Operations Management

Layout Strategy

Vasudev Danait
Professor of Practice – Operations and Supply Chain Management
Importance of Layout Strategy
• Layout has implications on
• Capacity
• Processes
• Flexibility
• Cost
• Quality of output
• Customer contact
• Image of the company

• Effective layout can help organisation to achieve a strategy which it wants to follow
• Differentiation
• Low-cost
• Response

Objective of the layout strategy is to develop an effective and efficient layout that will meet
the firm’s competitive requirements

K J Somaiya Institute of Management, India

Importance of Layout Strategy
• Layout design must consider following
• Higher utilisation of space, equipment and people
• Improved flow of information, material and people
• Improved employee morale and safe working conditions
• Improved customer interaction
• Flexibility (Whatever it is now, it can change and we must be able to change it easily)

• Flexibility
• Small (Modular, plug and play)
• Movable (equipment on wheels which can be taken wherever required)
• Flexible ( collapsible partition walls, multipurpose furniture)

K J Somaiya Institute of Management, India

Types of Layout
• Office Layout: positions employees, their
equipment and spaces/offices to provide for
movement of information
• Retail Layout: allocates display space and
responds to customer behaviour
• Warehouse Layout: addresses trade-off
between space and material handling
• Fixed Position Layout: addresses the layout
requirements of large, bulky projects such as
ships and buildings
• Process Oriented Layout: Deals with low
volume, high variety production (also called
job-shop or intermittent production
• Work-cell layout: arranges machinery and
equipment to focus on production of a single
product or group of related products
• Product oriented layout: seeks the best
personnel and machine utilisation in
repetitive or continuous production

K J Somaiya Institute of Management, India

Office Layout
• Office layout require grouping of workers, their equipment and spaces to provide for
comfort, safety and movement of information
• Main emphases is on flow of information
• Considerations
• Proximity: Spaces should bring people together
• Privacy: People must be able to control access to their conversation when required
• Interaction: Non-work interactions should be encouraged
• Departments which need to work closely and arranged next to each [Link] HR and
Finance, Sales and Service, Billing and Collection, HR and Administration etc
• Closed cabins v/s Open cubicles
• Casual Interaction Areas: Coffee machines, pantry, cafeteria, recreation area, breakout area

K J Somaiya Institute of Management, India

Retail Layout
• Objective is to maximise sales and
that too of high margin products
• Strategies
• Locate high volume items on the
periphery of store on the opposite
side (so that customers have to walk
entire store)
• Use prominent or end aisle locations
for high value/high margin products
(Eye level or corner round)
• Distribute frequent purchases on
two ends of the aisle (So customer
needs to walk whole aisle)
• Positioning your Lead off
department or items in the front (
Large LED TVs in the front as soon as
you enter)

Main objective is to maximise profitability per square foot of store space

K J Somaiya Institute of Management, India

Service-scapes
• Though objective of service location is to maximise profit per square foot, there are aspects
of physical surroundings which have profound effect on customer experience
• Ambient Conditions: Lighting, Temperature, Smell, Background soft music makes customer
experience sensual
• Spatial Layout and Functionality: Aisle planning, walkway planning (Width, direction, angle,
height
• Signages, symbols and artifacts

K J Somaiya Institute of Management, India

Warehouse and Storage Layout
• Objective of warehouse layout is to find the optimum trade-off between handling cost and
costs associated with warehouse space
• Maximisation of utilisation of the total “Cube” – Utilise full volume while maintaining low
material handling costs
• Material handling costs are the costs of the material transaction
• This consists of incoming transport, storage and outgoing transport
• These costs include material handling equipment, people, material, supervision, insurance
and depreciation, damage, spillage, theft and obsolescence
• Modern warehouses use ASRS (Automatic Storage and Retrieval Systems and AGV
(Automated Guided vehicles)

K J Somaiya Institute of Management, India

Fixed Position Layout

To improve productivity, concepts of prefabricated components are introduced

Latest development is 3D printing

K J Somaiya Institute of Management, India

Process Oriented Layout
• Process Oriented layout can simultaneously handle wide variety of products or services
• It is most efficient when making products with different requirements or when handling
customers, patients or clients with different needs
• Process oriented layout is typically low volume, high variety strategy discussed earlier
• In this “Job Shop” environment, each product or a small group of products undergoes a
different sequence of operations
• Product or a small order is produced by moving it from one department to another in a
sequence required for manufacturing that product

K J Somaiya Institute of Management, India

 Work Cells
• Work Cells organise people and machines that would ordinarily be dispersed in various job shops into a
group so that they can focus on making a single product or a group of related products. Cellular work
arrangements are used when volume warrants a special arrangement of machinery and equipment. These
work cells are reconfigured as product design changes or volume fluctuates

K J Somaiya Institute of Management, India

 Work Cells (Cellular Layout or Group Technology Layout)
• Work Cells organise people and machines that would ordinarily be dispersed in various job shops into a
group so that they can focus on making a single product or a group of related products. Cellular work
arrangements are used when volume warrants a special arrangement of machinery and equipment. These
work cells are reconfigured as product design changes or volume fluctuates

Machines, Machines, Machines, Machines,

tools and tools and tools and tools and
people people people people

Blade and stand

Grill Manufacturing Cell Motor manufacturing Cell Assembly cell
manufacturing cell

K J Somaiya Institute of Management, India

Work Cells (Cellular Layout or Group Technology Layout)

Group Group Group Group

Technology Technology Technology Technology
Large AC Power Small AC Power Cooling DC Power

Fixed Position Assembly Line Assembly Line

Assembly Line
Layout Can be U Cell Can be U Cell

K J Somaiya Institute of Management, India

Work Cells

Advantages of work cells are

• Reduced WIP because principle used is One-Piece-Flow
• Less Floor Space required because less WIP between two machines
• Reduced RM and FG because less WIP allows more rapid movement of material through
cells
• Reduced direct labour cost because improved communication among employees, better
material flow and improved scheduling
• Heightened sense of employee participation in the manufacturing of the product.
Employees are accountable for quality because down stream employee can detect defect
and stop the line
• Increased equipment and machinery utilisation because of better scheduling and faster
material flow
• Reduced investment in machinery and equipment because good utilisation reduces the
number of machines and the equipment and tooling

K J Somaiya Institute of Management, India

Requirements for Work Cells

• Identification of families of products (e.g. laptops, desktops, servers or different types of wall
clocks, different toys
• High level of training, flexibility and empowerment of employees
• Being self-contained with its own equipment and resources
• Poke-Yoke (Mistake proofing) at each station in cell

Advantages of work cells

• Inspection is immediate
• Fewer workers are needed
• Workers can access all areas in a cell
• Work area can be more efficiently balanced
• Communication is enhanced

K J Somaiya Institute of Management, India

Takt Time - Definition
Let’s take a look a takt time.
Takt means beat- think of pace of production. We want to match production to the pace of
sales.

Takt Time
German Word for meter or beat

Takt = Ta = Time Available

D Customer Demand
Customer demand rate synchronises the pace of production to the pace of sales
Takt is available time to make the product divided by customer demand. Often, we can
produce more than our customers need. This would result in excess inventory and would
increased costs.
Takt time is often confused with cycle time. Cycle time is how long it takes to manufacture or
complete the product or process, so it is focused solely on manufacturing capabilities and not
customer demand. The goal is for cycle time to be at or faster than customer demand.

Takt time is NOT the time to manufacture the product

K J Somaiya Institute of Management, India

Takt Time - Calculation

Example
Let’s do a quick calculation. We need to know 2 things:
How much time is available to make the product?
1 shift? 2 shifts? Don’t forget to take out time for lunches and breaks.
For this example, we have 1 shift daily (8 hours) and we subtract lunch and breaks. Giving
us a net available time of 430 mins.
What is the demand?
Often this comes from scheduling or production control.
In this example, the customer demand is 400 units in one shift.

Calculation
Ta = 8 hr shift, minus 30 minutes for lunch, minus 2, 10 min. breaks
= (8 x 60)-30-20 = 430 mins of available time to work in the shift.
Customer Demand = 400 units in one shift.
Takt = T = 430/400 = 1.1 mins/unit

K J Somaiya Institute of Management, India

Takt Time - Calculation

Non-Manufacturing Example
Here is another example.

Call center handles 200,000 inbound calls per year. This would be the customer demand.
200,000 calls / 52 work weeks = 3846 calls / week
3846 calls per week / 7 days = 549 / day
Available Time = 9 hours (540 minutes) – 120 minutes (down time) = 420 mins per shift
T = 420 mins / 549 calls per day = 0.77 minutes
Takt Time = 46.2 seconds

The call center must answer a call every 46.2 seconds to answer 200,000 calls per year

K J Somaiya Institute of Management, India

Staffing and balancing work cells

• Once the work cell has been established

• Equipment has to be located in proper sequence
• Staff it
• Balance it
• Steps in balancing
• Determine takt time
• Determine number of workers required
• Workers required = Total Operation Time / Takt Time

K J Somaiya Institute of Management, India

Staffing and balancing work cells - Example

• Company making automobile mirrors has demand of 600 mirrors per day. Work shift is of 8
hours
• Mirror making has following operations
• Assembly – 50 seconds
• Painting – 45 seconds
• Testing – 10 seconds
• Labelling – 20 seconds
• Shipping – 15 seconds

• Takt Time = (8 hrs x 60 minutes)/600 = 48 seconds.

• Every 48 seconds, one mirror must be produced
• Number of workers = ( 50+45+10+20+15)/48 = 140/48 = 2.92 rounded off to always higher
number. In this case 3

K J Somaiya Institute of Management, India

Repetitive and Product Oriented Layout
• Product oriented layout are organised around products or families of similar high volume
low variety products.
• Repetitive production and continuous production use Product Layouts.
• Assumptions are
• Volume is adequate for high equipment utilisation
• Product demand is stable enough to justify high investment in specialised
equipment
• Product is standardised
• Supplies of RM and components are adequate and of uniform quality (standardised)
to ensure they will work with specialised equipment
• Two types of product oriented layouts are
• Fabrication – builds the components
• Assembly Line – assembles them together to build a subassembly or final product

• In both cases line must be balanced

K J Somaiya Institute of Management, India

Assembly Line Balancing

• Line balancing is usually undertaken to minimise imbalance between machines or

personnel while meeting a required output from the line
• To produce at a specified rate, management must know the tools, equipment and work
methods used
• Time requirement for each task ( assembly, cutting , bending, painting, packing, shipping
etc) must be determined
• We have to know precedence relationship between the activities ie the sequence in which
various tasks must be performed

K J Somaiya Institute of Management, India

Summary of Formulae

• Takt Time = Total work time available

Customer Demand

• Cycle Time to be achieved = Max time allowed at each workstation = Takt Time

• Min workstations = ∑ Time for each task

Cycle Time

• Efficiency = _____________∑ Task Times_______________________

Actual workstations x Largest Assigned Cycle Time

K J Somaiya Institute of Management, India

Assembly Line Balancing Example

Task Assembly Time Precedence

A 10 -
B 11 A
C 5 B
D 4 B
E 11 A
F 3 C,D
G 7 F
H 11 E
I 3 G,H
Total Time 65

K J Somaiya Institute of Management, India

Assembly Line Balancing Example Task
A
Assembly Time
10
Precedence
-
B 11 A
C 5 B
D 4 B
E 11 A
F 3 C,D
G 7 F
H 11 E
I 3 G,H
Total Time 65

A B C F G
10 11 5 3 7

I
D 3
4

E H
11 11

K J Somaiya Institute of Management, India

Assembly Line Balancing Example Task
A
Assembly Time
10
Precedence
-
B 11 A
Cycle Time for each station = Production Time available
C 5 B
D 4 B
Units required per day
E 11 A
F 3 C,D
Assume Demand = 40 per day
G 7 F
Production time = 8 hrs = 480 minutes per day
H 11 E
I 3 G,H
Cycle Time for each station = 480/40 = 12 minutes
Total Time 65

A B C F G
10 11 5 3 7

I
D 3
4

E H
11 11

K J Somaiya Institute of Management, India

Assembly Line Balancing Example Task
A
Assembly Time
10
Precedence
-
B 11 A
Minimum number of workstations = ∑ Time for each Task C 5 B
D 4 B
Cycle Time = 65/12 = 5.42 = 6 (Always rounded off to higher one) E 11 A
F 3 C,D
G 7 F
H 11 E
I 3 G,H
Total Time 65

A B C F G
10 11 5 3 7

I
D 3
4

E H
11 11

K J Somaiya Institute of Management, India

 Task Assembly Time Precedence

Assembly Line Balancing Example A 10 -

B 11 A
Methods to assign tasks to workstation
C 5 B
1. From the available tasks, choose the task with the longest time
D 4 B
2. From the available tasks, choose the task with largest number of
E 11 A
dependencies
F 3 C,D
3. From the available tasks, choose the task which gives longest
G 7 F
total remaining path
H 11 E
4. From the available tasks, choose the task with the shortest time
I 3 G,H
5. From the available tasks, choose the task with least number of
Total Time 65
dependencies

A B C F G
10 11 5 3 7

I
D 3
4
Station 3 Station 6

Station 1 Station 2 E H
11 11

Station 4 Station 5
K J Somaiya Institute of Management, India
 Task Assembly Time Worker Utilisation

Assembly Line Balancing Example A 10 1 10/12 = 83%

Line Efficiency = ∑ Task Time B 11 2 11/12 = 92%

(Actual number of workstations) x (Largest assigned cycle time) C 5 3

12/12 = 100%
D 4

= 65/(6 x 12) = 65/72 = 90.3% F 3

E 11 4 11/12 = 92%

If we add 7th workstation (for some reason) line efficiency will drop G 7
6 10/12 = 83%
down to 65/84 = 77.4% I 3
H 11 5 11/12 = 92%
Total Time 65 90.3%

A B C F G
10 11 5 3 7

I
D 3
4
Station 3 Station 6

Station 1 Station 2 E H
11 11

Station 4 Station 5
K J Somaiya Institute of Management, India
Summary of Formulae
• Takt Time = Total work time available
Customer Demand

• Cycle Time to be achieved = Max time allowed at each workstation = Takt Time

• Min workstations = ∑ Time for each task

Cycle Time

• Efficiency = _____________∑ Task Times_______________________

Actual workstations x Largest Assigned Cycle Time

K J Somaiya Institute of Management, India

Thank You
[Link]

K J Somaiya Institute of Management, India 38