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Layout Strategies

PowerPoint presentation to accompany

Heizer, Render, Munson

Operations Management, Twelfth Edition, Global Edition

Principles of Operations Management, Tenth Edition, Global Edition

PowerPoint slides by Jeff Heyl

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Outline

Global Company Profile: McDonald's

The Strategic Importance of Layout Decisions

Types of Layout

Office Layout

Retail Layout

Warehousing and Storage Layouts

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Outline - Continued

Fixed-Position Layout

Process-Oriented Layout

Work Cells

Repetitive and Product-Oriented Layout

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Innovations at McDonald's

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

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Innovations at McDonald's

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

Six out of the seven are layout decisions!

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McDonald's New Layout

Seventh major innovation

Redesigning all 30,000 outlets around the world

Three separate dining areas

Linger zone with comfortable chairs and Wi-Fi connections

Grab and go zone with tall counters

Flexible zone for kids and families

Facility layout is a source of competitive advantage

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Learning Objectives

When you complete this chapter you should be able to:

9.1 Discuss important issues in office layout

9.2 Define the objectives of retail layout

9.3 Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking

9.4 Identify when fixed-position layouts are appropriate

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When you complete this chapter you should be able to:

Learning Objectives

9.5 Explain how to achieve a good process-oriented facility layout

9.6 Define work cell and the requirements of a work cell

9.7 Define product-oriented layout

9.8 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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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

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Types of Layout

Office layout

Retail layout

Warehouse layout

Fixed-position layout

Process-oriented layout

Work-cell layout

Product-oriented layout

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Types of Layout

Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information

Retail layout: Allocates display space and responds to customer behavior

Warehouse layout: Addresses trade-offs between space and material handling

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Types of Layout

Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings

Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)

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Types of Layout

Work cell layout: Arranges machinery and equipment to focus on production of a single product or group of related products

Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production

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Layout Strategies

TABLE 9.1	Layout Strategies
		OBJECTIVES	EXAMPLES
Office		Locate workers requiring frequent contact close to one another	Allstate Insurance Microsoft Corp.
Retail		Expose customer to high-margin items	Kroger’s Supermarket Walgreen’s Bloomingdale’s
Warehouse (storage)		Balance low-cost storage with low-cost material handling	Federal-Mogul’s warehouse The Gap’s distribution center
Project (fixed position)		Move material to the limited storage areas around the site	Ingall Ship Building Corp. Trump Plaza Pittsburgh Airport

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Layout Strategies

TABLE 9.1	Layout Strategies
		OBJECTIVES	EXAMPLES
Job Shop (process oriented)		Manage varied material flow for each product	Arnold Palmer Hospital Hard Rock Cafe Olive Garden
Work Cell (product families)		Identify a product family, build teams, cross-train team members	Hallmark Cards Wheeled Coach Ambulances
Repetitive/ Continuous (product oriented)		Equalize the task time at each workstation	Sony’s TV assembly line Toyota Scion

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Good Layouts Consider

Material handling equipment

Capacity and space requirements

Environment and aesthetics

Flows of information

Cost of moving between various work areas

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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

Typically in state of flux due to frequent technological changes

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Relationship Chart

Figure 9.1

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Office Layout

Three physical and social aspects

Proximity

Privacy

Permission

Two major trends

Information technology

Dynamic needs for space and services

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Retail Layout

Objective is to maximize profitability per square foot of floor space

Sales and profitability vary directly with customer exposure

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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

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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

All costs associated with the transaction

Incoming transport

Storage

Finding and moving material

Outgoing transport

Equipment, people, material, supervision, insurance, depreciation

Minimize damage and spoilage

Material Handling Costs

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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

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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

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Random Stocking

Typically requires automatic identification systems (AISs) and effective information systems

Allows more efficient use of space

Key tasks

Maintain list of “open” locations

Maintain accurate records

Sequence items to minimize travel, “pick” time

Combine picking orders

Assign classes of items to particular areas

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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

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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

Like 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

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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

Figure 9.3

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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

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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

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Advantages of Work Cells

Reduced work-in-process inventory

Less floor space required

Reduced raw material and finished goods inventories

Reduced direct labor cost

Heightened sense of employee participation

Increased equipment and machinery utilization

Reduced investment in machinery and equipment

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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

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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

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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

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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

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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

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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

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

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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

Organized around products or families of similar high-volume, low-variety products

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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

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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

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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

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McDonald's Assembly Line

Figure 9.11

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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			11	A
F			3	C, D
G			7	F
H			11	E
I			3	G, H
Total time			65

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			11	A
F			3	C, D
G			7	F
H			11	E
I			3	G, H
Total time			65

Wing Component Example

Figure 9.12

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			11	A
F			3	C, D
G			7	F
H			11	E
I			3	G, H
Total time			65

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

= 65 / 12

= 5.42, or 6 stations

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TABLE 9.3	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

Wing Component Example

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Wing Component Example

Station 1

Station 2

Station 3

Station 4

Station 3

Station 5

Station 6

Figure 9.13

480 available mins per day

40 units required

Cycle time = 12 mins

Minimum workstations

= 5.42 or 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

Figure 9.12

480 available mins per day

40 units required

Cycle time = 12 mins

Minimum workstations

= 5.42 or 6

Efficiency =

∑ Task times

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

= 65 minutes / ((6 stations) x (12 minutes))

= 90.3%

Idle Time = ((6 stations) × (12 minutes)) – 65 minutes = 7 minutes

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= Time for task i

i=1

∑ Cycle time

Time for task i

i=1

Cycle time