Plant planning and facility planning


Plant planning refers to the designing, installing and physical arrangement of plants, factories, laboratories, research and development R&D facilities, warehouses, etc. It also includes facilities planning or planning of processing equipments, plant utilities and services, plant buildings and other plant facilities such as communication systems, materials handling system and storage systems.

Facilities planning refers to the determination of how much of long range production capacity is needed, when it is needed, where production facilities should be located and the layout and characteristics of these facilities.


1. Plant planning is a long-range planning which begins with the choice of a suitable location or site for the plant and ends with the installation of the complete production system there.
2. The right plant enables the firm to produce the desired quantity sand quality of the products at the minimum possible cost.
3. The choice of the right plant helps to minimize the capital investments.
4. It provides job satisfaction to employees by providing safe and healthy working conditions.
5. Effective planning and arrangement of plant, equipments, machinery, buildings, etc., is essential to remain profitable in a competitive business environment.


1. Ultimate objectives is to set up an optimum plant system that will provide highest efficiency in manufacturing i.e., at the lowest possible cost.
2. An effective integration of all factors affecting the layout of physical facilities.
3. Efficient utilization of resources such as machines, labor and space.
4. Logical work flow and the smooth sequence of operations.
5. Compactness to minimize movement of material and labor for processing .
6. Satisfaction, safety and convenience to all employees.
7. Provision of facilities for future expansion.
8. System flexibility to adapt to changes in product design and volume of output.

When to make and when to buy :

This can form a part of Facilities Planning. When to make,

1. Lower cost because the firm does not have to pay for the vendors( which includes their profit and overheads). This is more applicable to high tech items or inputs
2. Assurance of availability as the components are made in the Plant itself..
3. Better control on Quality.
4. Availability of in house expertise and equipments.
5. Confidentiality of Design and Trade secrets.
When to buy,

1. Parts from Vendor at lower cost than Plant cost
2. Higher Quality and faster delivery
3. Very few numbers are required and have to be made by special purpose machines
4. When Vendor holds a Patent for the required item
5. Opportunity cost of producing is much higher than buying.
6. When Just in Time supply is possible thus saving inventory carrying costs.