Analysis On Location Of Photovoltaic Wafer Facility From The Perspective Of Supply Chain Management

Since the earthquake in Eastern Japan happened on11th March2011, different countries around the world seriously consider the safety and risks of nuclear power. People also put a great hope on new energy sources, such as solar, wind and etc. In fact, the energy consumption in the current society cannot only depend on the traditional energy, like oil, coal and natural gas. The new generation of energy, however, contributes less than1%of the total world energy generation. Solar photovoltaic technology has the advantages of low geographical restriction, safe and less conflict with the society. In view of its advantage, solar energy is considered as the major energy source among all other energy sources in the end of the century.As the solar industry is still a new energy industry, it is developing rapidly but also suffering from a huge fluctuation periodically. While the companies in the industry are competing more and more intensely, the supply chain management and facility location decision become more important to the players in the industry, even impact to their survival and long-term development. The writer investigated the facility location in the photovoltaic industry, based on real case study and combined with the theories in the supply chain management. The value chain and cost structure in the photovoltaic industry are discussed. The transportation costs in different facility location strategies are compared and contrasted, using the center-gravity model based on the real longitude and latitude of the facility location.The solar business unit in the GCL-Power Energy Holding limited (GCL) is used as our case study for investigation. Based on the "close to customer" strategy of GCL, GCL’s wafer production plants being built close to their key customer’s production sites. This strategy is also compared with the strategies that are close to the supplier facility of the key material and best location produced from center-gravity model. These three strategies are contrasted based on the transportation cost and supplier response time. The delivery damage, packaging cost and technical sharing with customers are also considered. GCL’s strategies are reviewed and discussed in term of its advantages and challenges ahead. The article provides systematic information and location selection model about photovoltaic industry. It may help the company cope with any future facility expansion and location selection issue.In addition, the article introduces the basic theory of supply chain management, supply chain concepts and history. It emphasizes the importance of supply chain management, and points out the decision and strategy making process for the supply chain. It explains the supply chain impact of facility location selection and the key factors that affect the facility location selection. This article also describes a number of selection decision framework and models that help making a right facility location selection decision.