Layout Strategy
Layout Strategy
Layout Strategy
Management
Chapter 9
Layout Strategies
Outline
Global Company Profile:
McDonalds
The Strategic Importance
of Layout Decisions
Types of Layout
Office Layout
Outline Continued
Retail Layout
Servicescapes
Fixed-Position Layout
Outline Continued
Process-Oriented Layout
Computer Software for ProcessOriented Layouts
Work Cells
Requirements of Work Cells
Staffing and Balancing Work Cells
The Focused Work Center and the
Focused Factory
Outline Continued
Repetitive and ProductOriented Layout
Assembly-Line Balancing
Learning Objectives
When you complete this chapter you should
be able to:
Learning Objectives
When you complete this chapter, you should
be able to:
Innovations at
McDonalds
Indoor seating (1950s)
Drive-through window (1970s)
Adding breakfast to the menu
(1980s)
Adding play areas (late 1980s)
Redesign of the kitchens (1990s)
Self-service kiosk (2004)
Now three separate dining
sections
Innovations at
McDonalds
Indoor seating (1950s)
out of the
Drive-through window Six
(1970s)
seven are
Adding breakfast to the menu
layout
(1980s)
decisions!
Adding play areas (late 1980s)
Redesign of the kitchens (1990s)
Self-service kiosk (2004)
Now three separate dining
sections
Strategic Importance of
Layout Decisions
The objective of layout strategy
is to develop a cost-effective
layout that will meet a firms
competitive needs
Layout Design
Considerations
Higher utilization of space, equipment,
and people
Improved flow of information,
materials, or people
Improved employee morale and safer
working conditions
Improved customer/client interaction
Flexibility
Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout
Types of Layout
1. Office layout: Positions workers,
their equipment, and
spaces/offices to provide for
movement of information
2. Retail layout: Allocates shelf
space and responds to customer
behavior
3. Warehouse layout: Addresses
trade-offs between space and
material handling
Types of Layout
4. Fixed-position layout: Addresses
the layout requirements of large,
bulky projects such as ships and
buildings
5. Process-oriented layout: Deals
with low-volume, high-variety
production (also called job shop or
intermittent production)
Types of Layout
6. Work cell layout: Arranges
machinery and equipment to
focus on production of a single
product or group of related
products
7. Product-oriented layout: Seeks the
best personnel and machine
utilizations in repetitive or
continuous production
Layout Strategies
Office
Retail
Warehouse
(storage)
Examples
Allstate Insurance
Microsoft Corp.
Krogers
Supermarket
Federal-Moguls
warehouse
Walgreens
The Gaps
distribution center
Bloomingdales
Problems/Issues
Locate workers
requiring frequent
contact close to
one another
Table 9.1
Expose customer
to high-margin
items
Balance low-cost
storage with lowcost material
handling
Layout Strategies
Project
(fixed position)
Job Shop
(process oriented)
Examples
Ingall Ship Building
Corp.
Trump Plaza
Olive Garden
Pittsburgh Airport
Problems/Issues
Move material to the
limited storage areas
around the site
Table 9.1
Layout Strategies
Work Cells
(product families)
Repetitive/ Continuous
(product oriented)
Examples
Hallmark Cards
Wheeled Coach
Standard Aero
Sonys TV assembly
line
Toyota Scion
Problems/Issues
Identify a product
family, build teams,
cross train team
members
Table 9.1
Office Layout
Grouping of workers, their
equipment, and spaces to provide
comfort, safety, and movement of
information
Movement of
information is main
distinction
Typically in state of
flux due to frequent
technological
changes
Relationship Chart
Figure 9.1
Retail Layout
Objective is to maximize
profitability per square foot of
floor space
Sales and profitability vary
directly with customer
exposure
Store Layout
Figure 9.2
Retail Slotting
Manufacturers pay fees to
retailers to get the retailers to
display (slot) their product
Contributing factors
Limited shelf space
An increasing number of new
products
Better information about sales
through POS data collection
Closer control of inventory
Shampoo
Conditioner
Shampoo
Shampoo
Shampoo
Conditioner
Conditioner
2 ft.
Shampoo
Shampoo
Shampoo
Shampoo
Shampoo
Computerized
tool for shelfspace
management
Generated from
stores scanner
data on sales
Often supplied
by
manufacturer
Servicescapes
Ambient conditions - background
characteristics such as lighting, sound,
smell, and temperature
Spatial layout and functionality - which
involve customer
circulation path planning,
aisle characteristics, and
product grouping
Signs, symbols, and
artifacts - characteristics
of building design that
carry social significance
Warehousing and
Storage Layouts
Objective is to optimize tradeoffs between handling costs and
costs associated with warehouse
space
Maximize the total cube of the
warehouse utilize its full
volume while maintaining low
material handling costs
Warehousing and
Storage Layouts
Material Handling Costs
All costs associated with the
transaction
Incoming transport
Storage
Finding and moving material
Outgoing transport
Equipment, people, material, supervision, insurance,
depreciation
Warehousing and
Storage Layouts
Warehouse density tends to vary
inversely with the number of different
items stored
Automated Storage and
Retrieval Systems (ASRSs)
can significantly improve
warehouse productivity by
an estimated 500%
Dock location is a key
design element
Cross-Docking
Materials are moved directly from
receiving to shipping and are not
placed in storage
in the warehouse
Requires tight
scheduling and
accurate shipments,
bar code or RFID
identification used for
advanced shipment
notification as materials
are unloaded
Random Stocking
Typically requires automatic
identification systems (AISs) and
effective information systems
Random assignment of stocking
locations allows more efficient use of
space
Key tasks
1.
2.
3.
4.
5.
Customizing
Value-added activities performed
at the warehouse
Enable low cost and rapid
response strategies
Assembly of components
Loading software
Repairs
Customized labeling and packaging
Warehouse Layout
Traditional Layout
Customization
Storage racks
Conveyor
Staging
Shipping and receiving docks
Office
Warehouse Layout
Cross-Docking Layout
Office
Fixed-Position Layout
Product remains in one place
Workers and equipment come to
site
Complicating factors
Limited space at site
Different materials
required at different
stages of the project
Volume of materials
needed is dynamic
Alternative Strategy
As much of the project as possible
is completed off-site in a productoriented facility
This can
significantly
improve efficiency
but is only
possible when
multiple similar
units need to be created
Process-Oriented Layout
Similar machines and equipment
are grouped together
Flexible and capable of handling
a wide variety of products or
services
Scheduling can be difficult and
setup, material handling, and
labor costs can be high
Process-Oriented Layout
Patient A - broken leg
ER
triage
room
Surgery
Laboratories
Radiology
ER Beds
Pharmacy
Billing/exit
Figure 9.3
Central break
and medical
supply rooms
Local linen
supply
Central nurses
station
Local
nursing pod
Process-Oriented Layout
Arrange work centers so as to
minimize the costs of material
handling
Basic cost elements are
Number of loads (or people)
moving between centers
Distance loads (or people) move
between centers
Process-Oriented Layout
n
Minimize cost =
where
Xij Cij
i=1 j=1
50
Machine Receiving
Shop (3)
(4)
Shipping
(5)
Testing
(6)
100
20
30
50
10
20
100
50
0
0
Testing (6)
Figure 9.4
Area 2
Area 3
Assembly
Department
(1)
Painting
Department
(2)
Machine Shop
Department
(3)
40
Figure 9.5
Receiving
Department
(4)
Shipping
Department
(5)
Testing
Department
(6)
Area 4
Area 5
Area 6
60
50
20
50
50
2
10
30
20
100
6
Figure 9.6
Cost
$40
Cost = Xij
i = 1j = 1
Cij
$50
(1 and 2)
$200
(1 and 3)
+
(1 and 6)
$30
(2 and 3)
$50
(2 and 4)
$10
(2 and 5)
$40
(3 and 4)
$100
(3 and 6)
$50
(4 and 5)
= $570
50
10
20
50
50
100
3
100
50
6
Figure 9.7
Cost
$20
Cost = Xij
i = 1j = 1
Cij
$50
(1 and 2)
$100
(1 and 3)
+
(1 and 6)
$60
(2 and 3)
$50
(2 and 4)
$10
(2 and 5)
$40
(3 and 4)
$100
(3 and 6)
$50
(4 and 5)
= $480
Area 2
Area 3
Painting
Department
(2)
Assembly
Department
(1)
Machine Shop
Department
(3)
40
Figure 9.8
Receiving
Department
(4)
Shipping
Department
(5)
Testing
Department
(6)
Area 4
Area 5
Area 6
60
Computer Software
Graphical approach only works for
small problems
Computer programs are available
to solve bigger problems
CRAFT
ALDEP
CORELAP
Factory Flow
CRAFT Example
1
3
4
5
PATTERN
TOTAL COST
20,100
EST. COST REDUCTION
ITERATION
0
(a)
.00
3
4
5
PATTERN
TOTAL COST
14,390
EST. COST REDUCTION
ITERATION
3
(b)
70.
Figure 9.9
Computer Software
Work Cells
Reorganizes people and machines
into groups to focus on single
products or product groups
Group technology identifies
products that have similar
characteristics for particular cells
Volume must justify cells
Cells can be reconfigured as
designs or volume changes
Reduced work-in-process
inventory
Less floor space required
Reduced raw material and
finished goods inventory
Reduced direct labor
Heightened sense of employee
participation
Increased use of equipment and
machinery
Reduced investment in machinery
and equipment
Improved layout - in U
shape, workers have
better access. Four crosstrained workers were
reduced.
Requirements of Work
Cells
1. Identification of families of
products
2. A high level of training, flexibility
and empowerment of employees
3. Being self-contained, with its own
equipment and resources
4. Test (poka-yoke) at each station
in the cell
Determine the
number of operators
required
Workers required =
Test
Operations
Takt time
Workers required
Focused Factory
A focused work cell in a separate facility
May be focused by product line, layout, quality, new
product introduction, flexibility, or other requirements
Focused Factory
A work cell is a
temporary productoriented arrangement
of machines and
personnel in what is
ordinarily a processoriented facility.
A focused factory is a
permanent facility to
produce a product or
component in a
product-oriented
facility. Many focused
factories currently
being built were
originally part of a
process-oriented
facility.
Example: A plant to
produce window
mechanism for
automobiles.
Table 9.2
Product-Oriented Layouts
Fabrication line
Builds components on a series of machines
Machine-paced
Require mechanical or engineering changes to balance
Assembly line
Puts fabricated parts together at a series of
workstations
Paced by work tasks
Balanced by moving tasks
Product-Oriented Layouts
Advantages
1.
2.
3.
4.
5.
Disadvantages
1.
2.
3.
Figure 9.12
Disassembly Lines
Disassembly is being considered in new
product designs
Green issues and recycling standards are
important consideration
Automotive
disassembly is
the 16th largest
industry in
the US
Assembly-Line Balancing
B
11
A
C
5
B
D
4
B
E
12
A
F
3
C, D
G
7
F
H
11
E
I
3
G, H
Total time 66
This means
that tasks B
and E cannot
be done until
task A has
been
completed
B
11
A
C
5
B
D
4
B
E
12
A
F
3
C, D
G
7
F
10
H
11
E
A
I
3
G, H
Total time 66
5
11
B
12
C
4
G
3
11
H
Figure 9.13
B
11
A
Production time
C
5
B
available per day
Cycle
D
4
B time = Units required per
E
12
A
= 480 / 40 day
5
F
3
C, D
= 12 minutes per unit
C
n
G
7
F
10
11
3
7
H
11
E
for taskFi
= Time
1B
A i
G
Minimum
I
3
G, H
4
3
Cycle time
number of =
Total time 66
D
workstations
I
12
11
= 66 / 12
E
H
= 5.5 or 6 stations
Figure 9.13
Line-Balancing Heuristics
Wing Component
Example
Figure 9.13
Cycle time
= 12 mins
B
11
A
Minimum = 5.5 or 6
Statio
5
C
B
workstation
n52
C B
D
4
s
11
3
7
E 10
12
A
B
F
G
F A
3
C, D
4
3
G
7
F
D E Station 3
H
11
I
I
3
G, H
12
11
Station
Total
Statiotime 66
6
E
H
n1
Statio
n4
Statio
n5
Figure 9.14
Cycle time
= 12 mins
B
11
A
Minimum = 5.5 or 6
C
5
B
workstation
D
4
B
s
E
12
A
F
3
C, D
Task times
G
7
F
Efficiency =
(Actual
number ofEworkstations) x (Largest cycle time)
H
11
I
G, H
= 663minutes / (6 stations)
x (12 minutes)
Total time
66
= 91.7%