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Facilities

Emerald Article: Facility layout overview: towards competitive advantage Alberto G. Canen, Geoff H. Williamson

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To cite this document: Alberto G. Canen, Geoff H. Williamson, (1996),"Facility layout overview: towards competitive advantage", Facilities, Vol. 14 Iss: 10 pp. 5 - 10 Permanent link to this document: http://dx.doi.org/10.1108/02632779610129104 Downloaded on: 03-05-2012 References: This document contains references to 42 other documents Citations: This document has been cited by 1 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 3543 times.

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Facility layout overview: towards competitive advantage


Alberto G. Canen and Geoff H. Williamson

Introduction
Facility layout is the arrangement of work space which, in general terms smoothes the way to access facilities that have strong interaction. Its aims are similar regardless of whether the organizations are services or manufacturing. Facilities are of crucial importance to organizations because, usually, they represent the largest and most expensive assets of the organization[1]. The layout planning of facilities constitutes an important logistics management issue to be faced by an organization. If not tackled in the early phases it can generate logistics implications for the company involved. The main concern with the plant facility layout planning is to reduce the cost of materials handling, as poor materials handling can generate business problems. As Sims Jr[2] states the best materials handling is no handling. Mathematical modelling can be used to solve the layout problem. Nevertheless it is important to bear in mind that not only the quantitative aspects of the problem should be taken into consideration. There is certainly a qualitative side in which factors such as safety, product mix and aesthetics can inuence the decision process and lead to facilities being located far apart. Consequently, these aspects should not be ignored. Canen and Boaventura[3] emphasize that sometimes the best compromise is the true optimal solution. Thus the whole scenario concerning the facility layout problem should be considered by management before an agreement is reached on a practical operational solution. Facility layout surveys have been carried out, such as those by Jajodia et al.[4] and Heragu[5]. Nevertheless, the most recent survey of computerized layout is given by Welgama and Gibson[6]. Vollmann and Buffa[7] suggested guidelines to assist in the analysis of the layout problem; however, each layout problem has its own characteristics. Kim and Kim[8] state that the optimal design of the physical layout problem should be solved in the early stages of the system design. Modern factories should have this planning requirement catered for in their physical design.

The authors Alberto G. Canen is in the Department of Production Engineering at COPPE/ Federal University of Rio de Janeiro. Currently he is a Visiting Professor in the Department of Management Studies at the University of Glasgow. Geoff H. Williamson is a Senior Lecturer in the Department of Mathematics at Glasgow Caledonian University. Abstract Facility layout is a classical industrial/production engineering problem. Good layout will help any company to improve its business performance. Presents a general overview of the facility layout problem and includes information about approaches to the solution of the problem. Discusses the role of the computer; and the contribution of facility layout to an organizations competitive advantage. Describes experiences of organizations with facility layout.

Searching for a solution


Facilities Volume 14 Number 10/11 October/November 1996 pp. 510 MCB University Press ISSN 0263-2772

The facility layout problem is concerned with how different facilities should be arranged. 5

Here an attempt is made to give a summary of the literature related to solutions for the layout problem. Several approaches could be used to obtain a solution ranging from an acceptable to an optimal one. One approach could be for a company team to develop methods based on their own experience and creativity. Every possible solution is evaluated according to some pre-established criteria and the best is selected. This seems a straightforward approach but can be tedious and time-consuming. Consequently this may not be a desirable method of obtaining a solution to the problem. However, human experience should be taken into consideration to help in the decision-making process. It is relevant to point out at this moment that in the mid1970s a discussion was raised in the literature concerning the facility layout problem after the publication of a paper by Scriabin and Vergin[9]. This was concerned with comparison between layout solutions generated by computer algorithms and ones based on human visual methods. The results of the research showed that visual methods gave a better performance than the computer software available at that time. These results were criticized by Buffa[10] with an immediate reply by Scriabin and Vergin[11]. Coleman[12] added his reservations about the results. Block[13] showed that more research should be carried out. Sometimes it would be necessary to uncover the hidden pattern of the ow characteristics and use this to help to determine the layout. Such an approach would provide a better solution than any rule of thumb or guesswork. Another approach, from Muther[14,15] is Systematic Layout Planning (SLP). It uses a graphical representation and is concerned with building up a proximity matrix or an activity relationship chart where each pair of facilities shares a letter such as A (absolutely necessary), E (very important), I (important), O (ordinary), U (unimportant) and X (undesirable), which represents the closeness rating for each pair of facilities. These levels of desirability represent management wishes. These are based on information such as logical interaction between facilities, costs and safety. Flowcharts also can be developed showing quantitative relationships such as number of trips between a pair of facilities. From the above proximity matrix a trial and error process can be used to generate the layout but again this approach has not been 6

shown to be a particularly efcient method in practice. However, mathematical modelling has been suggested as a way to get an optimal solution for the facility layout problem. Since the rst mathematical model developed by Koopmans and Beckmann[16] as a quadratic assignment problem, interest in the area has attracted considerable growth. This opened up a new and interesting eld for the researcher. In searching for a solution to the facility layout problem, researchers launched themselves into developing mathematical models. Here are just a few examples of mathematical programming formulations for the facility layout problem. Houshyar and White[17] looked at it as an integer programming problem while Rosenblatt[18] formulated the layout problem as one of dynamic programming. Palekar et al.[19] deals with uncertainty and Shang[20] uses a multiple criteria approach. On the other hand, Leung[21] presented a graph theory, formulation and Vancamp et al.[22] used a non-linear optimization approach for the problem. Montreuil et al.[23] use a linear programming model to generate a layout from a design skeleton.

The role of the computer


Several mathematical models are available in the literature to determine an optimal solution for the layout problem. They vary from a simple assignment model formulation to the more complex ones. However, when the number of facilities becomes large, the model becomes complex and difcult to handle analytically. Obtaining the necessary data to be fed into the model is another burden in the formulation. Thus the development of an efcient model to solve a large layout problem has been a challenge and an area of research interest. These reasons led researchers to have a special interest in the development of computer programs seeking a solution for the layout problem. The computerized layout methods are heuristics; they do not guarantee an optimal solution. Nevertheless, an efcient solution is expected. These computer programs can be classied as improvement methods and construction methods. The improvement ones take an initial layout as a starting point. The results are evaluated in the light of the effects of the changes to the locations of the facilities. On the other hand, the

construction method starts the layout from scratch, where each facility is assigned to the site. Nothing is perfect. While the improvement method requires an initial layout, this could be looked at as a disadvantage, even though it provides, in general, layouts that can be evaluated. The construction method, on the other hand, does not require an initial solution. However, it provides only one unique layout in the end, which could be sometimes far from what was expected. Nevertheless, hybrid algorithms which represent a combination of the construction and improvement methods are also available and are described in the literature of facility layout. Some examples are Kaku et al.[24] and Wscher and Chamoni[25]. The literature is rich in the area of computer software for the facility layout problem which is one of the classical problems of industrial engineering. Most of this software falls in one of the above two categories. Some software is available commercially and some can be obtained through academia. Figure 1 is an attempt to present in chronological order, a non-exhaustive survey of the most representative and historical computer software for facility layout. Each box contains the name of the program and the year of reference, followed by the name(s) of the author(s)[4, 26-37].

It is important to point out that CRAFT (Computerized Relative Allocation of Facilities Technique) developed by Armour and Buffa[26] seems to be the rst package available for commercial purposes. Several enhanced versions have been issued since it was originally developed. Information relating to each piece of software, presented in Figure 1, is given in the reference section of this paper.

Competitive advantage
In the business world, company managers are exposed to continuous challenges. One of them is to equip their organizations with the ability to compete in a global marketplace. The British Government, through its deputy Prime Minister Michael Heseltine in The Times[38] said improving competitiveness was a relentless agenda. He has called for a new initiative a national benchmarking scheme, which will help Britains companies achieve world class performance. Sir David Simon, chairman of BP was quoted in the same article as saying benchmarks helped to identify strengths and weaknesses, and what companies needed to do to improve themselves. However, as Schonberger[39] states world class performance is dedicated to serving the customer. Thus, in order to keep track of their performance, organizations must develop measures of performance. Canen and Lawrie[40] looking at a specic manufacturing company, focus their recommendations on developing and implementing key measures of performance as part of the company information systems providing top management with a broader view of the company operations. This is a fundamental decision to be taken by any organization and is necessary to face tougher competition in world business. Skinner[41] argued that the approach by management should emphasize building competitive strength. Internal benchmarking should follow this process, i.e. internal critical assessment. After that, the companies should launch themselves into national or international benchmarking. The facility layout problem represents an area of rich interest for academia and practitioners alike, and both could contribute towards this initiative. When Johnston[42] analysed a case of a production problem in a manufacturing company, he stated that the striking thing about this case is the pivotal role the physical 7

Figure 1 Chronologically listed facility layout computer software CRAFT


[1963]

Armour and Buffa[26]

HC66 ALDEP
[1967]

[1966]

HillIer and Connors[31]

BIAS SAMPLING [1968]


Nugent et al.[35]

Seehof and Evans[36]

[1967] Lee and Moore[34]

CORELAP
[1970]

MAT PLANET FRAT


Khalil[33]

Edwards et al. [29] [1972]

Deiseroth and Apple[27] [1973]

CRAFT M

[1976]

COFAD DISCON

[1976]

Hicks and Cowan[30]

Tompkins and Reed[37] [1980]

SPACECRAFT
Johnson[32]

[1982]

Drezner[28]

CLASS
Jajodia et al.[4]

[1992]

layout played in the story. This is a real example of the inuential role of the facility layout in the future business success of the company. At this stage, it is of prime importance to point out some of the contributions that a good layout could provide to the company. The rst one comes direct from its own main objective, i.e. to reduce unnecessary material handling within the company. Obviously costs will be reduced. In relation to the ow of products, a good layout will keep such ow through the facilities moving as smoothly as possible. In addition, an efcient layout will also reduce inventory and associated costs. With more empty oor space released it creates opportunities for management to expand utilization in volume of the existing products, new management initiatives may bring new products to be manufactured in the plant. The business competition is enormous. The domestic market is under siege from overseas competition. The above results would provide advantages to the company over the competition certainly a good solution of the facility layout and its continuous improvement, it would efciently contribute to keeping the company on the competitive edge. Skinner[41] indicates that organizations with superior resources such as technology and management are usually the winners.

The other side


Given the importance attached to the facility layout problem by academia, the authors decided to discover the attitude of some major organizations to the problem. In an attempt to describe the approach used by organizations, the authors visited ve companies located in the west of Scotland: two alcohol companies, two electronics manufacturers and a heavy engineering plant. Unstructured interviews were carried out with company managers. The selection of these business segments is due to the fact that alcohol companies are important to Scotland, electronics represent new sunrise industries and heavy engineering has been traditional in the past. These organizations have different attitudes towards facility layout planning. Both alcohol companies make very few changes to facility layout after the initial layout has been determined. They consider themselves a traditional business where very few changes take place. The bottling side of the business is 8

a very simple process as far as layout is concerned. The problem being to do it quickly! On the other hand, the hi-tech companies changed their facilities most often as they were in a fast-changing sector, where the lack of ability to change to the market was likely to force the company out of business. These companies had, in the main, purpose-built factories with facilities which could be changed more easily. Services such as electricity, gas and water are provided via ceiling access. If a layout changes, the route these services take can be changed easily as there are no obstructions in the ceiling area. Industrial engineers are constantly looking for improved production processes. Planned maintenance was a common method of feedback. This provided indicators (e.g. high downtime owing to repairs being undertaken) that machines needed changing which, in turn, gave rise to considerations of facility layout changes as new machines offering improved processes were purchased. The heavy engineering company changed its facilities with a re-engineering review. Efciency of manpower usage was made by placing machines in such a way that one operator could deal with two machines. Labour costs were obviously a higher priority than an improvement of its layout. This benet could not be realized when there were small batches to be manufactured as it was only worth setting up one machine (instead of both that the operator controls) for this purpose. Facility layout appears to be dealt with via the use of Autocad or similar drawing packages. Layouts are planned by draughtsmen or engineers based on their own personal views. Senior management is then consulted and, where appropriate, changes to facility layout are made. Of the companies visited, not one had used any form of computerized facility layout software, as discussed earlier in the paper (or any other software for this purpose). The view was that the companys engineers were better placed to make such a decision since there were other aspects which were difcult to quantify, such as xed placement of main services such as water, gas and electricity. Here, services are provided at oor level rather than ceiling level, as was the case of the hi-tech companies. Thus layout design must take into consideration this additional constraint.

Another issue touched on during the visit was related to the efciency of the facility layout. Benchmarking was a key issue. Most companies were keen to show that efciency and productivity were being monitored. External benchmarking (with other companies) was dealt with at a mainly informal level. In some industries, the facilities used were of the same type, and so estimation of productivity and benchmarking approaches could be made by simple deduction based on total output. Benchmarking against other sister factories (in companies with more than one factory) seemed to be common. Improved approaches were shared between sites to provide a company-wide benet. Internal benchmarking is very common with companies comparing productivity from one time period to the next. Whether benchmarking does reect improvements due to facility layout change is less certain. Companies are trying to become more competitive and attention is paid to such analysis. A common improvement that companies are trying to make is that of improving materials handling and stock control. In the last few years there seems to have been a major trend towards the use of more automated warehousing and towards the general reduction in total stock. In terms of facility layout, it would appear that facility improvements have been most prevalent in this area, i.e. warehouse facility layout. Two important issues were raised during the interview process. The rst concerned the use of consultants. The companies occasionally used consultants but this was not due to lack of expertise, but to short-term manpower requirements. Rather than employ a new member of staff, it was considered more prudent to employ consultants for a shortterm task. In the main, however, consultants were not often used for facility layout planning. Concerning links with academic institutions, most companies do not wish to link with academic institutions in the planning of facility layout. A view that came across was that a company knows its own facilities and therefore it is the company that should decide how the facilities should be laid out. The links that companies have with universities seem to be for educational courses only and not for research (at least in the area of facility layout planning). Companies were unaware of the work concerning facility layout that had been published from the academic sector. Even 9

when told that this was available, companies showed little interest in its existence. Most companies approaches were that they knew best. Inexibility of software coupled with individual constraints and difculty of understanding such software when the present approach was adequate were some of the reasons for this attitude.

Conclusions
Much research has been carried out on the facility layout problem. The literature is rich in this area, as already pointed out. However, despite the fact that companies consider the facility layout problem as vital to improve competitiveness, not much has been done to utilize this available literature and software, and the above seems to be empty rhetoric. The companies are not aware of the new techniques or computerized software available through academic institutions, and no interest was shown to close this gap. From the companies visited, the hi-tech companies have to respond to the marketplace more quickly than traditional companies, owing to the short shelf-life of the products manufactured. As for benchmarking, the internal ones are very common and are used as a vehicle for facility change; however external ones are dealt with by looking at contracts lost and total output of competitors. Non-specialist software such as Autocad or similar software is used to plan facility layout, and it seems that no use is made of any specic computerized software available for facility layout. Because facility layout is considered a way towards competitive advantage, the authors intend to develop a research agenda in this area.

References
1 Sthahl, J.F., Facility productivity today can be planned, measured and controlled do it, Industrial Engineering, June 1990. 2 Sims Jr, R., MH problems are business problems, Industrial Engineering, May 1990. 3 Canen, A.G. and Boaventura Netto, P.O., An OR group is born, OR/MS Today, October 1993. 4 Jajodia, S., Minis, I., Harhalakis, G. and Proth, J-M., CLASS: computerized layout solutions using simulated annealing, International Journal of Production Research, Vol. 30 No. 1, 1992. 5 Heragu, S.S., Recent models and techniques for solving the layout problems, European Journal of Operational Research, Vol. 57, 1992, pp. 136-44.

6 Welgama, P.S. and Gibson, P.R., Computer-aided facility layout a status report, International Journal of Advanced Manufacturing Technology, Vol. 10 No. 1, 1995. 7 Vollmann, T.E. and Buffa, E.S., The facilities layout problem in perspective, Management Science, Vol. 12 No. 10, 1966. 8 Kim, J.Y. and Kim, Y.D., Graph theoretic heuristics for unequal-sized facility layout problems, Omega, Vol. 23 No. 4, 1995. 9 Scriabin, M. and Vergin, R.C., Comparison of computer algorithms and visual based methods for plant layout, Management Science, Vol. 22 No. 2, 1975. 10 Buffa,E.S., On a paper by Scriabin and Vergin, Management Science, Vol. 23 No. 1, 1976. 11 Scriabin, M. and Vergin, R.C., Computer and visual methods for plant layout a rejoinder, Management Science, Vol. 23 No. 1, 1976. 12 Coleman, D.R., Plant layout: computers versus humans, Management Science, Vol. 24 No. 1, 1977. 13 Block, T.E., A note on comparison of computers, algorithms and visual based methods for plant layout by Scriabin, M. and Vergin, R.C., Management Science, Vol. 24 No. 2, 1977. 14 Muther, R., Practical Plant Layout, McGraw-Hill, New York, NY, 1955. 15 Muther, R., Systematic Layout Planning, Cahners Books, Boston, MA, 1973. 16 Koopmans, T.C. and Beckmann, M., Assignment problems and the location of economic activities, Econometrica, Vol. 25 No. 1, 1957. 17 Houshyar, A. and White, B., Exact optimal solution for facility layout deciding which pairs of location should be adjacent, Computers and Industrial Engineering, Vol. 24 No. 2, 1993. 18 Rosenblatt, M.J., The dynamics of plant layout, Management Science, Vol. 32 No. 1, 1986. 19 Palekar, V.S., Batta, R., Bosch, R.M. and Elhence, S., Modelling uncertainties in plant layout problems, European Journal of Operational Research, Vol. 63 No. 2, 1992. 20 Shang, J.S., Multicriteria facility layout problem an integrated approach, European Journal of Operational Research, Vol. 66 No. 3, 1993. 21 Leung, J., A graph-theoretic heuristics for designing loop-layout manufacturing systems, European Journal of Operational Research, Vol. 57 No. 2, 1992. 22 Vancamp, D.L.,Carter, M.V. and Vannelli, A ., A non linear optimization approach for solving facility layout problems, European Journal of Operational Research, Vol. 57 No. 2, 1992. 23 Montreuil, B., Venkatadri, U. and Ratlift, H.D., Generating a layout from a design skeleton, IIE Transactions, Vol. 25 No. 1, 1993. 24 Kaku, B.K., Thompson,T.E. and Morton, T.E., A hybrid heuristic for the facilities layout problem, Computers and Operations Research, Vol. 18 No. 93, 1991.

25 Wscher, G. and Chamoni, P., MICROLAY: an interactive computer program for factory layout planning on microcomputers, European Journal of Operational Research, Vol. 31, No. 2, 1987. 26 Armour, G.C. and Buffa, E.S., A heuristic algorithm and simulation approach to relative location of facilities, Management Science, Vol. 9, 1963, pp. 294-309. 27 Deiseroth, M.P. and Apple, J.M., A Computerized Plant Layout Analysis and Evaluation Technique (PLANET), American Institute of Industrial Engineers, Norcross, GA,1972. 28 Drezner, Z., DISCON: A new method for the layout problem, Operations Research, Vol. 28 No. 6, 1980. 29 Edwards, H.K., Gillett, B.E. and Hale, M.E., Modular allocation technique (MAT), Management Science, Vol. 17 No. 3, 1970. 30 Hicks, P.E. and Cowan, T.E., CRAFT M for layout arrangements, Journal of Industrial Engineering, Vol. 14, 1976, pp. 30-5. 31 Hillier, F.S. and Connors, M.M., Quadratic assignment problem algorithms and the location of indivisible facilities, Management Science, Vol. 13 No.1, 1966. 32 Johnson, R.V., SPACECRAFT for multi-oor layout planning, Management Science, Vol. 28 No. 4, 1982. 33 Khalil, T.M., Facilities relative allocation technique FRAT, International Journal of Production Research, Vol. 11 No. 2, 1973. 34 Lee, R.C. and Moore, J.M., CORELAP computerized relationship layout planning, The Journal of Industrial Engineering, Vol. 18, March 1967. 35 Nugent, C.E., Vollmann, T.E. and Ruml, J., An experimental comparison of techniques for the assignment of facilities to locations, Operations Research, Vol. 16 No. 1, 1968. 36 Seehof, J.M. and Evans, W.O., Automated layout design program, The Journal of Industrial Engineering, Vol. 18, December 1967. 37 Tompkins, P.A. and Reed Jr, R., An applied model for the facilities design problem, International Journal of Production Research, Vol. 14 No. 5, 1976. 38 The Times , Heseltine calls for benchmarking, 14 November 1995. 39 Schonberger, R.J., Building a Chain of Customers, Hutchinson Business Books, London, 1990. 40 Canen, A.G. and Lawrie, N.L., Looking at customer service in a drinks company, Logistics Information Management, Vol. 8 No. 1, 1995. 41 Skinner, W., Manufacturing The Formidable Competitive Weapon, John Wiley & Sons, New York, 1985. 42 Johnston, R.B., Making manufacturing practices tacit: a case study of computer-aided production management and lean production, Journal of the Operational Research Society, Vol. 46 No. 10, 1995.

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