I believe that the close proximity and logical organisation of the processes or functions within a system aid process flow and overall system performance.
For example how could the necessary communication and cross process understanding be nurtured if a companies manufacturing plant was located in Walsall and it's Sales Department in John O'Groats. Just think of the language barriers alone.

A dramatic example it may well be, however, even when processes/functions are separated by a mere road, building or even a plastic strip curtain sometimes it may as well be the 565.1 miles in the above example.
Route Planner
Have you considered this?
Do you agree?
Are your processes fragmented?
Does it cause problems?
Have you made changes to your physical organisation to counteract this?
Would you like to?
Has this got anything to do with 6.3 in ISO 9001:2000?
Regards,
Simon