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Layout Strategies

Chapter 9

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Learning Objectives

When you complete this chapter you should be able to:

Define the objectives of layout

Discuss important issues in layout strategies

Discuss modern warehouse management and terms such as cross-docking

Identify when each type of layout is appropriate

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When you complete this chapter you should be able to:

Learning Objectives

Explain how to achieve a good process-oriented facility layout

Define work cell and the requirements of a work cell

Explain how to balance production flow in a repetitive or product-oriented facility

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Strategic Importance of Layout Decisions

The objective of layout strategy is to develop an effective and efficient layout that will meet the firm’s competitive requirements

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What is Layout?

Layout refers to the configuration of departments, work centers and equipment with emphasis on movement of work (customers or materials) through the system.

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Layout Decisions

Layout decisions:

Requires substantial investments of money and effort

Involve long term commitment, which makes mistakes difficult to overcome

They have a significant impact on the cost and efficiency of operations.

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Inefficient operations

For Example:

High Cost

Bottlenecks

Changes in the design

of products or services

The introduction of new products or services

Accidents

Safety hazards

The Need for Layout Decisions

FYI

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Changes in

environmental

or other legal

requirements

Changes in volume of

output or mix of

products

Changes in methods

and equipment

Morale problems

The Need for Layout Design (Cont’d)

FYI

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Layout Design Consideration

Layout design must consider how to achieve the following:

Improved flow of information, materials, or people

Improved employee morale and safer working conditions

Improved customer interaction

Flexibility

Minimal material handling costs

Efficient use of space

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Most common reason for redesign of layout

Inefficient operation (e.g., high cost, bottleneck)

Safety hazards

Change in the design of product or service

Changes in the volume of output

Morale problem (e.g., lack of face to face contact)

FYI

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The 7 Types of Layouts

Manufacturing layouts:

Process-oriented layout (job shop)

Product-oriented layout (repetitive/ product)

Work-cell layout (mass customization)

Other layouts:

Office layout

Retail layout

Fixed-position layout

Warehouse layout

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Types of Layout

Office layout: Positions workers and their equipment for flow of information

Retail layout: Positions products to maximize product exposure & net profit per unit of space (e.g. supermarket, grocery store, department store).

Warehouse layout: Positions products according to trade-offs between material handling & space https://www.youtube.com/watch?v=AEKMgCmLcRc

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Types of Layout

Fixed-position layout: Item being worked on remains stationary, and workers, materials and equipment are moved as needed (e.g. Shipbuilding, house building, power plant etc.) In fixed position layout, equipment and workers move to the project.

Process-oriented layout: Positions departments or work centers low-volume, high-variety production environments to minimize handling and movement costs (e.g. hospital & bank)

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Types of Layout

Work cell layout: Layout in which machines are grouped into a cell that can process items that have similar processing requirements.

Product-oriented layout: Deals with setting up assembly lines in high-volume, low-variety production environments to balance work among workstations in repetitive or continuous production

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Layout Strategies

Type of Layout	Objectives
Office	Locate workers requiring frequent contact close to one another
Retail	Expose customer to high-margin items
Warehouse	Balance low-cost storage with low-cost material handling
Fixed position	Move material/equipment to the limited storage areas around the site
Process oriented (Job Shop)	Manage varied material flow for each product/service
Work Cell	Improve process flow for better speed & quality, and eliminate waste to reduce cost.
Product oriented (Repetitive/Continuous )	Equalize the task time at each workstation

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Office Layout

Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information

Movement of information is main distinction

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Relationship Chart

FYI

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Retail Layout

The main goal of retail layout is:

Minimizing material handling cost.

Minimizing customer confusion regarding location of items.

Minimizing storage costs.

Minimizing space required.

Maximizing profitability per square foot of floor space.

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Retail Layout

We expect Walmart ‘s fiscal 2019 store SALES per square foot of $468

Source: Forbes

FYI

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Five helpful ideas for supermarket layout

Locate high-draw items around the outside of the store

Use prominent locations for high-impulse and high-margin items

Distribute power items to both sides of an aisle and disperse them to increase viewing of other items

Use end-aisle locations

Convey mission of store through careful positioning of lead-off department

FYI

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Slotting fees

Manufacturers pay slotting 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

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Slotting fees

How ethical are slotting fees?

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Slotting fees

Slotting fees put small company with a new product at a disadvantage because small companies with limited resources may be squeezed out of the marketplace.

Slotting fees may also mean that customers may no longer be able to find the special local brand.

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Servicescapes

Servicescape: the physical surroundings in which a service takes place, and how they affect customers and employees.

To provide a good service layout, a firm considers 3 elements:

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

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Warehouse and Storage Layouts

The design of storage facilities present a different set of factors than the design of factory layouts.

Frequency of order is an important consideration:

Items that are ordered frequently should be placed near the entrance of the facility

Items that are ordered infrequently should be placed in the rear of the facility.

The goal is to minimize picking time and transportation

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Warehouse and Storage Layouts

Objective is to find the optimum trade-offs 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

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Warehousing and Storage Layouts

Material handling does not add value to the product; it’s just waste.

Objective: Minimize material handling as well as combining with other operations when possible, eliminating unnecessary and costly movements.

All costs associated with the transaction. This consist of:

Incoming transport

Storage

Finding and moving material

Outgoing transport

Equipment, people, material, supervision, insurance, depreciation

Effective warehouse layout will minimize the damage and spoilage of material within warehouse

Material Handling Costs

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Warehousing and Storage Layouts

Without investing in optimisation of your warehouse design and layout, you may well soon find yourself in a suboptimal situation with:

High warehousing and handling costs

Less efficient processes

Subpar customer service

FYI

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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

Dock location is a key design element

FYI

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Warehousing and Storage Layouts

The following areas must be perfectly defined when designing a layout:

Loading and unloading areas

Reception area

Storage area

Picking area

Dispatch area

FYI

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Cross-Docking

Cross-Docking: Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse.

Advantage of cross docking:

Reduces material handling.

Reduces need to store products in warehouse.

No need for large warehouse areas

Reduced labor costs (no packaging and storing).

Reduced time to reach customer.

FYI

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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

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Process-Oriented Layout

Workstations are physically organized according to the operations they perform

eg. All drilling machines located in the drilling department.

eg. All accountants located in the accounting department

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.

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Process-Oriented Layout

Example: The hospital groups together functions such as intensive care, surgery, emergency medicine, and radiology as separate departments.

This arrangement allows one patient entering through the emergency room to be seen in radiology, possibly surgery, and then intensive care, and another to be admitted directly for elective surgery and then to intensive care.

The variability among patients makes such flexibility necessary.

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Process-Oriented Layout

Process layouts are found primarily in job shops, or firms that produce customized, low-volume products that may require different processing requirements and sequences of operations.

Process layouts are facility configurations in which operations of a similar nature or function are grouped together.

Their purpose is to process goods or provide services that involve a variety of processing requirements.

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Process-Oriented Layout

All machines performing a particular process are grouped together in a processing department

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

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Surgery

Radiology

ER triage room

ER Beds

Pharmacy

Emergency room admissions

Billing/exit

Laboratories

Process-Oriented Layout

Patient A - broken leg

Patient B - erratic heart pacemaker

FYI

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Process-Oriented Layout

where n = total number of work centers or departments

i, j = individual departments

Xij = number of loads moved from department i to department j

Cij = cost to move a load between department i and department j

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Process Layout Example

Arrange six departments in a factory to minimize the material handling costs. Each department is 20 x 20 feet and the building is 60 feet long and 40 feet wide. The cost of moving one load:

Assume:

The movement between adjacent departments is estimated to be $1

The movement between nonadjacent departments is estimated to be $2

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Process Layout Example

Construct a “from-to matrix”

Determine the space requirements

Develop an initial schematic diagram

Determine the cost of this layout

Try to improve the layout

Prepare a detailed plan

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Department Assembly Painting Machine Receiving Shipping Testing

(1) (2) Shop (3) (4) (5) (6)

Assembly (1)

Painting (2)

Machine Shop (3)

Receiving (4)

Shipping (5)

Testing (6)

Number of loads per week

50 100 0 0 20

30 50 10 0

20 0 100

50 0

Process Layout Example from-to-matrix

Figure 9.4

Expected # of times people/materials move between departments

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Area A Area B Area C

Area D Area E Area F

60’

40’

Process Layout Example

Receiving Shipping Testing

Department Department Department

(4) (5) (6)

Figure 9.5

Assembly Painting Machine Shop

Department Department Department

(1) (2) (3)

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Total # of ways to arrange 6 departments across 6 areas?

6! = 6x5x4x3x2x1 = 720 ways

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Process Layout Example

Interdepartmental Flow Graph

Figure 9.6

100

Machine Shop (3)

Testing

(6)

Shipping

(5)

Receiving

(4)

Assembly

(1)

Painting

(2)

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Process Layout Example

Cost = ($1x$50) + ($2x$100) + ($2x$20) (1 and 2) (1 and 3) (1 and 6)

+ ($1x$30) + ($1x$50) + ($1x$10) (2 and 3) (2 and 4) (2 and 5)

+ ($2x$20) + ($1x$100) + ($1x$50) (3 and 4) (3 and 6) (4 and 5)

= $570

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Pair	Loads (X)	Cost to move loads (C)	Cost (XC)
1 to 2	50	1	50
1 to 3	100	2	200
1 to 4	0	1	0
1 to 5	0	2	0
1 to 6	20	2	40
2 to 3	30	1	30
2 to 4	50	1	50
2 to 5	10	1	10
2 to 6	0	1	0
3 to 4	20	2	40
3 to 5	0	1	0
3 to 6	100	1	100
4 to 5	50	1	50
4 to 6	0	2	0
5 to 6	0	1	0
			$570

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Area A Area B Area C

Area D Area E Area F

60’

40’

Revised layout

Receiving Shipping Testing

Department Department Department

(4) (5) (6)

Painting Assembly Machine Shop

Department Department Department

(2) (1) (3)

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Process Layout Example

Revised Interdepartmental Flow Graph

100

Machine Shop (3)

Testing

(6)

Shipping

(5)

Receiving

(4)

Painting

(2)

Assembly

(1)

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Process Layout Example

Cost = ($1x$50) + ($1x$100) + ($1x$20) (1 and 2) (1 and 3) (1 and 6)

+ ($2x$20) + ($1x$50) + ($1x$10) (2 and 3) (2 and 4) (2 and 5)

+ ($2x$20) + ($1x$100) + ($1x$50) (3 and 4) (3 and 6) (4 and 5)

= $480

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Pair	Loads (X)	Cost to move loads (C)	Cost (XC)
1 to 2	50	1	50
1 to 3	100	1	100
1 to 4	0	1	0
1 to 5	0	1	0
1 to 6	20	1	20
2 to 3	30	2	60
2 to 4	50	1	50
2 to 5	10	1	10
2 to 6	0	2	0
3 to 4	20	2	40
3 to 5	0	1	0
3 to 6	100	1	100
4 to 5	50	1	50
4 to 6	0	2	0
5 to 6	0	1	0
			$480

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Computer Software

Graphical approach only works for small problems

Computer programs are available to solve bigger problems

CRAFT

ALDEP

CORELAP

Factory Flow

Proplanner

FYI

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Computer Software

Proplanner analysis

Distance traveled reduced by 38%

Before

After

FYI

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Computer Software

Three dimensional visualization software allows managers to view possible layouts and assess process, material handling, efficiency, and safety issues

FYI

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Work Cells (Cellular Layout)

Work Cells: an arrangement of machines and personnel that focuses on making a single product or family of related product.

Cells can be reconfigured as designs or volume changes

FYI

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Work Cells (Cellular Layout)

An example of work cell would be in the production of a metallic case part that arrives at the factory from the vendor in separate pieces, requiring assembly.

First, the pieces would be moved from storage to the cell, where they would be welded together, then polished, then coated, and finally packaged. All of these steps would be completed in a single cell.

FYI

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Cellular Layout

Process (Functional) Layout

Group (Cellular) Layout

Similar resources placed together

Resources to produce similar products placed together

A cluster or cell

FYI

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Advantages of Work Cells

Reduce work-in-process inventory

Less floor space required

Reduce raw material and finished goods inventories

Enhance employee participation

Increase equipment and machinery utilization

Reduced investment in machinery and equipment

FYI

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Requirements of Work Cells

Identification of families of products

A high level of training, flexibility and empowerment of employees

Being self-contained, with its own equipment and resources

Test (poka-yoke) at each station in the cell

FYI

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Improving Layouts Using Work Cells

Current layout - workers in small closed areas.

Improved layout - cross-trained workers can assist each other. May be able to add a third worker as additional output is needed.

Figure 9.9 (a)

Material

FYI

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Improving Layouts Using Work Cells

Current layout - straight lines make it hard to balance tasks because work may not be divided evenly

Improved layout - in U shape, workers have better access. Four cross-trained workers were reduced to three.

Figure 9.9 (b)

U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection

FYI

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Key definition

Takt time: pace of production to meet customer demands.

FYI

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Key definition

Cycle Time: the maximum time that a product is allowed at each workstation

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Staffing and Balancing Work Cells

Determine the number of operators required

Workers required =

Total operation time required

Takt time

Determine the takt time

Takt time =

Total work time available

Units required to satisfy customer demand

FYI

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Staffing Work Cells Example

600 mirrors per day required

Mirror production scheduled for 8 hours per day

From a work balance chart total operation time = 140 seconds

Standard time required

Operations

Assemble

Paint

Test

Label

Pack for

shipment

Figure 9.10

FYI

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Staffing Work Cells Example

600 mirrors per day required

Mirror production scheduled for 8 hours per day

From a work balance chart total operation time = 140 sec

Takt time = (8 hrs x 60 mins) / 600 units

= .8 min = 48 seconds

Workers required =

Total operation time required

Takt time

= 140 / 48 = 2.92 = 3 workers

FYI

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Work Balance Charts

Used for evaluating operation times in work cells

Can help identify bottleneck operations

Flexible, cross-trained employees can help address labor bottlenecks

Machine bottlenecks may require other approaches

FYI

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Focused Work Center and Focused Factory

Focused Work Center

Identify a large family of similar products that have a large and stable demand

Moves production from a general-purpose, process-oriented facility to a large work cell

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

FYI

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Repetitive and Product-Oriented Layout

Volume is adequate for high equipment utilization

Product demand is stable enough to justify high investment in specialized equipment

Product is standardized or approaching a phase of life cycle that justifies investment

Supplies of raw materials and components are adequate and of uniform quality

The four preconditions to establishing layout for high-volume, low-variety products

FYI

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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

FYI

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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

Both types of lines must be balanced so that the time to perform the work at each station is the same

FYI

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Product-Oriented Layouts

Low variable cost per unit

Low material handling costs

Reduced work-in-process inventories

Easier training and supervision

Rapid throughput

Advantages

High volume is required

Work stoppage at any point ties up the whole operation

Lack of flexibility in product or production rates

Disadvantages

FYI

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McDonald's Assembly Line

Figure 9.11

FYI

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Assembly-Line Balancing

Objective is to minimize the imbalance between machines or personnel while meeting required output

Starts with the precedence relationships

Determine cycle time

Calculate theoretical minimum number of workstations

Balance the line by assigning specific tasks to workstations

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TABLE 9.2		Precedence Data for Wing Component
TASK	ASSEMBLY TIME (MINUTES)			TASK MUST FOLLOW TASK LISTED BELOW
A			10	–
B			11	A
C			5	B
D			4	B
E			10	A
F			3	C, D
G			7	F
H			11	E
I			3	G, H
Total time			64

Wing Component Example

This means that tasks B and E cannot be done until task A has been completed

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TABLE 9.2		Precedence Data for Wing Component
TASK	ASSEMBLY TIME (MINUTES)			TASK MUST FOLLOW TASK LISTED BELOW
A			10	–
B			11	A
C			5	B
D			4	B
E			10	A
F			3	C, D
G			7	F
H			11	E
I			3	G, H
Total time			64

Wing Component Example

480 available mins per day

40 units required

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480 available mins per day

40 units required

TABLE 9.2		Precedence Data for Wing Component
TASK	ASSEMBLY TIME (MINUTES)			TASK MUST FOLLOW TASK LISTED BELOW
A			10	–
B			11	A
C			5	B
D			4	B
E			10	A
F			3	C, D
G			7	F
H			11	E
I			3	G, H
Total time			64

Wing Component Example

Figure 9.12

Cycle time =

Production time available per day

Units required per day

= 480 / 40

= 12 minutes per unit

Minimum number of workstations

= 64 / 12

= 5.33, or 6 stations

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Layout Heuristics That May Be Used to Assign Tasks to Workstations in Assembly-Line Balancing
1. Longest task time	From the available tasks, choose the task with the largest (longest) task time
2. Most following tasks	From the available tasks, choose the task with the largest number of following tasks
3. Ranked positional weight	From the available tasks, choose the task for which the sum of following task times is the longest
4. Shortest task time	From the available tasks, choose the task with the shortest task time
5. Least number of following tasks	From the available tasks, choose the task with the least number of subsequent tasks

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Wing Component Example

Station 1

Station 2

Station 3

Station 5

Station 3

Station 4

Station 6

Figure 9.13

480 available mins per day

40 units required

Cycle time = 12 mins

Minimum workstations

= 6

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TABLE 9.2		Precedence Data for Wing Component
TASK	ASSEMBLY TIME (MINUTES)			TASK MUST FOLLOW TASK LISTED BELOW
A			10	–
B			11	A
C			5	B
D			4	B
E			11	A
F			3	C, D
G			7	F
H			11	E
I			3	G, H
Total time			65

Wing Component Example

480 available mins per day

40 units required

Cycle time = 12 mins

Minimum workstations

= 6

Efficiency =

∑ Task times

(Actual number of workstations) x (Largest cycle time)

= 64 minutes / ((6 stations) x (12 minutes))

= 88.89%

Idle Time = ((6 stations) × (12 minutes)) – 64 minutes = 8 minutes

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Layout at Arnold Palmer Hospital´s New Facility (7 layouts)

https://www.youtube.com/watch?v=MWWsSUWWowc&index=96&list=PLQQrEJuJbVzddxf_T7Kw1oG9qldGpwjVs&t=0s

FYI

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Office Layout

https://www.youtube.com/watch?v=d67nLyjN4hQ&index=32&list=PLQQrEJuJbVzddxf_T7Kw1oG9qldGpwjVs

FYI

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Supermarket layout

https://www.youtube.com/watch?v=RjgkQ6bq7aE&list=PLQQrEJuJbVzddxf_T7Kw1oG9qldGpwjVs&index=30

FYI

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Work cell

https://www.youtube.com/watch?v=Ynhp8Wi2qwM

FYI

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Amazon warehouse

https://www.youtube.com/watch?v=Y-lBvI6u_hw&index=31&list=PLQQrEJuJbVzddxf_T7Kw1oG9qldGpwjVs

FYI

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Minimize cost = XijCij j=1

∑ i=1

∑

Minimize cost= X

j=1

i=1

Cost = XijCij j=1

∑ i=1

∑

Cost= X

j=1

i=1

Cost = XijCij j=1

∑ i=1

∑

Cost= X

j=1

i=1

= Time for task i

i=1

∑ Cycle time

Time for task i

i=1

Cycle time