Operations and
supply chain dynamics
Presented by
Team Teaching
IPB university
Layout Strategies:
Strategic and Types of Layout
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
© 2014 Pearson Education, Inc. 6-3
Good Layouts Consider
► Material handling equipment
► Capacity and space requirements
► Environment and aesthetics
► Flows of information
► Cost of moving between various work
areas
© 2014 Pearson Education, Inc. 6-4
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
© 2014 Pearson Education, Inc. 6-5
Layout Strategies
OBJECTIVES EXAMPLES
Office Locate workers requiring frequent Allstate Insurance
contact close to one another Microsoft Corp.
Retail Expose customer to high-margin items Kroger’s Supermarket
Walgreen’s
Bloomingdale’s
Warehouse (storage) Balance low-cost storage with low- Federal-Mogul’s warehouse
cost material handling The Gap’s distribution center
Project (fixed position) Move material to the limited storage Pittsburgh Airport
areas around the site
Job Shop (process Manage varied material flow for each Arnold Palmer Hospital
oriented) product Hard Rock Cafe
Work Cell (product Identify a product family, build teams, Hallmark Cards
families) cross train team members Wheeled Coach Ambulances
Repetitive/ Continuous Equalize the task time at each Sony’s TV assembly line
(product oriented) workstation Toyota Scion
© 2014 Pearson Education, Inc. 6-6
Types of Layout
1. Office layout: Positions workers, their equipment, and
spaces/offices to provide for movement of information
2. Retail layout: Allocates shelf space and responds to customer
behavior
3. Warehouse layout: Addresses trade-offs between space and
material handling
4. Fixed-position layout: Addresses the layout requirements of large,
bulky projects such as ships and buildings
5. Process-oriented layout: Deals with low-volume, high-variety
production (also called job shop or intermittent production)
6. Work cell layout: Arranges machinery and equipment to focus on
production of a single product or group of related products
7. Product-oriented layout: Seeks the best personnel and machine
utilizations in repetitive or continuous production
© 2014 Pearson Education, Inc. 6-7
1. Office Layout
► Three physical and social
► Grouping of workers, their
aspects
equipment, and spaces to
provide comfort, safety, and ► Proximity
movement of information ► Privacy
► Movement of information is ► Permission
main distinction
► Typically, in state of flux due to ► Two major trends
frequent technological ► Information technology
changes ► Dynamic needs for space
and services
© 2014 Pearson Education, Inc. 6-8
Relationship Chart
© 2014 Pearson Education, Inc. 6-9
© 2014 Pearson Education, Inc. 6 - 10
Office Layout
Private
Open
Activity- based
Co-working space
Cubicle
Open Office Layout Cubicle Office Layout
Characteristics Characteristics
Open office layouts are In a cubicle layout,
characterized by a lack of employees have their own
barriers such as walls or semi-private workspace
cubicles between workspaces. separated by partitions.
Employees sit together in a These partitions are usually
large, open space, usually at lower than full walls,
desks arranged in rows or allowing some level of
clusters. visibility and
Pros: Promotes communication.
communication, collaboration, Pros: Offers a better balance
and a sense of community between privacy and
among employees. openness, allowing
Cons: Noise levels can be high, employees to focus while
Private Office Layout Activity-Based Layout
Characteristics Characteristics
In this layout, each employee Activity-based layouts
or team has their own provide different zones for
enclosed space, separated by various tasks such as
full walls and a door. collaboration, focus work,
Pros: Provides maximum and relaxation.
privacy, allows for high Pros: Highly flexible and
concentration, and can tailored to specific tasks,
convey status and hierarchy. promoting efficiency.
Cons: Takes up more space Cons: Employees don't have a
and can limit communication fixed desk, which might be
and collaboration among unsettling for some.
employees.
Co-Working Spaces Hybrid Layout
Characteristics Characteristics
Co-working spaces are shared A hybrid office layout
work environments where incorporates elements of
employees from different open offices, cubicles, and
companies or freelancers private offices. For example,
work side by side. a common area might be
Pros: Offers networking surrounded by a series of
opportunities, and a change private offices.
of scenery can boost Pros: Versatility, can meet a
creativity. variety of employee needs,
Cons: Lack of control over the and fosters both
environment, and collaboration and focus.
distractions can be plentiful. Cons: Complexity in planning
and potentially higher costs
2. Retail Layout
▶ Objective is to maximize profitability
per square foot of floor space
▶ Sales and profitability vary directly
with customer exposure
© 2014 Pearson Education, Inc. 6 - 15
Retail Slotting
▶ Manufacturers pay fees to retailers to get the
retailers to display (slot) their product
▶ Contributing factors
▶ Limited shelf space
▶ An increasing number of new products
▶ Better information about sales through POS data
collection
▶ Closer control of inventory
© 2014 Pearson Education, Inc. 6 - 16
Servicescapes
1. Ambient conditions - background characteristics such as
lighting, sound, smell, and temperature
2. Spatial layout and functionality - which involve customer
circulation path planning,
aisle characteristics, and
product grouping
3. Signs, symbols, and
artifacts - characteristics
of building design that
carry social significance
© 2014 Pearson Education, Inc. 6 - 17
Five Helpful Ideas for Supermarket Layout
1. Locate high-draw items around the periphery of the store
2. Use prominent locations for high-impulse and high-margin
items
3. Distribute power items to both sides of an aisle and disperse
them to increase viewing of other items
4. Use end-aisle locations
5. Convey mission of store through careful positioning of lead-
off department
© 2014 Pearson Education, Inc. 6 - 18
Retail Layout
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Supermarket
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Department Store
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[Link]
[Link]
3. Warehousing and Storage Layouts
Material Handling Costs
▶ The objective is to ► All costs associated with the transaction
optimize trade-offs
between handling costs ► Incoming transport
and costs associated ► Storage
with warehouse space
► Finding and moving material
▶ Maximize the total “cube”
of the warehouse – ► Outgoing transport
utilize its full volume ► Equipment, people, material,
while maintaining low supervision, insurance, depreciation
material handling costs
► Minimize damage and spoilage
© 2014 Pearson Education, Inc. 6 - 25
Warehousing and Storage Layouts
© 2014 Pearson Education, Inc. 6 - 26
© 2014 Pearson Education, Inc.
Warehouse Layout 6 - 27
The 7 best practices for warehouse layout optimization
1. Mapping your warehouse layout 2. Choose your storage areas
• The first step in warehouse layout The next step in warehouse layout
optimization is creating a detailed optimization is determining the
blueprint of your warehouse. size of your storage areas. The
• This step includes: ideal storage area size will
• Taking the most accurate depend on your production
measurements of the warehouse. volume and business demand, so
• Labelling each area and the consider grouping your storage by
direction of the workflow. product type or setting up storage
• Include common walkways, doors in aisles. Remember to use
and staircases alongside material vertical space effectively, as it
flow routes. maximizes the efficiency of your
• Include space measurements warehouse layout.
such as length, width and height.
The 7 best practices for warehouse layout optimization
3. Designate storage space for 4. Optimize designs based on your loading
specific products and shipping areas
Storage racks house various goods and Warehouse layout optimization will heavily depend on
where the delivery and shipping vehicles are located.
materials, and warehouse layout • The L-shaped layout
optimization should maximize the use of A warehouse may have the loading/unloading
these spaces. space and the shipping space at the tips of the ‘L’.
For example, think of the space between This means the bulk of the workflow — production
the top of a stored item and the bottom and storage — should be housed at the ‘L’
intersection.
level of the higher rack. If more than six • The U-shaped layout
inches of space is present, you might be The U-shaped layout is a standard design. It features
underutilizing the space. Typically, racks production and storage in the bend of the ‘U’ while
only need about six inches to loading/unloading and shipping occur in the arms.
accommodate forklift interaction. • The I-shaped layout
Additionally, consider whether your racks I-shaped layouts denote a warehouse layout with
loading/unloading at one end of the warehouse and
consistently store the same-sized shipping at the other. Production and storage are
products. If your inventory varies, centrally located.
designate specific areas for larger and Whichever design you choose, work out where you
smaller items. This allows the need to store the high-demand items in relation to your
warehouse layout to be optimized by shipping, as these will be the most likely to be bought
and shipped. This is known as the dynamic storage
lowering racks to create additional levels area. Less popular items should be stored further away,
The 7 best practices for warehouse layout optimization
5. Prevent bottlenecks in your loading and 7. Designate areas for picking
unloading areas If your warehouse focuses on
To prevent bottlenecks, ensure enough space is shipping, having a designated
available in your loading and unloading areas. This picking area is essential. This area
space is crucial for equipment like forklifts or shuttles, should be located next to or within
as manually moving products is inefficient.
Sometimes, these areas can be separate from the main
storage areas to minimize the time
warehouse, which means that either: spent searching for items.
An automated conveyor system or Automated Guided Implementing machinery such as
Vehicles can transport the goods. conveyors and sorters can
significantly enhance picking
6. Designate reception areas performance.
The reception area is where deliveries are received and Machinery can be a vital part of
where product sorting begins. Again, this needs a lot of warehouse layout optimization,
space, as too little will create a blockage at the ensuring the workflow of your
beginning of your warehouse’s workflow. warehouse is optimized and
Accuracy is a must in this area, and goods and improved alongside the layout.
materials need to be allocated to the appropriate uses
or destinations. Space is crucial, so ensure there is
These things can be achieved in
enough space for employees and trucks to enter and tandem, where you design a new
exit safely. layout based on the machinery you
are onboarding.
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 by
an estimated 500%
▶ Dock location is a
key design element
© 2014 Pearson Education, Inc. 6 - 31
[Link]
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
© 2014 Pearson Education, Inc. 6 - 33
[Link]
[Link]
Random Stocking
► Typically requires automatic identification systems
(AISs) and effective information systems
► Allows more efficient use of space
► Key tasks
1. Maintain list of open locations
2. Maintain accurate records
3. Sequence items to minimize travel, pick time
4. Combine picking orders
5. Assign classes of items to particular areas
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[Link]
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
© 2014 Pearson Education, Inc. 6 - 38
[Link]
4. 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
© 2014 Pearson Education, Inc. 6 - 40
© 2014 Pearson Education, Inc. 6 - 41
Line layout cafeteria
Fixed Position Layout
Cell layout buffet
Fixed-position layout service
restaurant
Desert
buffet
Starter
buffet
Main course buffet
Service line
Preparation
Oven
Process layout kitchen
Cool room
Freezer Grill
Vegetable prep
42
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
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44
[Link]
5. 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
© 2014 Pearson Education, Inc. 6 - 45
Surgery ER triage room Emergency room admissions
Patient A - broken leg
Patient B - erratic heart
pacemaker
Laboratories
Radiology ER Beds Pharmacy Billing/exit
© 2014 Pearson Education, Inc. 6 - 46
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
© 2014 Pearson Education, Inc. 6 - 47
Process-Oriented Layout
© 2014 Pearson Education, Inc. 6 - 48
Loan books in subject order
On-line and
CD-ROM access room
Study desks
To journal
sack
Company reports
Current
Enquiries
Process-
journals
oriented Layout
Reference
section
Reserve
collection
Store Counter staff
room
Copying area
Entrance Exit
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[Link]
Process-Oriented Layout Cost
n n
Minimize cost = å å X ij C ij
i=1 j=1
where n = total number of work centers or
departments
i, j = individual departments
Xij = number of loads moved from
department i to department j
Cij = cost to move a load between
department i and department j
© 2014 Pearson Education, Inc. 6 - 51
Process Layout Example
Arrange six departments in a factory to minimize the
material handling costs. Each department is 20 x 20 feet,
and the building is 60 feet long and 40 feet wide.
1. Construct a “from-to matrix”
2. Determine the space requirements
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. Try to improve the layout
6. Prepare a detailed plan
© 2014 Pearson Education, Inc. 6 - 52
Process Layout Example
Number of loads per week
Department Assembly Painting Machine Receiving Shipping Testing
(1) (2) Shop (3) (4) (5) (6)
Assembly (1) 50 100 0 0 20
Painting (2) 30 50 10 0
Machine Shop (3) 20 0 100
Receiving (4) 50 0
Shipping (5) 0
Testing (6)
© 2014 Pearson Education, Inc. 6 - 53
Process Layout Example
Area A Area B Area C
Assembly Painting Machine Shop
Department Department Department
(1) (2) (3)
40’
Receiving Shipping Testing
Department Department Department
(4) (5) (6)
Area D Area
60’E Area F
© 2014 Pearson Education, Inc. 6 - 54
Process Layout Example
Interdepartmental Flow Graph
100
Assembly 50 Painting 30 Machine
(1) (2) Shop (3)
20 20
10
50 100
Receiving Shipping Testing
(4) (5) (6)
50
© 2014 Pearson Education, Inc. 6 - 55
Process Layout Example
n n
Cost = å å X ij C ij
i=1 j=1
Cost = $50 + $200 + $40
(1 and 2) (1 and 3) (1 and 6)
+ $30 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)
+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $570
© 2014 Pearson Education, Inc. 6 - 56
Process Layout Example
Revised Interdepartmental Flow Graph
30
Painting 50 Assembly 100 Machine
(2) (1) Shop (3)
10
20 20 100
50
Receiving Shipping Testing
(4) (5) (6)
50
© 2014 Pearson Education, Inc. 6 - 57
Process Layout Example
Area A Area B Area C
Painting Assembly Machine Shop
Department Department Department
(2) (1) (3)
40’
Receiving Shipping Testing
Department Department Department
(4) (5) (6)
Area D Area
60’E Area F
© 2014 Pearson Education, Inc. 6 - 58
Process Layout Example
n n
Cost = å å X ij C ij
i=1 j=1
Cost = $50 + $100 + $20
(1 and 2) (1 and 3) (1 and 6)
+ $60 + $50 + $10
(2 and 3) (2 and 4) (2 and 5)
+ $40 + $100 + $50
(3 and 4) (3 and 6) (4 and 5)
= $480
© 2014 Pearson Education, Inc. 6 - 59
Computer Software
▶ Graphical approach only ▶ Proplanner analysis
works for small problems ▶ Distance traveled reduced by 38%
▶ Computer programs are
available to solve bigger
problems
► CRAFT
► ALDEP After
Before
► CORELAP
► Factory Flow
► Proplanner
© 2014 Pearson Education, Inc. 6 - 60
Computer Software
▶ Three-dimensional visualization software allows managers to
view possible layouts and assess process, material
handling, efficiency, and safety issues
© 2014 Pearson Education, Inc. 6 - 61
6. 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
© 2014 Pearson Education, Inc. 6 - 62
© 2014 Pearson Education, Inc. 6 - 63
Cellular Layout
Books and
videos
Footwear Sports shop Menswear
Entrance
Perfume
& jewelry
Elevators
Confectionery, newspaper,
magazines and stationery Women’s clothes
Luggage and
gifts
Entrance
© 2014 Pearson Education, Inc. 6 - 64
Advantages of Work Cells
1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished goods
inventories
4. Reduced direct labor cost
5. Heightened sense of employee participation
6. Increased equipment and machinery utilization
7. Reduced investment in machinery and equipment
© 2014 Pearson Education, Inc. 6 - 65
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
© 2014 Pearson Education, Inc. 6 - 66
Work Balance Charts
▶ Used for evaluating operation times in work
cells
▶ Can help identify bottleneck operations
▶ Flexible, cross-trained employees can help
address labor bottlenecks
▶ Machine bottlenecks may require other
approaches
© 2014 Pearson Education, Inc. 6 - 67
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
© 2014 Pearson Education, Inc. 6 - 68
[Link]
[Link]
Improving Layouts Using Work Cells
Material
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.
© 2014 Pearson Education, Inc. 9 - 71
Improving Layouts Using Work Cells
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,
and facilitating inspection
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[Link]
Staffing and Balancing Work Cells
Determine the takt time
Total work time available
Takt time =
Units required
Determine the number
of operators required
Total operation time required
Workers required =
Takt time
© 2014 Pearson Education, Inc. 6 - 74
Staffing Work Cells Example
60
600 Mirrors per day required
Mirror production scheduled for 50
Standard time required
8 hours per day 40
From a work balance chart total
operation time = 140 seconds 30
20
10
0
Assemble Paint Test Label Pack for
shipment
Operations
© 2014 Pearson Education, Inc. 6 - 75
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
= 0.8 min = 48 seconds
Total operation time required
Workers required =
Takt time
= 140 / 48 = 2.92
© 2014 Pearson Education, Inc. 6 - 76
7. Product-Oriented Layout
Organized around products or families of
similar high-volume, low-variety products
1. Volume is adequate for high equipment utilization
2. Product demand is stable enough to justify high
investment in specialized equipment
3. Product is standardized or approaching a phase of
life cycle that justifies investment
4. Supplies of raw materials and components are
adequate and of uniform quality
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[Link]
McDonald’s Assembly Line
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Waiting Waiting
Lecture theatre area area
Blood
Doctor Doctor test
Uniform X-ray Record
issuing personal
area history and
Blood medical
Doctor Doctor test details
X-ray
Blood
Doctor Doctor test
Uniform
store X-ray
© 2014 Pearson Education, Inc. 6 - 81
Product-Oriented Layouts
► Fabrication line
► Builds components on a series of machines
► Machine-paced
► Require mechanical or engineering changes to Both types of lines
balance must be balanced
so that the time to
► Assembly line perform the work
at each station is
► Puts fabricated parts together at a series of the same
workstations
► Paced by work tasks
► Balanced by moving tasks
Product-Oriented Layouts
Advantages Disadvantages
1. Low variable cost per unit 1. High volume is required
2. Low material handling costs 2. Work stoppage at any point ties up
3. Reduced work-in-process the whole operation
inventories 3. Lack of flexibility in product or
4. Easier training and production rates
supervision
5. Rapid throughput
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
© 2014 Pearson Education, Inc. 6 - 84
Wing Component Example
Precedence Data for Wing Component
ASSEMBLY TASK MUST FOLLOW
TASK TIME (MINUTES) TASK LISTED BELOW
A 10 –
B 11 A This means that
C 5 B tasks B and E
cannot be done
D 4 B until task A has
E 11 A been completed
F 3 C, D
G 7 F
H 11 E
I 3 G, H
Total time 65
© 2014 Pearson Education, Inc. 6 - 85
Wing Component Example
Precedence Data for Wing 480 available mins per day
Component
40 units required
TASK MUST 5
ASSEMBLY FOLLOW C
10 11 3 7
TIME TASK LISTED
A B F G
TASK (MINUTES) BELOW 4 3
A 10 – 11
D
11 I
B 11 A E H
C 5 B
D 4 B Production time available per day
E 11 A Units required per day
Cycle time =
F 3 C, D = 480 / 40 = 12 minutes per unit
n
G 7 F
Minimum number of
å Time for task i
H 11 E i=1
workstations =
I 3 G, H Cycle time
Total time 65 = 65 / 12 =5.42, or 6 stations
© 2014 Pearson Education, Inc. 6 - 86
Wing Component Example
Layout Heuristics That May Be Used to Assign Tasks to
Workstations in Assembly-Line Balancing
[Link] task time From the available tasks, choose the task with
the largest (longest) task time
[Link] following tasks From the available tasks, choose the task with
the largest number of following tasks
[Link] positional weight From the available tasks, choose the task for
which the sum of following task times is the
longest
[Link] task time From the available tasks, choose the task with
the shortest task time
[Link] number of following From the available tasks, choose the task with
tasks the least number of subsequent tasks
© 2014 Pearson Education, Inc. 6 - 87
Wing Component Example
480 available mins per day
40 units required
Cycle time = 12 mins
Minimum
= 5.42 or 6
workstations
Station 5
2
C
10 11 3 7
A B F G
4 3
D Station 3
Station 4 I
11 11
Station 6 6
Station
Station
1 E H
Station Station
3 5
© 2014 Pearson Education, Inc. 6 - 88
Wing Component Example
Precedence Data for Wing 5
Component 480 available mins C
per day 10 11 3 7
TASK MUST
ASSEMBLY FOLLOW 40 units required A B F G
4
3
TIME TASK LISTED Cycle time = 12 mins D
TASK (MINUTES) BELOW 11 11 I
Minimum
A 10 – = 5.42 or 6 E H
workstations
B 11 A
C 5 B
D 4 B ∑ Task times
E 11 A Efficiency = (Actual number of workstations) x (Largest cycle time)
F 3 C, D
= 65 minutes / ((6 stations) x (12 minutes))
G 7 F
= 90.3%
H 11 E
I 3 G, H
Total time 65
© 2014 Pearson Education, Inc. 6 - 89
Group Project
Based on the case you have chosen
● Discuss the application of Layout Strategy
Thank You