MBA_Operations_Management_07(2)
MBA_Operations_Management_07(2)
07 Facility Layout
Names of Sub-Units
Facility Layout, Factors Influencing Layout Decisions, Principles of Layout, and Computerised Relative
Allocation of Facilities Technique
Overview
The unit begins with an introduction to facility layout. Further, it discusses the factors influencing
layout decisions, principles of layout. The unit also explains the features of ideal layout.
Learning Objectives
Learning Outcomes
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7.1 INTRODUCTION
The success of operations in an organisation depends on its facility layout design which is necessary
for smooth working and efficiency of operations that dictate the profitability of the company. Facility
location analysis should be carefully considered and planned during the product design and process
selection decisions for minimising material handling within the facility. A good layout acts as a
powerful tool for communicating and creating a positive image with the customers. Facility layouts
have extensive implications on the quality, productivity, and competitiveness of a business enterprise
since these decisions affect the efficiency of the workers, productivity, and the responsiveness of the
system for creating changes in product or service design, the volume of demand, and the product mix.
The facility layout design is critical for the efficiency of operations with minimising material handling
which reduces the mishandling or damaging of products, resulting in a reduction in costs and increasing
profits. The focus of facility layout is to improve the efficiency of the space and time management for
the workers moving from one location to the other and reducing the costs of operations.
The major objective of planning facility layout is maximising sales and profits where market opportunities
are best for them for gaining a competitive advantage. The facility layout planning should eliminate
bottlenecks in the facility to produce more efficiently run operations because the bottleneck results in
reducing the efficiency and effectiveness of the operations. Good facility layout should take into account
the improvement in interaction and communications between the workers and management that result
in improvement in the quality of the output. The other critical factor of the facility design process is to
facilitate reduction of cycle time and processing time that leads to a reduction in the waiting time for
the customers for their product orders. The facility layout design should ensure a smooth and steady
flow of production material, equipment, and manpower along with the safety of their workforce and not
put them at risk while performing their jobs.
7.2 LAYOUT
The physical arrangement of all resources within a facility refers to the layout of the place. Layout
design planning is a critical aspect involved in facilitating the efficient flow of material and customers
through the service or manufacturing system. It involves configuring and arranging the design of the
department within the facility and also the arrangement of other activity centres in each department.
There are many factors involved in designing the layout in terms of direct and indirect costs and other
operational costs. Therefore, it is essential to design a facility where the operations can be carried out
smoothly and cost-effectively. The movement of materials, utilisation of space, safety of the workers,
and more contribute to operational costs. Hence, the main objectives involved with a good layout are:
Facilitate smooth movement of materials and information
Identify and reduce bottlenecks and reduce machine interference
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Organisations need to incorporate various objectives early in the process of layout designing to find
effective solutions for various factors involved with operational management. There should be more on
material handling capabilities and flexibility with the amount of space in the layout.
In the words of Moore, “Plant or Facility layout is the act of planning an optimum arrangement of
facilities, including personnel, operating equipment, storage space, material handling equipment and
all other supporting services along with the design of the best structure to contain these facilities.”
Poor layout design leads to major losses in regards to wastage and re-working, more efforts for material
handling, badly planned space utilisation, low morale of employees, and more reasons. It is essential
to study and analyse an effective layout design for a plant during the initial planning for growth,
diversification, and development of the plant facility and smooth working of the system.
In the words of James Lundy, “Layout identically involves the allocation of space and the arrangement
of equipment in such a manner that overall operating costs are minimised.”
According to Weiss and Gershon, “Facility layout must be considered very carefully because we do not
want to constantly redesign the facility.” They believed that, “Some of the goals in designing the facility
are to ensure a minimum amount of materials handling, to avoid bottlenecks, to minimise machine
interference, to ensure high employee morale and safety, and to ensure flexibility. Essentially, there are
two distinct types of layout. Product layout is synonymous with the assembly line and is oriented towards
the products that are being made. Process layout is oriented around the processes that are used to
make the products. Generally, product layout is applicable for high-volume repetitive operations, while
process layout is applicable for low-volume custom-made goods.” The objectives of a good layout are:
Minimum material handling.
To promote order in production towards a single objective.
Elimination of bottlenecks.
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Principle of flexibility
Principle of safety
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Principle of the utilisation of space: The space should be well utilised where there is the minimum
spacing between the machines and movement of people for carrying out all forms of tasks.
Principle of flexibility: The layout should provide enough flexibility and be adaptable to changes
required for expansion or other forms of technological advancement.
Principle of interdependence and overall integration: The various departments and units need to
be located near each other for interdependent operations and processes for minimising movement
of product. The various facilities need to be combined and integrated into a single operating unit for
reducing the cost of production.
Principle of safety: The comfort and safety of the workers should be provided through an inbuilt
provision in the design of the layout.
Principle of Smooth flow: The design of the facility needs to have a proper plan for reducing work
bottlenecks and for facilitating an uninterrupted flow of work throughout the facility.
Principle of supervision and employee satisfaction: A good layout should facilitate effective
supervision of the workers through free movement and be able to boost the morale of the workforce
by providing them maximum satisfaction.
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Milling
Drilling Plating
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Operations Management
resources and materials. In product layout, operations take place in predetermined order and it is very
easy to decide where to locate different resource centres. The advantages of product layout are:
High rate of output because the resources are dedicated to only a specific product.
Lower inventories with the items moving from one operation to the next without interruption.
High utilisation of both labour and machines due to simplified flow of work; less time is lost for
unproductive activities.
There is a division of labour and the jobs can be divided into various standard tasks that can be
carried out by unskilled labour that can be trained.
Reduced material handling costs with simplified production planning and control.
Simplified flow of product through the system due to the placement of machines.
Optimum floor space with less congestion.
Low cost per manufacturing unit and labour procurement.
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Operations Management
The product layout has lower material handling costs since the output of one machine is the input
of another machine and it does not require any transportation. In process layout, the output of one
machine is the input of another machine, and transportation is required.
In product layout, inventory is not required for continuing production, whereas in the process
layout, large inventories are required because of discontinuous production.
In product layout, a small space is needed that is fully utilised because machines are kept one after
another in order. In process layout, large spaces or different locations are required to set up different
departments
In product layout, the workers do not require any special skills and they can work on any machine.
In process layout, the workers require special skills to operate specific machines.
The product layout requires minimum supervision and inspection during the sequence of operations.
In process layout, supervision and inspection are carried out several times during the sequence of
operations.
The processes in product layout are rigid and cannot be expanded or shortened and the process gets
disrupted with the breakdown of the machines due to interconnected systems. In process layout,
there is easy and flexible changing of processes and the breakdown of machines does not affect the
final output
The product layout is suitable for mass production with less job variety, whereas the process layout
is suitable for moderate production with more job variety.
The production cost in product layout involves high fixed cost and low variable cost. In the process
layout, there are low fixed costs and high variable costs.
In warehouses and the store layout, the items that are ordered more frequently are placed close together
near the entrance of the facility, while those ordered less frequently remain in the rear of the facility.
The layouts for offices are designed in a manner that optimises the physical transfer of information and
there can be better communication using low-rise partitions and glass walls.
Organisations today look towards building smaller and more compact facilities with more automation
and robotics, which has a direct impact on the facility layout. In these situations, the machines are
placed closer to each other for reducing material handling. With the advancement of technology, there
is an increase in automated material handling systems that include automated storage and retrieval
systems (AS/AR) and automated guided vehicles (AGVs). The firms have a preference toward the use
of U-shaped lines that allow workers, supervisors, and material handlers to have a total view of the
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entire line and travel efficiently between the workstations. It has fewer walls and partitions in the
layout to avoid any form of obstructions. With the introduction of lean manufacturing and just-in-time
production, lesser space is required for storage of inventory throughout the layout.
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layout based on certain defined design criteria and area limitations with one or multiple objectives. It
starts with the initial layout and thereafter it improves the layout by interchanging the department
pairwise for reducing the transportation costs. Normally, the result produced by craft may not
be optimum in terms of minimum cost of transportation but the result will be good and close to the
optimum requirement.
The requirements for Computerised Relative Allocation of Facilities Technique (CRAFT) are:
Initial layout
Flow data
Cost per unit distance
Total number of departments
Fixed departments
Area of departments
For designing the area of a new layout, there are many inputs needed in the form of distance matrices,
cost matrices, and flow matrices.
The success of operations for an organisation depends on its facility layout design which is necessary
for smooth working and efficiency of operations that dictate the profitability of the company.
The major objective of planning facility layout is maximising sales and profits where market
opportunities are best for gaining a competitive advantage.
The other critical factor of the facility design process is to facilitate reduction of cycle time and
processing time that leads to a reduction in the waiting time for the customers for their product
orders.
The physical arrangement of all resources within a facility refers to the layout of the place. Layout
design planning is a critical aspect involved in facilitating the efficient flow of material and
customers through the service or manufacturing system.
Organisations need to incorporate various objectives early in the process of layout designing to find
effective solutions for various factors involved in operational management.
An effective and good layout provides convenience, safety, comfort, efficiency, and profits for the
company; and the success of the business enterprise depends on the location and a good facility
layout.
Pool layout design leads to major losses in regards to wastage and re-working, more efforts for
material handling, badly planned space utilisation, low morale of employees, and so on.
An effective facility layout should be able to provide ideal coordination between raw material,
equipment, manpower, and final product at minimal cost under a safe and comfortable environment.
Facility layout designing and implementation are influenced by several factors that vary from
industry to industry, influencing the designing of the facility layout.
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Good layouts have to be deliberately and carefully planned and worked out so that they provide
maximum benefits and satisfaction to the people involved in form of senior management,
shareholders, employees, customers, and others.
The formats of a facility layout are established by the general pattern of workflow and the
workstations are arranged accordingly within the facility.
Organisations today look towards building smaller and more compact facilities with more
automation and robotics which has a direct impact on the facility layout. In these situations, the
machines are placed closer to each other for reducing material handling.
The ideal layout provides the framework and master plan required for arranging the departments,
machines, people, and more for a smooth and efficient workflow.
7.9 GLOSSARY
Layout: This is the physical arrangement of all resources of the organisation within a facility.
Process layout: In process layout, the operations of similar nature are grouped to ensure maximum
utilisation of resources and facilities, the workstations are grouped according to their specialisation.
Product layout: In the product, the resources and activities are arranged according to the processing
needs of a single product, rather than shared among different types of products.
Fixed-position layout: In a fixed-position layout, the product stays stationary and the machines,
workers, and materials keep on changing position as required.
Cellular layout: A cellular layout is a type of layout where machines are grouped into cells according
to the process requirements for a set of similar items that require similar processing.
Hybrid layout: It is a combination of process layout, product layout, and fixed-position layout and
its main focus is to take advantage of the good attributes of the process, product, and fixed layout
and at the same time avoid their shortcomings.
Computerised Relative Allocation of Facilities Technique (CRAFT): This is an improvement
algorithm developed as a significant tool and technique for solving problems related to layout
designing in the manufacturing system.
Case Objective
The primary purpose of this case study is improving efficiency in layout of the warehouse.
The Red Manufacturing Company is into the manufacturing of spring-loaded replacement spikes for
power rakes. They package the products in small individual containers due to the small size of the item
that is then packed into a larger carton of 25 counts for shipping. They have the packing operation for
this unit on the third floor of a multi-story building. Once the packaging is completed, the shipping
cartons are placed on semi-live skids and taken to the second floor using an elevator. The same elevator
is also used to move other materials to various floors in the plant for processing. On the second floor,
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packages are sorted according to the distribution factors. After sorting, all packages are placed on a
semi-live skid and moved to the first floor via the same elevator. On the first floor, the packages are
stored awaiting shipment (picked up by the assigned truck line).
The company aims to redesign its current facility by integrating all of its production and warehousing
activities in a new way, to reduce its logistics costs and time required. They want efficient methods of
elimination of duplicated operations within the warehouse, allowing an increase in the efficiency and
reducing the workforce. They are looking for efficiency in their packaging, picking of items, reduction
of buffer transfers, and improving their operations. The main goal of the company is to achieve a 25%
logistic cost reduction, while the payback of the investment should not be greater than two and a half
years.
Questions
1. What is the business of Red Manufacturing Company manufacturing?
(Hint: Spring-loaded replacement spikes for power rakes.)
2. How can they bring down the costs of their packaging operations?
(Hint: Improve on the process of packaging, movement of goods.)
3. Explain how the movement of packages is improved in the system?
(Hint: The boxes should be packed once and there should be elimination of redundant processes.)
4. What are the alternative solutions that can be effective in the systems of operations in the warehouse?
(Hint: The number of elevators should be increased for the process, improvements, and efficiency in
the logistic operations and packaging.)
2. An effective facility layout should be able to provide ideal coordination between raw material,
equipment, manpower, and final product at minimal cost under a safe and comfortable environment.
Refer to Section Layout
3. Facility layout designing and implementation are influenced by several factors that vary from
industry to industry influencing facility layout. Refer to Section Factors influencing Layout Decisions
4. A cellular layout is a type of layout where machines are grouped into cells according to the process
requirements for a set of similar items that require similar processing. Refer to Section Types of
Layout
5. The product layout and process are two important ways to design the layout of the facility depending
on various factors involved with the manufacturing of different kinds of products. Refer to Section
Types of Layout
https://www.bdc.ca/en/articles-tools/blog/facility-layout-what-is-it-why-should-care
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MATERIALS-HANDLING.pdf
Discuss with the group: what are the factors that need to be considered for designing a facility
layout for manufacturing an automobile product and why?
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