Facilty Layout

1. Facilty Layout Dr. Ron Tibben-Lembke

2. Layout Types • Project or Fixed-position layout • Process-oriented layout • Product-oriented layout • Office layout • Warehouse layout • Retail/service layout

3. Project or Fixed-Position • Design is for stationary project • Workers & equipment come to site • Complicating factors • Limited space at site • Changing material needs • Examples • Ship building • Highway construction

4. Process-Oriented Layout • Design places departments with large flows of material or people together • Dept. areas have similar processes • e.g., All x-ray machines in same area • Used with process-focused processes • Examples • Hospitals • Machine shops

5. Process-Oriented Layout Office Table Saws © 1995 Corel Corp. Drill Presses Tool Room © 1995 Corel Corp.

6. Process Layout + Allows specialization - focus on one skill + Allows economies of scale - worker can watch several machines at once + High level of product flexibility -- Encourages large lot sizes -- Difficult to incorporate into JIT -- Makes cross-training difficult

7. Process-Oriented Layout Steps • Construct ‘from-to-matrix’ • Determine space needs for each dept. • Develop initial schematic diagram • Determine layout cost, Xij•Cij • By trial-and-error, improve initial layout • Prepare detailed plan • Includes factors besides cost

8. Process-Oriented Example You work in facilities engineering. You want to find the cost of this layout. The cost of moving 1 load between adjacent dept. is $1. The cost between nonadjacent dept. is $2. Dept. 1 Dept. 2 Dept. 3 40 ft. Dept. 4 Dept. 5 Dept. 6 60 ft. There are 6! or 720 possibilities! Clearly, we can’t look at them all.

9. From-to-Matrix Department 1 2 3 4 5 6 1 2 3 Dept. Number of Trips 4 5 6

10. Schematic Diagram & Cost Dept. Dept. Cost1 3 $ 200 1 2 $ 50 1 6 $ 40 4 2 $ 50 4 3 $ 40 4 5 $ 50 2 5 $ 10 2 3 $ 30 3 6 $ 100 100 30 50 1 2 3 10 20 50 100 20 4 5 6 Total Cost $570 50

11. Schematic Diagram & Cost Dept. Dept. Cost1 2 $ 50 1 3 $ 100 1 6 $ 20 4 2 $ 50 4 3 $ 40 4 5 $ 50 2 5 $ 10 2 3 $ 60 3 6 $ 100 30 100 50 2 1 3 10 50 100 20 20 4 5 6 50 Total Cost $480

12. Product-Oriented Layout • Facility organized around product • Design minimizes line imbalance • Delay between work stations • Types: Fabrication line; assembly line • Examples • Auto assembly line • Brewery • Paper manufacturing.

13. Cellular Layout (Work Cells) • Special case of process-oriented layout • Consists of different machines brought together to make a product • May be temporary or permanent • Example: Assembly line set up to produce 3000 identical parts in a job shop

14. Work Cell Floor Plan Saws Drills Office Work Cell Tool Room

15. Work Cell Advantages Reduces: Inventory Floor space Direct labor costs Increases: Equipment utilization Employee participation Quality

16. Work Cell Layout + Facilitates cross-training + Can easily adjust production volumes + Easy to incorporate into JIT -- Requires higher volumes to justify -- May require more capital for equipment

17. Office Layout Example

18. Relationship Chart Ordinary closeness: President (1) & costing (2) 1 1 President 2 O 3 2 Costing U 4 A A 3 Engineering I O Absolutely necessary: President (1) & secretary (4) 4 President’s Secretary I = Important; U = Unimportant

19. 1 2 1 3 O 4 2 E 5 I O 3 6 U O 7 U U I 4 8 U U I 9 U U U I 10 5 O U U O A I U U I U 6 U U I U U U U E 7 I U U U I A 8 U E U U 9 A E 10 Relationship Chart

23. Warehouse Layout • Design balances space (cube) utilization & handling cost • Similar to process layout • Items moved between dock & various storage areas • Optimum layout depends on • Variety of items stored • No. items picked © 1995 Corel Corp.

24. Warehouse Flow Receiving Shipping

25. Warehouse Layout Try to organize storage in such a way that order pickers can move through the product in a logical and timely manner.

28. Warehouse Layout • Fastest near the front • Fastest within easy reach • Bulk storage vs. Single item picking • Serpentine vs. oval picking order • Restocking: frequency, safety stock

29. Cross-Docking In-coming • Transferring goods from incoming trucks at receiving docks to outgoing trucks at shipping docks • Avoids placing goods into storage Outgoing © 1984-1994 T/Maker Co. © 1995 Corel Corp.

30. Retail/Service Layout • Design maximizes product exposure to customers, profitability per square foot • Decision variables • Store flow pattern • Allocation of (shelf) space to products • Types • Grid design • Free-flow design Video

31. Grid Design Grocery Store Bread Meat Milk Check-out Carts Office

32. Free-Flow Design Apparel Store Trans.Counter Feature Display Table

37. Retail Store Flow Guidelines • “Prisoner” aisles make you enter store in a particular route, and pass by certain displays • Often contain less profitable (for the store) brands • “Decompression Zone” people walk past first rows of items before settling into shopping mode.

38. Retail Store Flow Guidelines • Bakery, coffee shop, restaurant spread aromas by entrance to stimulate taste buds • Siren song of the Starbucks (Safeway) • Food samplers throughout store do same

39. Retail Store Flow Guidelines • Frequently purchased items at far sides of stores so you have to go through entire store (produce or meat). • Profitable sections like produce placed where you keep running into them Meat Milk Produce

40. Retail Store Flow Guidelines • Major items in middle of aisles so you have to walk down into middle of aisle (Cereal, peanut butter) • ‘Power items’ on both sides of aisle so you have to look at both sides Peanut Butter Cereal

41. Retail Store Flow Guidelines Cereal • Quality of produce section important in customer decisions about which stores to visit, so produce is often prominently displayed upon entrance • People like to see what they’re looking for, not read signs Peanut Butter produce

42. Retail FlowGuidelines • End caps for high-visibility sale items • Large quantities of inventory serve as “psychic stock” • If there is a lot of it, it must be on sale • Stimulates sales © 1995 Corel Corp.

43. Retail Flow Guidelines • Eliminate cross-over aisles: • less wasted floor space, • you have to look at more items, • the more time you spend in the store, the more you will buy.

44. PERT PERT PERT PERT PERT VO-5 VO-5 VO-5 VO-5 VO-5 Shelf Space Planogram • Computerized tool for shelf-space management • Generated from store’s scanner data on sales • Often supplied by manufacturer • Example: P&G 5 facings SUAVE SUAVE 2 ft.

45. Shelf Placement • Companies prefer to be at eye-level or at child-reaching level • Close to leading brands or high-draw items: snack foods next to the peanut butter or across from the cereal: • Lots of kids visit the area

46. Slotting Fees • Manufacturer pays retailer to get a product into a store • 35,000 new grocery products per year • Grocery stores often stock 30,000 items • Impossible to evaluate all new products to choose the best new ones • Slotting fees guarantee grocer profits on a product, help balance risk of trying unknown product. • Grocery is a narrow margin business, slotting fees can represent a significant revenue source.

47. Slotting Fees • Senate Small Business Committee held hearings on them in 2000. • Industry refused to cooperate with GAO. • Growers of produce (not just brand names) now getting involved and complaining. • Small businesses claim they can’t afford the big payments big companies can make. • Advocates say small companies can “put their money where their mouths are” just like anyone else

48. Perimeter Items • People follow perimeter pattern • Sale items on end – everyone sees • Half of a store’s profit comes from items on the perimeter • Breakfast cereal brings in the most dollars per square foot • Manufacturer incentives increase profitability of soft drinks • “Anchors” at ends of a section: milk and butter at opposite ends of dairy case