Home > Articles > Business & Management

This chapter is from the book

Quantitative Data: Why Have Multiple Plants?

Similar to our use of the word “warehouse,” we are also going to use the term “plant” to broadly refer to locations where product is made or where it comes from. So a plant could be a manufacturing plant that produces raw material, components, or finished goods, or just does assembly. A plant could be owned by the firm, it could be a supplier, or it could be a third-party plant that makes products on behalf of the firm. These third-party plants are often called co-packers, co-manufacturers, or toll manufacturers (a term used for third-party manufacturers common in the chemical industry).

A plant can also contain multiple production lines. So, often we are determining not only the location of plants, but also the number and location of the production lines.

For companies that make products, the number and location of plants are important. For retailers and wholesalers however, the location of the suppliers is often beyond their scope of control.

Even for a firm that has only one product, the location of the plant can impact transportation costs and the ability to service customers. In some cases, the location of the plant is primarily driven by the need to have skills in the right place or the need to be next to the corporate headquarters. However, in most cases, there are choices for plant locations. An even more interesting choice is to determine whether you should locate multiple plants to make the same product—even when a single plant could easily handle all the demand.

When you have choices for where to put your plants or the option to have several plants, you must consider some of the same questions we did when locating warehouses. For example, factors that would drive you to have multiple plants making the same product include:

  • Service Levels—If you need your plants to be close to customers, this will drive the need for multiple plants making the same product. This becomes especially important if your business does not use warehouses. In this case, your plants face the customer and their location can drive service levels.
  • Transportation Costs—For producers of heavy or bulky products that easily fill up truckload capacities, you will want to be as close to your markets as possible. This may also drive the need for multiple warehouses.
  • Economies of Scale—As a counterbalance to the benefits of transportation, you also want to factor in the economies of scale within production. As mentioned previously, the more you make of a given product at a single location, the lower the production cost per unit. This is driven by a reduction in production line setup time and costs and the benefit of being able to create a more focused manufacturing process. So while it may be ideal to have many production locations to minimize transportation cost, economies of scale in manufacturing suggest that fewer plants will be better.
  • Taxes—In a global supply chain, it is often important to consider the tax implications of producing and distributing product from multiple or different locations.
  • Steps in the Production Process—In a production process with multiple steps, you may need to decide where you should do various activities. For example, it can often be a good strategy to make product in bulk at a low-cost plant, ship it in bulk to another plant closer to the market to complete the conversion to a finished good.

As with the warehouses, a plant can also represent many types of facilities. A plant may represent any of the following:

  • A Manufacturing or Assembly Site—This is a site that is owned by the firm that makes products. The products coming out of the plant could be raw materials, semifinished goods, or finished goods.
  • A Supplier—This is a location that is not owned by the firm but supplies product to the firm. The products could again be raw material, semifinished goods, or finished goods. In the majority of cases, you have no control over where your suppliers are located. You may, however, be able to pick which supplier you will purchase from.
  • Third-Party Manufacturing Site—This is a location similar to supplier plants, but these sites make product on behalf of the firm and are therefore treated more like the firms’ own plants than a raw material supplier. Many firms use third-party manufacturing sites because manufacturing may not be their core competency. Their competitive advantage comes from all other activities including the design, marketing, and/or final sale of the product. These third-party firms, typically called contract manufacturers, are widely used in the electronics industry. Other third-party firms, termed co-manufacturers, co-packers, or toll manufacturers, are used to simply supplement the capacity of the firm itself. These are quite common with consumer packaged goods like food and beverages or chemical companies.

As with warehouses, in practice, you will find many variations in terminology for plants and different types of manufacturing sites and suppliers serving roles similar to those mentioned previously.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020