorrect search area Manufacturing site selection usually begins with a general region of interest due to transportation issues, human capital needs, or other market dynamics. Problems will arise and valuable time will be lost if this geography is not carefully validated with the new facility’s overall operating objectives and criteria. ● Narrowing the search area too rapidly After the search area is determined, companies are often tempted to quickly eliminate large chunks of geography to accelerate the process. Whole states or countries might be eliminated that, with some analytical consideration, could have been favorable alternatives. This can be avoided by correctly prioritizing the project’s critical location factors – those aspects of the desired solution that can be quantified and measured. These can include transportation, demographic, labor, tax, and in some cases, utility infrastructure requirements. With an agreed- upon methodology for elimination, the critical location factors should be used to reduce the areas of consideration thoughtfully and objectively. If areas exhibit borderline characteristics, it is generally wise to retain them, not eliminate them, for the next round of analysis.