LAYOUT STRATEGIES

Chapter 9
LEARNING OBJECTIVES

• Discuss important issues in office layout

• Define the objectives of retail layout
• Discuss modern warehouse management and terms such
as ASRS, cross-docking, and random stocking Identify
when fixed-position layouts are appropriate
• Explain how to achieve a good process-oriented facility
layout
• Define work cell and the requirements of a work cell
• Define product-oriented layout
• Explain how to balance production flow in a repetitive or
product-oriented facility
Layout

Layout is one of the key

decisions that determines
the long-run efficiency of
operations.
 Layout has strategic implications because it
establishes an organization’s competitive
priori- ties in regard to capacity, processes,
flexibility, and cost, as well as quality of
work life, customer contact, and image. An
effective layout can help an organization
The Strategic Importance achieve a strategy that supports
of Layout Decisions differentiation, low cost, or response.‘
The objective of layout strategy is to develop
an effective and efficient layout that will
meet the firm’s competitive requirements
• Indoor seating (1950s)
• Drive-through windows (1970s)
• Adding breakfasts to the menu
(1980s)
• Adding play areas (late 1980s)
• New redesign of the kitchens
(1990s)
• A new food ordering layout: the
self-service kiosk (2000s)
• Redesigning all 30,000 eateries
around the globe to take on a 21st-
century look (2010s)
 • Higher utilization of space,
equipment, and people
• Improved flow of information,
materials, and people
• Improved employee morale
Layout design must and safer working conditions
consider how to achieve • Improved customer/client
interaction
the following: • Flexibility (whatever the
layout is now, it will need to
change)
Types of Layout
Layout decisions include the best
placement of machines (in production
settings), offices and desks (in office
settings), or service centers (in settings
such as hospitals or department stores). An
effective layout facilitates the flow of
materials, people, and information within
and between areas. To achieve these
objectives, a variety of approaches has
been developed.
Types of Layout
 Good layout requires determining the
following:
• Material handling equipment
• Capacity and space requirements
• Environment and aesthetics
• Flows of information
Types of Layout • Cost of moving between various
work areas
 Managers must decide about
equipment to be used, including
Material handling conveyors, cranes, automated
equipment storage and retrieval systems, and
automatic carts to deliver and store
material.
 Only when personnel, machines, and
equipment requirements are known can
managers proceed with layout and
provide space for each component. In
the case of office work, operations
Capacity and space managers must make judgments about
the space requirements for each
requirements
employee. They must also consider
allowances for requirements that
address safety, noise, dust, fumes,
temperature, and space around
equipment and machines.
 Layout concerns often require
decisions about windows, planters,
Environment and and height of partitions to facilitate
aesthetics air flow, reduce noise, and provide
privacy.
 Communication is important to any
organization and must be facilitated by
the layout. This issue may require
decisions about proximity, as well as
Flows of information decisions about open spaces versus half-
height dividers versus private offices.
 There may be unique
considerations related to moving
materials or to the importance of
Cost of moving
having certain areas next to each
between various work
other. For example, moving molten
areas
steel is more difficult than moving
cold steel.
Office Layout

It requires the grouping of workers,

their equipment, and spaces to provide
for comfort, safety, and movement of
information. The main distinction of
office layouts is the importance placed
on the flow of information. Office
layouts are in constant flux as the
technological changes sweeping
society alter the way offices function.
Office Layout
Even though the movement of
information is increasingly electronic,
analysis of office layouts still requires a
task-based approach. Managers
therefore examine both electronic and
conventional communication patterns,
separation needs, and other conditions
affecting employee effectiveness. A
useful tool for such an analysis is the
relationship chart (also called as
Muther Grid)
 Richard Muther developed a format for
displaying manager preferences for
departmental locations, known as
Muther's grid. The preference
Muther Grid information is coded into six categories
associated with the five vowels, A, E, I,
O, and U, plus the letter X.
Office Layout

Workspace can inspire informal and productive encounters if it balances

three physical and social aspects.

Proximity : Spaces should naturally bring people together.

Privacy : People must be able to control access to their conversations.

Permission : The culture should signal that nonwork interactions are

encouraged.
 Office Layout

We need to take note that there are two major trends. First, technology, such
as smart phones, scanners, the Internet, laptop computers, and tablets, allows
increasing layout flexibility by moving information electronically and allowing
employees to work offsite. Second, modern firms create dynamic needs for
space and services.
 Retail Layout

Are based on the idea that sales and profitability vary directly with customer
exposure to products. Thus, most retail operations managers try to expose
customers to as many products as possible. Studies do show that the greater
the rate of exposure, the greater the sales and the higher the return on
investment. The operations manager can change exposure with store
arrangement and the allocation of space to various products within that
arrangement.
Example of Retail Layout
 Five ideas that are helpful for determining the overall
arrangements of many stores

1. Locate the high-draw items around the periphery of the store. Thus, we
tend to find dairy products on one side of a supermarket and bread and
bakery products on another.
2. Use prominent locations for high-impulse and high-margin items. Best
Buy puts fast growing, high-margin digital goods—such as cameras and
printers in the front and center of its stores.
3. Distribute what are known in the trade as “power items” items that may
dominate a purchasing trip to both sides of an aisle, and disperse them to
increase the viewing of other items.
 Five ideas that are helpful for determining the overall
arrangements of many stores

4. Use end-aisle locations because they have a very high exposure rate.

5. Convey the mission of the store by carefully selecting the position of the
lead-off department. For instance, if prepared foods are part of a
supermarket’s mission, position the bakery and deli up front to appeal to
convenience-oriented customers. Walmart’s push to increase sales of clothes
means those departments are in broad view upon entering a store .
 Retail Layout

Once the overall layout of a retail store has been decided, products need to be
arranged for sale. Many considerations go into this arrangement. However, the
main objective of retail layout is to maximize profitability per square foot of
floor space (or, in some stores, on linear foot of shelf space).
 A controversial issue in retail layout is
called slotting. Slotting fees are fees
manufacturers pay to get their goods on
the shelf in a retail store or supermarket
chain. The result of massive new-
Slotting fees product introductions, retailers can now
demand up to $25,000 to place an item
in their chain.
 Although a major goal of retail layout
is to maximize profit through
product exposure, there are other
aspects of the service that managers
consider. The term servicescape
describes the physical surroundings
in which the service is delivered and
Servicescapes
how the surroundings have a
humanistic effect on customers and
employees. To provide a good
service layout, a firm considers
three elements.
 Three Elements to provide good service layout

1. Ambient conditions , which are background characteristics such as lighting,

sound, smell, and temperature. All these affect workers and customers and
can affect how much is spent and how long a person stays in the building.

2. Spatial layout and functionality , which involve customer circulation path

planning, aisle characteristics (such as width, direction, angle, and shelf
spacing), and product grouping.

3. Signs, symbols, and artifacts , which are characteristics of building design

that carry social significance (such as carpeted areas of a department store
that encourage shoppers to slowdown and browse).
 Warehouse and Storage Layouts

A design that attempts to minimize total

cost by addressing trade-offs between
space and material handling.
 Avoiding the placement of
materials or supplies in
storage
Cross-docking by processing them as they
are
received for shipment.
 Used in warehousing to locate stock
wherever there is an open location.
Although cross-docking reduces
product handling, inventory, and
facility costs,
Random stocking
it requires both (1) tight scheduling
and (2) accurate inbound product
identification.
 Using warehousing to add
value to a product through
component modification,
repair, labeling, and
Customizing packaging.
 Fixed-position layout

A system that addresses the layout

requirements of stationary projects.
 A work cell reorganizes people and machines
that would ordinarily be dispersed in
various departments 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
Work Cell machinery and equipment. These work cells
are reconfigured as product designs change
or volume fluctuates.
 The advantages of work cells are:

• Reduced work-in-process inventory because the work cell is set up to provide one-piece flow from machine
to machine
• Less floor space required because less space is needed between machines to accommodate work-in-
process inventory
• Reduced raw material and finished goods inventories because less work-in-process allows more rapid
movement of materials through the work cell.
• Reduced direct labor cost because of improved communication among employees, better material flow, and
improved scheduling.
• Heightened sense of employee participation in the organization and the product: employees accept the
added responsibility of product quality because it is directly associated with them and their work cell.
• Increased equipment and machinery utilization because of better scheduling and faster material flow.
• Reduced investment in machinery and equipment because good utilization reduces the number of machines
and the amount of equipment and tooling.
 ◆ A high level of training, flexibility, and
empowerment of employees
Requirements of Work ◆ Being self-contained, with its own
Cells equipment and resources
◆ Testing (poka-yoke) at each station in
the cell
Example of Work Cell

Work cells have at least five advantages over

assembly lines and focused process facilities:
(1) because tasks are grouped, inspection is often
immediate;
(2) fewer workers are needed;
(3) workers can reach more of the work area;
(4) the work area can be more efficiently balanced;
and
(5) communication is enhanced.
Work cells are sometimes organized in a U shape, as
shown on the figure
 Once the work cell has the appropriate
equipment located in the proper
Staffing and Balancing sequence, the next task is to staff and
Work Cells balance the cell. Efficient production in
a work cell requires appropriate
staffing.
This involves two steps.

First, determine the takt time, which is Takt time = Total work time
the pace (frequency) of production units available/Units required to satisfy
necessary (time per unit) to meet customer demand
customer orders:

Second, determine the number of Workers required = Total operation time

operators required. This requires required/Takt time
dividing the total operation
time in the work cell by the takt time:
 A focused work center (also called a “plant
within a plant”) moves production to a
large work cell that remains part of the
present facility.

The Focused Work Center and

the Focused Factory

If the focused work center is in a separate

facility, it is often called a focused factory
 Product-oriented layouts are organized
Repetitive and Product-Oriented around products or families of similar
Layout high-volume,low-variety products.
 Two Types of Product-Oriented Layout

• fabrication line - builds components,

• assembly line - puts the fabricated parts together at a series of workstations.

 To balanced the time spent to work on
Objective of Repetitive one station must be equal or
and Product-Oriented Balanced the time spent to perform
work on next station
Layout
 Line balancing is usually undertaken to minimize
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. Then the
time requirements for each assembly task (e.g.,
drilling a hole, tightening a nut, or spray-painting a
part) must be determined. Management also needs
to know the precedence relationship among the
activities that is, the sequence in which various tasks
Line Balancing must be performed. Example 3 shows how to turn
these task data into a precedence diagram.
Example:
There are two measures of effectiveness of a balance assignment. The first measure com-
putes the efficiency of a line balance by dividing the total task times by the product of
the number of workstations required times the assigned (actual) cycle time of the longest
workstation:
Operations managers compare different levels of efficiency for various numbers of work-
stations. In this way, a firm can determine the sensitivity of the line to changes in the produc-
tion rate and workstation assignments.
The second measure computes the idle time for the line.