Location Strategies (Facility or Lay out planning and analysis)

• Introduction to Location Planning

• Location Planning Process
• Layout Planning and Objectives
• Why Layout decisions are important?
• Basis for Types of Layouts

I. Introduction to Location Planning

Layout planning is deciding on the best physical arrangement of
all resources that consume space within a facility. These resources
might include a desk, a work center, a cabinet, a person, an entire
office, or even a department. Decisions about the arrangement of
resources in a business are not made only when a new facility is being
designed; they are made any time there is a change in the
arrangement of resources, such as a new worker being added, a
machine being moved, or a change in procedure being implemented.
Also, layout planning is performed any time there is an expansion in
the facility or a space reduction.
The arrangement of resources in a facility can significantly affect
the productivity of a business. A lot of wasted time, energy, and
confusion can result from a poor layout. There are also other reasons
layout planning is important. In many work environments, such as
office settings, face-to-face interaction between workers is important.
Proper layout planning can be critical in building good working
relationships, increasing the flow of information, and improving
communication. Similarly, in retail organizations layout can affect
sales by promoting visibility of key items and contributing to customer
satisfaction and convenience. Layout planning affects many areas of a
business, and its importance should not be underestimated.

Layout Planning
The term 'layout planning' can be applied at various levels of planning.
 Plant location planning (where you are concerned with location
of a factory or a warehouse or other facility.) This is of some
importance in design of multinationally cooperating, Global-
supply Chain systems.
 Department location Planning: This deals with the location of
different departments or sections within a plant/factory. This is
the problem we shall study in a little more detail, below.
 Machine location problems: which deal with the location of
separate machine tools, desks, offices, and other facilities within
each cell or department.
 Detailed planning: The final stage of a facility planning is the
generation, using CAD tools or detailed engineering drawings, of
scaled models of the entire floor plans, including details such as
the location of power supplies, cabling for computer networks
and phone lines, etc.
 The Department Location Problem: A department is defined as
any single, large resource, with a well defined set of operations,
and fixed material entry and exit points. Examples range from a
 large machine tool, or a design department. The aim is to
develop a BLOCK PLAN showing the relative locations of the
departments.

II. Location Planning Process

Designing a facility layout is a systematic process that involves
several key steps.

1. Process Flow Chart

Create a process flow chart to understand the sequence of operations
and material flow in the facility. Identify key processes, decision
points, and material handling requirements.
2. Document Material/Work Flow
Document the material and work flow based on the process flow chart.
Consider how materials move through different stages of production
and identify points where work is performed.
3. Decide on Type of Layout
Based on the nature of operations, choose the most suitable type of
layout (e.g., product layout, process layout, or a hybrid layout).
Consider factors such as production volume, product variety, and
flexibility requirements.
 4. Finalize Arrangement Shape
Determine the overall shape of the layout, considering options such as
straight-line, U-shaped, S-shaped, convoluted, or 3-D layouts. Choose
a layout shape that aligns with the flow of materials and processes.
5. Determine Proximity Requirements
Identify the optimal proximity of workstations and departments based
on the nature of interactions and material flow. Consider factors like
communication needs, equipment sharing, and material handoffs.
6. Draw Final Layout
Draw the final layout incorporating the chosen type and shape,
ensuring it reflects the optimized material flow and work processes.
Include details such as equipment placement, workstations, storage
areas, and pathways.
7. Verify Layout Design Requirements
Ensure that the finalized layout meets design requirements, including
efficiency, flexibility, and safety. Verify that the layout supports the
overall goals and objectives of the organization.
Example
Let's consider the design of a manufacturing facility for electronic
devices. The process flow includes stages of assembly, testing, and
packaging.
1. Process Flow Chart
Identify key stages: Component Assembly → Testing → Packaging.
2. Document Material/Work Flow
Document the movement of electronic components through assembly
stations, testing stations, and the packaging area.
3. Decide on Type of Layout
Choose a hybrid layout to accommodate both assembly line
processes and specialized testing and packaging areas.
4. Finalize Arrangement Shape
Opt for an S-shaped layout to facilitate a sequential flow from
assembly through testing and packaging.
5. Determine Proximity Requirements
Place assembly stations close to each other for efficient material flow.
Ensure proximity between testing and assembly for quick feedback
and adjustments.
6. Draw Final Layout
Draw an S-shaped layout with assembly workstations on one side,
testing stations in the middle, and packaging on the other side.
7. Verify Layout Design Requirements
Ensure the layout supports efficient production, allows for changes in
product configurations, and provides a safe and organized work
environment.
By following these steps, the facility layout is designed to optimize the
production process for electronic devices, balancing efficiency,
flexibility, and overall operational goals.

III. Layout Planning and Objectives

IV. Why Layout decisions are important?
 Layout planning involves decisions regarding following aspects:

 Determining type of centers: depends on type of jobs involved in

production of a good or service. For instance, a motorcycle service
station should include specific service center for each motorcycle, tool
station for each unit and a common tool center used by all the units. It
should not include sitting space either for workers or for customers as
it would hinder working and decrease productivity. Similarly, a barber
shop includes economic centers i.e. centers which occupy space like
sitting chair for customer, space for movement of workers, common
and special storage space for tools and a waiting area.
 Determining space and capacity for each center: is very important for
uninterrupted and unhindered movement of man and material. For
instance, in motorcycle service station and barber shop example,
there should be sufficient space in between each service center as
every one of them is an independent economic center so workers or
employees engaged in activities at these centers should have enough
space to carry their activity unhindered. On other hand, in some
service centers such as banks and retail stores where movement of
customers is part of production process the layout design should
involve space for movement of customers as well.
 Placement of different service centers: An educational institution has
various economic centers in the form of teaching and non-teaching
departments, library centre, canteens and hostels. The placement of
each service centre in relation to each other is an important aspect of
layout planning. Library should be placed near to teaching
departments but away from canteen and similar decisions have to be
considered. In this context, placement of centers has two
aspects: relative location i.e. a particular space that a centre occupies
relative to other centers and absolute location i.e. particular space that
a center occupies within a facility. This concept has been illustrated in
educational institution example. Such institution might have numerous
departments. For instance departments related to social sciences are
grouped in one center whereas departments relating to sciences to
some other centre. Relative location of canteen w.r.t. teaching
departments should be such that it does not disturb teaching function.

V. Basis for Types of Layouts

A. PROCESS LAYOUT
A company would adopt a process layout for its operations if it is
involved in manufacturing of low- volume, high variety category of
products. A process layout groups workstations or departments
according to function. For example, in a retail store all grocery
functions are arranged at one place and not segregated. Most of
service organizations such as banking, retail stores, apparel stores,
wedding dinner etc. adopt process layout. These organizations
provide variety of services and volume of each kind of service is small.
Demand levels for one particular kind of product or service is too low.
 Thus management does not have inclination to allocate dedicated
human or capital resources.

Process Layout Example

Commonly found process layout examples are restaurants, clothing
factories, toy manufacturers, and consumer technology plants.
This is a list breaking down the restaurant process layout example
further:

1. Ingredient storage is located in a centralized area of the store.

2. Employees that are responsible for taking customer orders are at
the front of the store.
3. Once the order is received, the order is dispatched to the proper
kitchen staff.
4. The kitchen staff then pulls the ingredients from storage and
prepares food.
5. Once the food is prepared, the delivery staff (waiters) deliver the
meal to the customer.

Specifically, following are the characteristics of a process layout:

 Volume of product or service produced is low.

 Variety of product or service produced is high.
 General purpose equipment which can perform variety of operations is
generally used.
 Layout is flexible as it is less vulnerable to change in product mix. In a
process layout same resources can be used to produce different
products or services. For example, in retail store grocery department
 can be replaced by any other department without hindering activities
of other departments.
 Equipment utilization is higher as same resource is utilized for
production of different products. As demand for one type of product
is low so when one machine gets free from producing that product it
can be used to manufacture other products.
 Employee skill set is varied and high. For example, in a bank an
employee can be used to provide different services. Same employee
can be used for cash deposit and also for creating fixed deposits
depending on the demand of each kind of service. Thus, skill set of
employees’ increases as they become proficient in carrying out
different services.

A process layout comes with following disadvantages:

 Productive time is lost in changing resources for production of different

products or services. For example, suppose a general purpose
machine has a capacity of producing 1000 units in an 8 hr. shift.
Company gets an order of manufacturing 400 units of product A and
600 units of product B. Now the machine might not be able to produce
all 1000 units in specified time of 8 hr. shift. Some productive time
might be lost in changing or setting the machine for production of
product B after manufacturing product A.
 The flow of resources is jumbled making movement of material
handling equipment costly and time consuming. For example, a
 customer ‘A’ visiting a retail store whose layout is shown in 16.3.1.1
might follow a path of kids ——- grocery —– books (as shown in red
color arrows) and then exit whereas another customer ‘B’ might follow
apparels —– vegetables ——– books —— (as shown in green color
arrows) and then exit. The point is every customer might follow
different paths thus making movement of man and handling material
(in this case carts) jumbled. This can also lead to obstruction as
customers might find movement hindered making movement as time
consuming process.

 More skilled labor is required resulting in higher cost as employees

are engaged in different activities. For example, Indian IT industry
works on projects. IT companies get projects from all type of sectors
like banking, automobile, finance etc. so employees of such
companies need to have varied skill set to work on different projects.
 Time gap or lag in production is higher. Because of loss of productive
time in changeover of machines and labor processing rate tends to be
slower leading in loss of production.
 Work in progress inventory is high needing greater storage space.
Process layout is based on features of batch shop production system
which asks for general purpose machines i.e. same machine is used
to produce variety of products. So, if a machine is processing raw
material into finished good of one kind of product then raw material of
other product has to wait for processing. This causes increase in work
in process inventory occupying essential storage space.
 Designing of Process Layout

Thus, to meet the challenges of process layout following are few

aspects that need to consider in designing of work centers based on
process layout:

 The distance between departments should be as short as possible for

avoiding long distance movement of materials
 The departments should be in sequence of operations
 The arrangement should be convenient for inspection and supervision.

B. Product Layout / (assembly lines layout)

A firm would adopt a product layout for its operations if manufacturing
of its products is based on mass production system. Such a system is
characterized by high volume and very low variety of products. As
high volume of products is required so operations are continuous and
repetitive. Car assembly, car washing, computer manufacturing and
other manufacturing operations predominantly use product layout. It is
important to emphasize that services predominantly use batch
production system and thus inclined to adopt process layout for its
operations whereas manufacturing firms use mass production system
and so adopt product layout for its operations.
In this type of layout, machines and auxiliary services are located
according to the processing sequence of the product. If the volume of
production of one or more products is large, the facilities can be
 arranged to achieve efficient flow of materials and lower cost per unit.
Special purpose machines are used which perform the required
function quickly and reliably.

Specifically, following are the characteristics of a product layout:

 Product layout involves production of high volume and low-variety of

goods.
 Equipment required to manufacture such high quantities are
specialized in nature. Such machinery is equipped to perform only one
kind of operation at a very fast rate. For instance in car washing
example as shown in Fig. 16.3.2.1 one machine is equipped to
perform only one kind of job i.e. machine 1 can perform washing,
machine 2 is for rinsing and machine 3 is for drying operation. No
machine can replicate the job of other machine.

 Productive time is not lost in changing operations. As only one kind of

product is produced so machines or other resources are dedicated for
only one kind of job. There is no need to stop operations of a
 particular machine for changeover resulting in high production and
almost nil wastage of production time.
 Flow of products is streamline and not jumbled as was in process
layout. As machines are arranged in a sequence depending on the
process of production so all the raw material would flow according to a
set flow. This results in a very streamlined flow of material. For
instance, in car washing example all cars would move according to the
process i.e. washing—–rinsing—–drying. No car can skip or change
the flow of operation.
 Work in progress inventory is low so there is no wastage of storage
space. Dedication of resources in a particular flow determines which
machine, material and labor is required for which operation. So,
material keeps on moving on a conveyor belt from one operation to
other without stopping in between the machines.
 Employee skill set is most of the time low and entails lower costs as
compared to employees involved in batch shop production system. An
employee is required to operate only one kind of machine or he/she
indulges in very few types of operations thus, limiting his/her skill set.
But as he/she is involved in doing one kind of job repetitively so
he/she becomes proficient in that job. Also time taken to carry out that
job would be less as worker has become efficient in performing such a
job. This is required in product layout as high volume of units needs to
be produced which asks for efficient operations at less time.
 Material handling cost is also low in product layout.
 A product layout comes with following disadvantages:

 Layout is fixed. Product layout is also called as assembly line layout

as machines are arranged in a sequential format. The format is
dictated by the process of production. In car washing example, rinsing
cannot be carried out before washing so resources for rinsing would
only be placed and used after washing operation. Thus a product
layout is not flexible to changes.
 Equipment utilization is low as compared to process layout. In a
product layout which is based on mass production system special
purpose machines are installed to manufacture very few types of
products. So, if demand for such products falls then these resources
cannot be utilized to manufacture or produce other products. Also, if
one machine goes out of order then it would affect entire assembly
line. For example, if machine operating rinsing function breaks down
then drying machine cannot operate its operation as no car would
reach its work centre.
 Equipment used is capital intensive i.e. cost of special purpose
equipment is very high. To fulfill high demand production rate has to
be very high so special purpose machines are used in mass
production system. To incur such huge costs machines and other
resources need to run continuously resulting in lower per unit cost of
product. Whereas in process layout which is governed by batch
production system general purpose machines produce at low volumes
thus, increasing cost of services being delivered.

C. HYBRID LAYOUT

Some processes calls for combination of both product and process

layouts. Some activities are processed b y using characteristics of
product layout and some are carried out by using features of process
layout. Assembly lines are good example of hybrid layout. In car
assembly products are assembled using product layout. Machines are
arranged in a sequence wherein each car moves along a designated
process flow. At the end of assembly line final product manufactured
in similar or sometimes almost identical. But painting of cars is done in
batches. Different cars might be of different colors. So, painting
operations involve process layout whereas assembly operations
require product layout
 Another illustration is comparison of food arrangements in a
dine-in restaurant and that of fast food restaurant. In a dine-in
restaurant each family or group of individuals might ask for
different meals. Thus, such a restaurant provides high variety of
goods at low volumes. Whereas a fast food restaurant has to
provide high volume of goods at low variety as majority of
customers asks for similar kind of products. With increasing
competition some restaurant are providing both kind of services.
In such cases these restaurants adopt hybrid layout. High variety
 and low demand products can be produced by using process
layout whereas high demand, low variety goods can be produced
by using product layout.

D. FIXED POSITION LAYOUT

In process and product layout product used to move from one

machine to another. All resources such as labor, tools and machinery
used to be fixed. But in cases of production of heavy products such as
aircraft, ships etc. it is the product which is fixed and all resources
such as labor, tools and machinery moves towards the product. Fixed
position layout is the only possible option in cases of manufacturing of
such heavy products.