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LOCATION SELECTION AND FACILITY LAYOUT (FACILITY LAYOUT Refers to the…
LOCATION SELECTION AND FACILITY LAYOUT
LOCATION STRATEGY
LOCATION DECISIONS
REGION/COMMUNITY DECISIONS
Key success factors:
:!: Labor availability and costs
:!: Availability of utilities and costs
:!: Environmental regulations
:!: Proximity to raw materials and customers
:!: Land/construction costs
SITE DECISIONS
Key success factors:
:!: Air, rail, highway and waterway systems.
:!: Facilities for education, shopping and recreation
:!: Environmental regulations
COUNTRY DECISIONS
Key success factors:
:!: Political risks, government rules, incentives
:!: Exchange rates and currency risks
IMPORTANCE
:!: Important strategic decisions because its affects both fixed and variable costs.
:!: Important long-term decisions. Once commited to a location, many resource and cost issues are difficult to change.
:!: The objective of location strategy is to maximize the benefit of location to the firm.
FACTORS AFFECTING LOCATION DECISIONS
:!: Labor productivity
:!: Exchange rates and currency risks
:!: Cost - Tangible, Intangible (education, public transportation)
:!: Political risk, values and culture (punctuality, corruption)
:!: Proximity to markets (customers)
:!: Proximity to suppliers ( perishable goods, high transportation costs)
:!: Proximity to competitors (clustering)
FACILITY LAYOUT
Refers to the specific arrangement of physical facilities.
Location and arrangement of everything within and around buildings.
PROPER LAYOUT ENABLES
:!: 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
REQUIREMENTS OF A GOOD LAYOUT
:!: An understanding of capacity and space requirements
:!: Selection of appropriate material handling equipment
:!: Decisions regarding environment and aesthetics
:!: Identification and understanding of the requirements for information flow
:!: Identification of the cost of moving between the various work areas
PURPOSE OT LAYOUT STUDIES
:!: Minimize delays in materials handling and customer movement
:!: Maintain flexibility
:!: Use labor and space effectively
:!: Promote high employee morale and customer satisfaction
:!: Provide for good housekeeping and maintenance.
:!: Enhance sales as appropriate in manufacturing and service facilities
CONSTRAINTS ON LAYOUT OBJECTIVES
:!: Product design and volume
:!: Process equipment and capacity
:!: Quality of work life
:!: Building and site
THE NEED FOR LAYOUT DESIGN
:!: Changes in environmental or other legal requirement
:!: Changes in volume of output or mix of products
:!: Changes in methods and equipments
:!: Morale problems
TYPE OF LAYOUT
OFFICE LAYOUT
:!: Grouping of employees, their equipment, and spaces to provide comfort, safety, and movement of information
:!: Movement of information is main distinction
:!: It is affected a lot by technological changes
:!: Arranged by process or product, relationship chat used
WORK-CELL LAYOUT
:!: CELLULAR PRODUCTION
:!: GROUP TECHNOLOGY
REQUIREMENTS FOR CELLLULAR PRODUCTION
:!: Identification of families of products - group technology codes
:!: High lever of training and flexibility on the part of the employees
:!: Either staff support or flexible, imaginative employees to establish the work cells initially
:!:Similarity can be either in shape, size or in manufacturing process
:!: Special case of product-oriented layout-in what is ordinarily a process-oriented facility
:!: Consists of different machines brought together to make a product
:!: Temporary arrangement only
:!: Advantages: Inventory, Floor space. Direct labor costs: Equipment utilization, Employee participation, Quality
:!: Disadvantages: Duplication of equipment among cells: Greater worker skills requirements.
RETAIL LAYOUT
RETAIL STORE FLOW GUIDELINES
:!: "Prisoner" aisles
:!: Often contain less profitable brands
:!: "Decompression Zone"
:!: Frequently purchased items at far sides of stores
:!: Profitable sections
:!:Major items in middle of aisles
:!: "Power items" on both sides of aisles
:!: Produce is often prominently displayed upon entrance
:!: Customer "like to see"
:!: 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
:!: Eliminate cross_over aisles
Retail layouts are based on the idea that sales and profitability vary directly with customer exposure to products
:!: Goal-maximize net profit per square foot of floor space by exposing the customers to as many products as possible
:!: Sales and profitability vary directly with customer exposure
RETAIL STORE SHELF/SPACE PLANOGRAM
:!: Computerized tool for shelf-space management
:!: Generated from store's scanner data on sales
:!: Often supplied by manufacturer
RETAIL SLOTTING
:!: Due to: Limited shelf spce; An increasing number of new products
:!: Manufacturers pay fees to retailers
PRODUCT-ORIENTED LAYOUT
:!: A product layout is arrangement based on the sequence of operations that are performed during the manufacturing of a good or delivery of a service.
:!: Facility organized around product
:!: Volume is adequate for high equipment utilization
:!: Product demand is stable enough to justify high investment in specialized equipment
:!: Design minimizes line imbalance: Delay between work stations
:!: Types: Fabrication line; assembly line
PRODUCT-ORIENTED LAYOUT TYPES
:!: Fabrication line
:!: Assembly line
:!: Both types of lines must be balanced so that the time to perform the work at each station is the same
:!: Advantages: Lower variable cost per unit; Lower material handling costs; Lower work-in-process inventories; Shorter processing times; Lower labor skills; Simple planning and control systems.
:!: Disadvantages: Higher capital investment: special equipment; Any work stoppage stops whole process; Lack of flexibility: volume, product.
WAREHOUSE LAYOUT
RANDOM STOCKING SYSTEMS
:!: Maintain a list of "open" locations
:!: Maintain accurate records of existing inventory and its locations
:!: Sequence items on orders to minimize travel time required to pick orders
:!: Combine orders to reduce picking time
:!: Assign certain items or classes of items, such as high usage items, to particular warehouse areas so that distance traveled is minimized
CROSS-DOCKING
:!: Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse
:!: Requires tight scheduling and accurate product identification
:!: Requires suppliers provide effective addressing and packaging that provides for rapid transhipment
:!: Desing balances spaces utilization & handling cost
:!: Similar to process layout
:!: Optimum layout depends on: variety of items stored; number of items picked
:!: Try to organize storage in such a way that order pickers can move through the product in the logical and timely manner
:!: Fastest in the front; Fasest within easy reach; Bulk storage vs Single item picking; Serpentine vs oval picking order; Restocking: frequency, safety stock
CUSTOMIZING
:!: Value-added activities are performed at the warehouse
:!: Enable low cost and rapid response strategies
PROCESS-ORIENTED PLAYOUT
:!: Advantages: a lower investment in equipment; the diversity of jobs inherent in a process layout can lead to increased worker satisfaction; can handle a variety of processing requirements; not particularly vulnerable to equipment failures.
:!: Disadvantages: high movement and transportation costs; more complicated planning and control systems; longer total processing time, higher in-process time, higher in-process inventory or waiting time; higher worker-skill requirements.
:!: A process layout consists of a functional grouping of equipment or activities that do similar work.
:!: Design places departments with large flows of material or people together.
:!: Department areas having similar processes located in close proximity.
:!: Use with process-focused processes.
:!: 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
FIXED-POSITION LAYOUT
:!: Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed.
:!: Advantages: Work remains stationary; Reducing movement.
:!: Disadvantages: High level of planning and control required.
FACTORS COMPLICATING
:!: There is limited space at virtually all sites
:!: At different stages in the construction process, different materials are needed-therefore, different items become critical as the project develops
:!: The volume of materials needed is dynamic
THE NEED FOR LAYOUT DECISIONS
:!: Inefficient operations
:!: Changes in the design of products or services
:!: The introduction of new products or services
:!: Accidents