Manufacturing facility location and sustainability: A literature review and research agenda

Abstract

(Jan Olhager), ou.tang@liu.se (Ou Tang) A B S T R A C T The perspectives on the manufacturing footprint of global firms are widening from the economic aspects to also include the environmental and social aspects. Thus, sustainability is becoming an important issue for the location of manufacturing facilities. It is therefore timely to review the relevant aspects and dimensions in the extant literature to investigate the relationship between sustainability and facility location. In this paper, we aim to understand how sustainability aspects are included in decision-making concerning manufacturing facility locations and the role of location in evaluating manufacturing sustainability. We examine the literature streams on sustainability and facility location. A comprehensive search includes peer-reviewed literature from 1990 to 2011. We propose a literature classification scheme with respect to focal area and research methodology. The content analysis identifies the environmental, social and economic perspectives and factors affecting location decisions. We synthesize the findings into a framework for taking sustainability aspects into account in manufacturing facility location decision-making. We also propose a research agenda for further research on sustainable locations. Keywords:Corporate social responsibility (CSR), Environment, Facility location, Manufacturing, Sustainability 2 IntroductionThe facility location problem has been around for a long time. In general, it concerns the geographical positioning of facilities for a specific organizational entity, such as a company.As such, it is a strategic decision related to the configuration of the manufacturing network.As competition becomes global and the complexity of the environment in which companies operate is increasing, managing an integrated international network has become an increasingly important task for managers (Ferdows, 1997(Ferdows, , 2009). Traditionally, the objective has been to derive a cost-optimal distribution of facilities with respect to the location of markets (customers) and raw materials (suppliers). More recently, access to skills and knowledge has been added as a major strategic factor that affects location decisions (Ferdows 1997, Vereecke et al. 2006, and Feldmann and Olhager 2013. Manufacturing companies that have more than one plant can gain insights on markets, products, and processes by managing a group of plants as a manufacturing network. In practice, this can lead to a complete reconfiguration of the manufacturing network such as in the cases of Digital (Arntzen et al. Camm et al. 1997). In other cases, the changes to the manufacturing network may be more incremental such as opening up of a new facility or closing down an existing one. There may be different strategic reasons for the location decisions for different manufacturing facilities, such as access to low-cost manufacturing, proximity to market, and access to skills and knowledge (Ferdows, 1997). Thus, deciding on the "optimal" set and location of manufacturing faciliti...

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