Operations Management Week Four

A Review of Facilities Layout.

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Learning Objectives: Explain the relationship between market requirements and layout decisions. Distinguish between the four basic layout types and understand their relationship with process types. Understand the main objectives of each layout type, and their effects on volume and variety. Appreciate various techniques used to design layouts in detail.

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What are layout and flow? Layout ensuring that things are in the right place. Flow materials, people and information move around in the optimum way.

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There is no perfect layout and flow! High volume manufacturing will have a different layout to a small batch producer. High volume retailing like Tesco will have a different layout to an up-market specialist boutique. McDonalds will be different from the a top restaurant.

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The best result here is going to be a balance between: The needs of the market and Costs.

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Consider how do you get sugar to a customer? You could provide a chauffer driven service for each bag that ensured the customer always received the sugar when they wanted it or You could make customers drive hundreds of miles to the nearest sugar refinery. The reality is a balance between the two!

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The Benefits of Good Layout a good layout can achieve: Operational effectiveness in terms of throughput. Operating costs in terms of efficiency, distance traveled etc. Quality the more actions taken the higher the risk of error.

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The amount of space required for the operation. Space, like time, is money The wellbeing of the people who work in the operation and therefore the productivity.

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Choices and Trade-offs We have noted many times how operations is about trade-offs. Layout decision will be made based on a range of business issues.

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What are the market requirements?
Product Volume Variety Quality Delivery

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The process type project, mass etc. The layout selected to deliver this. The flow of the product service to the market.

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Making Layout Choices. The key factors in layout choice are: The nature of the product or service food requires a different approach to clothing! The complexity of the product how many processes, component parts etc.

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What is the transformation process is it information, materials, customers? Customers will need aesthetically pleasing environments as well! The variety required standard or custom? The volumes required projects or mass?

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Basic Layout Types Whatever we choose: Must make the process as easy as possible. Add value in terms of reducing delays, errors etc. Allow control and feedback access will be important for example.

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The main layout options are: Fixed position. Process Product Cell which is a mixture of the others!

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Fixed Position: Work is all brought to one place. Many engineering jobs are like this - but so too is building a house or performing an operation in a hospital! Works with projects and some jobbing.

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Advantages: Very high product mix and product flexibility good for unique jobs. The product or customer is not disturbed. High variety of tasks for staff.

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Disadvantages: Very high unit cost. Scheduling is a problem everything happens in the same place so you have to schedule the work very carefully or things get in each others way.

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Much movement of plant and staff everything comes to one point. Training costs may increase each project may be different and so staff have to be retrained each time.

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Process or Functional Layout. Common with jobbing and requires each of the functions will be grouped together. Work is moving around from function to function as required.

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Advantages: High degree of flexibility you can use the same functions for simple or complex jobs. Able to cope with disruptions you can reroute work according to requirements. Easy to supervise plant or equipment you can have specialist supervisors who know their area of the operation but not necessarily all of it.

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Disadvantages: Low utilisation of facilities parts of the process may remain idle for some time. High levels of WIP (Work In Progress). You have to have a lot of half finished work to make this system operate.

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Complex flow which is difficult to control often there will be backtracking, inefficiency.

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Product Layout: Common where volume is required, such as batch, mass and continuous production. The operation is laid out for one product. So you will have a Ford Mondeo production line.

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Some people call this system flow line or line layout. Requires very predictable and reasonably stable demand. Cars, tinned food, soft drinks etc. are all examples. Balancing supply and demand is critical in this type of layout.

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Advantages: Low unit cost, economies of scale achieved through repetition and standardisation. Specialisation of equipment this system makes it worth investing in special equipment perhaps made just for this job.

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Advantages: Material or customer movement is convenient and logical there is a logical sequence and handling time and cost will be reduced. This process tends to add value rather than adding cost.

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Disadvantages: Low product mix flexibility you cannot suddenly get the Ford Mondeo line to make Ford Kas at least not immediately. Sensitive to disruption everything has to work very reliably. Breakdowns can result in bottlenecks or queues.

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Repetitive Work all of the problems of Taylorism etc. can be present
Boredom Higher level needs not met etc.

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Cell layout Many real life processes are a compromise between these types. The ideal is to get a compromise between variety, flexibility and volume.

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Retailing is a good example: Traditionally clothes were grouped by product trousers, skirts etc. Increasingly stores have been setting up stores within stores but maintaining their standard tills.

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In a factory you may well find a range of machines grouped in one place with a team of people attached to it. There will still be some product layout as well. For example:

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You may have many variations of car and teams set up to deal with each variation. You also have a common line for painting or putting the engine in. In some ways its a bit like an operations version of a matrix structure you get in management.

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Advantages Good compromise between cost and flexibility. Fast throughput the work can go through the cells (teams) rather than individual processes. Good motivation this layout often means workers can see the finished item rather than just a small part of it.

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Disadvantages: Costly to rearrange existing layout. When BMW decided to change from a process to a cell layout when they bought the old Rover factory in Oxford it cost 230 million.

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Disadvantages: Need more equipment you may well end up duplicating machinery and processes, costing more money. Lower plant utilisation than a product layout some cells may not be used at some times.

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Higher training time/costs workers need to be multi skilled, work in teams and self manage. This requires a great deal of training.

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General objectives of good layout: Inherent safety it might be more efficient but might also be dangerous to customers or workers. Length of flow the aim is to minimise the flow length. For example, you would not want to push a patient 100 meters when undergoing an operation, even if it was cheaper to do so!

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Clarity of flow customers or products need to flow in a well signed way. We need to judge how processes are operating and safety may be an issue. For example, you do not want Fork Lift Trucks running around a factory at high speed in an unpredictable way!

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Staff comfort efficiency may also mean noise, heat, poor lighting etc. You have to provide good working conditions as well as a good ambience for service customers. This may be both a practical and legal requirement.

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Management co-ordination layout should assist with management supervision and communication, not hindering it in any way. For example, organising the work in teams may make empowerment and leadership easier as well as making the process more efficient.

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Accessibility you have to be able to get at every part of the process for maintenance and cleaning. Use of Space Office space in Mayfair in Central London averages out at around 80 per square foot. On the other hand, open space may be critical, as in a luxury hotel.

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Long-term flexibility few layouts stay the same because products and services change. Consider a retailer getting a new line for example. Making it reasonably easy to change is going to be important.

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Conclusions Layout works with process types to achieve maximum performance. Traditionally, there was a trade off between flexibility and volume but cell layouts are delivering both of these. A good layout can create competitive advantage for the firm.