Center of Gravity (CoG) for Facility Site Selection
Where is the best location?
When planning for a new facility, be it a new warehouse, or a distribution center, or a sales center, or a factory, or a new office, or a school, or a shopping mall, where the location should be is always an important question to answer.
A lot of cost is involved in setting up a new facility. You would want to do it right the first time.
Center of Gravity (CoG) is a location where the sum of weighted distances to each destination is minimized.
Ideally the site selected should be on or close to CoG of customer locations, so that the total travel or transport cost can be minimized. This is good for the bottom line, as well as for our Mother Earth.
How to find the Center of Gravity with Geolytics?
Finding the CoG of customer locations takes two simple steps.Step 1: Create a map and add a location layer.
Here is a video guide on how to do that. It’s important to provide a weight to each location. This weight can be monthly shipments, number of visits, or number of orders, any number that represents the demand of that location.Step 2: Click "Center of Gravity" option from the layer menu
A new pop up window will pop up, where you can select number of COGs to be calculated. You can find up to 20 COGs.
Once confirmed, the search for the CoG will start. It usually takes just a few seconds to come back with a result. Identified CoG will be shown in a new location layer. A new network map layer will also be added to connect the CoG location to each destination.
Benefits of finding the CoG with Geolytics:
- Easy to use and quick to produce a result
- Give a first indication on what locations to consider
- Visualisation can be used to validate shipments or sales data
Things to take note:
- Distance here refers to as-the-crow-flies distance, not actual road distance.
- Identifying the CoG location of customers is usually the first step of site selection.
- Other factors need to be taken into consideration, in order to make a comprehensive evaluation. These may include actual transport cost with real quotes, cost of operating the facility, availability of manpower, infrastructure support, taxes and duties, government incentives, future trends, etc.
- The goal is to minimize total cost, while transport cost may only be part of it.
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