Logistics and the supply chain involve many complex activities which require optimal strategic decisions in order to operate efficiently and effectively. Logistics managers are under a great amount of stress as the industry is ever changing. Management needs to adjust and improve all activities being conducted. Facility location is a crucial element in the supply chain and has a great impact on the efficiency of numerous logistics activities. Facility locations involve numerous aspects, such as the location of manufacturing plants, assembly locations as well as distribution centres. The location of the facility plays a vital role in the success of logistics networks.

The importance of facility location is gaining much attention in today’s day and age as companies are rapidly realising the importance and advantages of a successful facility location as well as the disadvantages involved in the selection of an unsuccessful facility location. The main focus of logistics is to reduce costs, improve efficiency as well as customer service. Successful facility location decisions may lead to drastic cost reductions as well as an improvement in the customer service levels. An unsuccessful facility location decision may lead to inefficient operations and additional costs which drastically affects the competency and effectiveness of the overall operation. Logistics managers are critically evaluating the performance of current facility locations.

The factors effecting the facility location decision include among others; personnel which most importantly consider the availability and cost of labour, informational technology infrastructure which includes advanced technologies found in certain countries that can improve an organisation’s service and performance, moving and installing equipment, company preferences, supplier networks which consider the costs of component, raw materials and transport, quality of life which mainly affects employee well-being and therefore standard of work, availability of transportation, proximity to market and customers, tax and industrial development incentives, which includes business taxes and inventory taxes as well as personal taxes and land costs and utilities including constructions costs and codes. When an organisation’s facility location no longer offers advantages previously achieved, the relocation of the facility can be seen as the optimal solution.