Page 136 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes Texas Instruments, Cisco Systems, Oracle, etc., some of the best-known names in software
applications, have located facilities in India.

Many countries, like China and India, are turning out to be attractive locations for industries
that require large contingents of unskilled labour.

Did u know? Hyundai Motors recently announced that India would be its hub for supply
of small cars and automobile components worldwide. Companies like Nike, Reebok, etc.,
are setting-up supply chains in Asia and South America. Many US automobile
manufacturers are moving production facilities to Mexico.

Though, this is often very appealing, you need to bear in mind that conditions can change
in time. For example, while labour costs may be low in a certain geographic location now,
this will change if the demand for labour grows significantly.
In considering the labour supply, the following points should be considered.
(a) Skills available – size of the labour force – productivity levels.
(b) Unionization – prevailing labour – management attitudes.

(c) History of local labour relations – turnover rates – absenteeism, etc.
Some organizations have relocated from a high skill/high cost area to a low skill/low
cost area without any decrease in productivity. Sometimes it has been due to skill
availability and labour-management relations but often it has been the result of higher
investment in mechanization.

Notes Labour Costs of Manufacturing Workers in Different Countries

5. Location of other plants and warehouses: Organizations need to look at their plant locations
for the complete system point of view.
(a) Distribution and supply requirements require the support of sister-plants and
warehouses that complement the system.

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