Jul
Which situations would this apply to?
Answer:
It would depend on a lot of factors. Costs would be important, but maybe not as important as swift and dependable service to the customer. Is it cheaper to bring materials in or to ship them out; does that change based on location? Do your customers need to see (or think they do) your sales rep? Or do they purchase on the web and all you need to do is to have UPS pick it up every afternoon? Is it a service based business, or a product based business?
Answer:
It seems to me that with the availability of fast delivery services like UPS and FedEx a firm can pick and choose where it locates and the customer still gets fast delivery. For a manufacturing company, being closer to a supplier can be less expensive and thus more profitable. As an example, I work for a company that manufactures industrial electric controls that are shipped world wide. Our vendors and suppliers are all local businesses. We have the ability to check on our orders in person if need be and delivery charges to the plant are minimal. Also this arrangement keeps local workers in jobs and helps our local economy. We use metal fabrication companies, component distributors, cable and wire distributors, and even local rubbish removers. It is my thought that a company does more good being near the suppliers and the customer still gets good and timely service.
Answer:
Depends on the product, the raw materials etc etc.
Some examples (there are many others)
Production of certain metals such as copper and aluminium needs a lot of raw material (in some cases I believe 98% of the ore is ‘waste’), which isn’t often found where the customers are so you would tend to have the factory near to the supply as transport costs are much lower for the product than the raw material.
Beer is composed mainly of water which is found almost everywhere, so breweries traditionally tend to be in where the demand is… in towns where the consumers live.
Financial services (banks, insurers etc) have no tangible supply or product so can pretty much choose where they want to be. Often, wherever they can get a sufficiently skilled taskforce. This is why you get ’call/processing centres’ in provincial towns where the premises and staff costs are lower than in big cities.
All the above reasons are just base examples, it all gets a lot more complicated with government allows, tax breaks and regional incentives where firms are encouraged to build factories etc in economically depressed areas by being given a special deal on tax etc.
Answer:
Customers! You can always pay “extra” to suppliers to get them to deliver stock to you.
But if your Customers can't find you, then you’re beggared! Because you'll sell nothing and won't need suppliers at all!
Answer:
Probably suppliers for cost reasons, the customers can be more flexible to reach, suppliers as the firm, wait for customers to come to them. Book Mark it-> del.icio.us | Reddit | Slashdot | Digg | Facebook | Technorati | Google | StumbleUpon | Window Live | Tailrank | Furl | Netscape | Yahoo | BlinkList