Operations

Management
LESSON 4 –
Layout Strategies

PowerPoint presentation to accompany

Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
Innovations at McDonald’s
 Indoor seating (1950s)
 Drive-thru 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 McDonald’s
 Indoor seating (1950s)
 Drive-through window (1970s)
Six out of the
 Adding breakfast to the menu (1980s)
seven are layout
 Adding play areas (late 1980s)
decisions!
 Redesign of the kitchens (1990s)
 Self-service kiosk (2004)
 Now three separate dining sections
McDonald’s New Layout
 Seventh major innovation
 Redesigning all 38,000 outlets in
over 100 countries.
 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
 P3
Strategic Importance of
Layout Decisions
The objective of layout strategy is to
develop a cost-effective layout that
will meet a firm’s competitive needs
Good Layouts Considerations
1. Material handling equipment
2. Capacity and space requirements
3. Environment and aesthetics
4. Flows of information
5. Cost of moving between various
work areas
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.
1. Office Layout
 Grouping of workers, their equipment,
and spaces to provide comfort, safety,
and movement of information.
Relationship Chart

Figure 9.1
2. Retail Layout
 Allocates shelf space and responds
to customer behavior
 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
Retail Store Shelf Space
Planogram
 Computerized tool 5 facings
for shelf-space

Shampoo

Shampoo

Shampoo

Shampoo

Shampoo
management
 Generated from
store’s scanner
data on sales

Shampoo

Shampoo

Shampoo

Conditioner

Shampoo
Conditioner

Conditioner
 Often supplied by
manufacturer

2 ft.
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.
3. Warehouse Layout
 Objective is to optimize 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
Warehouse Layout.
Traditional Layout
Storage racks
Customization

Conveyor

Staging
Office
Shipping and receiving docks
Warehouse 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.
Cross-Docking Layout.

Shipping and receiving docks

Office
Shipping and receiving docks
Customizing
 Value-added activities performed at the
warehouse
 Enable low cost and rapid response
strategies
4. Fixed-position layout
Addresses the layout requirements of
large, bulky projects such as ships and
buildings.
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 product-oriented
facility
 This can
significantly
improve efficiency
but is only
possible when
multiple similar
units need to be created.
5.Process-Oriented Layout
 Arrange work centers so as to minimize
the costs of material handling
 Deals with low-volume, high-variety
production (also called job shop or
intermittent production)
 Basic cost elements are
 Number of loads (or people) moving
between centers
 Distance loads (or people) move
between centers.
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.
Process-Oriented Layout.
Patient A - broken leg
ER
triage Emergency room admissions
room
Patient B - erratic heart
Surgery pacemaker

Laboratories

Radiology ER Beds Pharmacy Billing/exit

Figure 9.3
Layout at Arnold Palmer Hospital.
Pie-shaped
Central break and rooms
medical supply
rooms

Local linen Central nurses

supply station

Local nursing
pod
6. Work cell layout:
Arranges machinery and equipment to
focus on production of a single product
or group of related products
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.
 Current layout - workers in
small closed areas. Cannot
increase output without a
third worker and third set of
equipment. Improved layout - cross-trained
workers can assist each other. May
be able to add a third worker as
additional output is needed.

Figure 9.10 (a)

 Current layout - straight lines
make it hard to balance tasks Improved layout - in U shape,
because work may not be workers have better access.
divided evenly Four cross-trained workers
were reduced.

U-shaped line may reduce employee movement

and space requirements while enhancing
communication, reducing the number of workers,
Figure 9.10 (b) and facilitating inspection
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
7. Product-oriented layout:
Seeks the best personnel and machine
utilizations in repetitive or continuous
production
McDonald’s Assembly Line.

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
 Objective is to minimize the imbalance
between machines or personnel while
meeting required output
 Starts with the precedence relationships
1. Determine cycle time
2. Calculate theoretical
minimum number of
workstations
3. Balance the line by
assigning specific
tasks to workstations
 A restaurant complex with all four basic
layout types.
Line layout cafeteria

Cell layout buffet

Fixed-position layout
service restaurant

Desert

Starter
buffet

buffet
Main course
buffet Service line
Preparation

Oven
Process layout kitchen
Cool room
Freezer Vegetable prep Grill