9 Layout Strategies

PowerPoint presentation to accompany

Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e

PowerPoint slides by Jeff Heyl

© 2011 Pearson Education, Inc. publishing as Prentice Hall 9-1

 Outline

 Global Company Profile:

McDonald’s
 The Strategic Importance of
Layout Decisions
 Types of Layout
 Office Layout

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 Outline – Continued
 Retail Layout
 Servicescapes
 Warehousing and Storage Layouts
 Cross-Docking
 Random Docking
 Customizing
 Fixed-Position Layout

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 Outline – Continued

 Process-Oriented Layout
 Computer Software for Process-
Oriented Layouts
 Work Cells
 Requirements of Work Cells
 Staffing and Balancing Work Cells
 The Focused Work Center and the
Focused Factory

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 Outline – Continued

 Repetitive and Product-Oriented

Layout
 Assembly-Line Balancing

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 Learning Objectives
When you complete this chapter, you
should be able to:
1. Discuss important issues in office layout
2. Define the objectives of retail layout
3. Discuss modern warehouse management
and terms such as ASRS, cross-docking,
and random stocking
4. Identify when fixed-position layouts are
appropriate

© 2011 Pearson Education, Inc. publishing as Prentice Hall 9-6

 Learning Objectives
When you complete this chapter, you
should be able to:
5. Explain how to achieve a good process-
oriented facility layout
6. Define work cell and the requirements of
a work cell
7. Define product-oriented layout
8. Explain how to balance production flow
in a repetitive or product-oriented facility

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 Innovations at McDonald’s
 Indoor seating (1950s)
 Drive-through window (1970s)
 Adding breakfast to the menu
(1980s)
 Adding play areas (late 1980s)
 Redesign of the kitchens (1990s)
 Self-service kiosk (2004)
 Now three separate dining sections
© 2011 Pearson Education, Inc. publishing as Prentice Hall 9-8
 Innovations at McDonald’s
 Indoor seating (1950s)
 Drive-through window (1970s)
 Adding breakfast to Six
the out
menu
of the
(1980s) seven are
 Adding play areas (late layout
1980s)
decisions!
 Redesign of the kitchens (1990s)
 Self-service kiosk (2004)
 Now three separate dining sections
© 2011 Pearson Education, Inc. publishing as Prentice Hall 9-9
 McDonald’s New Layout
 Seventh major innovation
 Redesigning all 30,000 outlets around
the world
 Three separate dining areas
 Linger zone with comfortable chairs and
Wi-Fi connections
 Grab and go zone with tall counters
 Flexible zone for kids and families
 Facility layout is a source of
competitive advantage
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 Strategic Importance of
Layout Decisions

The objective of layout strategy

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

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 Layout Design
Considerations
 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

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 Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout
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 Types of Layout
1. Office layout: Positions workers,
their equipment, and spaces/offices
to provide for movement of
information
2. Retail layout: Allocates shelf space
and responds to customer behavior
3. Warehouse layout: Addresses trade-
offs between space and material
handling
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 Types of Layout

4. Fixed-position layout: Addresses

the layout requirements of large,
bulky projects such as ships and
buildings
5. Process-oriented layout: Deals with
low-volume, high-variety production
(also called job shop or intermittent
production)

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 Types of Layout

6. Work cell layout: Arranges

machinery and equipment to focus
on production of a single product or
group of related products
7. Product-oriented layout: Seeks the
best personnel and machine
utilizations in repetitive or
continuous production

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 Layout Strategies
Objectives Examples
Office Locate workers requiring Allstate Insurance
frequent contact close to one Microsoft Corp.
another
Retail Expose customer to high- Kroger’s Supermarket
margin items
Walgreen’s
Bloomingdale’s
Warehouse Balance low cost storage with Federal-Mogul’s warehouse
(storage) low-cost material handling
The Gap’s distribution center

Project (fixed Move material to the limited Ingall Ship Building Corp.
position) storage areas around the site Trump Plaza
Pittsburgh Airport

Table 9.1

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 Layout Strategies
Objectives Examples
Job Shop Manage varied material flow Arnold Palmer Hospital
(process for each product Hard Rock Cafe
oriented)
Olive Garden
Work Cell Identify a product family, Hallmark Cards
(product build teams, cross train team
Wheeled Coach
families) members
Standard Aero
Repetitive/ Equalize the task time at each Sony’s TV assembly line
Continuous workstation Toyota Scion
(product
oriented)

Table 9.1

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 Good Layouts Consider
 Material handling equipment
 Capacity and space requirements
 Environment and aesthetics
 Flows of information
 Cost of moving between various
work areas

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 Office Layout
 Grouping of workers, their equipment, and
spaces to provide comfort, safety, and
movement of information
 Movement of
information is main
distinction
 Typically in state of
flux due to frequent
technological
changes

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 Relationship Chart

Figure 9.1

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 Supermarket Retail Layout

 Objective is to maximize
profitability per square foot of
floor space
 Sales and profitability vary
directly with customer exposure

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 Retail Slotting
 Manufacturers pay fees to retailers
to get the retailers to display (slot)
their product
 Contributing factors
 Limited shelf space
 An increasing number of new
products
 Better information about sales
through POS data collection
 Closer control of inventory
© 2011 Pearson Education, Inc. publishing as Prentice Hall 9 - 23
 Retail Store Shelf Space
Planogram
5 facings
 Computerized
tool for shelf-

Shampoo

Shampoo

Shampoo

Shampoo

Shampoo
space
management
 Generated from
store’s scanner

Conditioner
Shampoo

Shampoo

Shampoo

Shampoo
data on sales Conditioner

Conditioner
 Often supplied
by manufacturer
2 ft.
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 Servicescapes
1. Ambient conditions - background
characteristics such as lighting, sound,
smell, and temperature
2. Spatial layout and functionality - which
involve customer
circulation path planning,
aisle characteristics, and
product grouping
3. Signs, symbols, and
artifacts - characteristics
of building design that
carry social significance
© 2011 Pearson Education, Inc. publishing as Prentice Hall 9 - 25
 Warehousing and Storage
Layouts

 Objective is to optimize trade-offs

between handling costs and costs
associated with warehouse space
 Maximize the total “cube” of the
warehouse – utilize its full volume
while maintaining low material
handling costs

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 Warehousing and Storage
Layouts
Material Handling Costs
 All costs associated with the transaction
 Incoming transport
 Storage
 Finding and moving material
 Outgoing transport
 Equipment, people, material, supervision,
insurance, depreciation
 Minimize damage and spoilage
© 2011 Pearson Education, Inc. publishing as Prentice Hall 9 - 27
 Warehousing and Storage
Layouts
 Warehouse density tends to vary
inversely with the number of different
items stored
 Automated Storage and
Retrieval Systems (ASRSs)
can significantly improve
warehouse productivity by
an estimated 500%
 Dock location is a key
design element
© 2011 Pearson Education, Inc. publishing as Prentice Hall 9 - 28
 Cross-Docking
 Materials are moved directly from
receiving to shipping and are not placed
in storage in the warehouse
 Requires tight
scheduling and
accurate shipments,
bar code or RFID
identification used for
advanced shipment
notification as
materials
are unloaded
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 Warehouse Layout
Traditional Layout
Storage racks
Customization

Conveyor

Staging
Office
Shipping and receiving docks
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 Warehouse Layout
Cross-Docking Layout

Shipping and receiving docks

Office
Shipping and receiving docks

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 Fixed-Position Layout
 Product remains in one place
 Workers and equipment come to site
 Complicating factors
 Limited space at site
 Different materials
required at different
stages of the project
 Volume of materials
needed is dynamic
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 Process-Oriented Layout
 Like machines and equipment are
grouped together
 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

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 Process-Oriented Layout
Patient A - broken leg
ER
triage Emergency room admissions
room
Patient B - erratic heart
Surgery pacemaker

Laboratories

Radiology ER Beds Pharmacy Billing/exit

Figure 9.3

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 Layout at Arnold Palmer Hospital
Pie-shaped
Central break rooms
and medical
supply rooms

Local linen Central nurses

supply station

Local
nursing pod
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 Process Layout Example
Area 1 Area 2 Area 3

Assembly Painting Machine Shop

Department Department Department
(1) (2) (3)

40’

Receiving Shipping Testing

Department Department Department
(4) (5) (6)

Figure 9.5 Area 4 Area 5 Area 6

60’
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 Process Layout Example
Interdepartmental Flow Graph
100

Assembly 50 Painting 30 Machine

(1) (2) Shop (3)
20 20
10
50 100

Receiving Shipping Testing

(4) (5) (6)
50

Figure 9.6
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 Work Cells
 Reorganizes people and machines
into groups to focus on single
products or product groups
 Group technology identifies
products that have similar
characteristics for particular cells
 Volume must justify cells
 Cells can be reconfigured as
designs or volume changes
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 Advantages of Work Cells
1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished
goods inventory
4. Reduced direct labor
5. Heightened sense of employee
participation
6. Increased use of equipment and
machinery
7. Reduced investment in machinery and
equipment
© 2011 Pearson Education, Inc. publishing as Prentice Hall 9 - 39
 Product-Oriented Layouts
 Fabrication line
 Builds components on a series of machines
 Machine-paced
 Require mechanical or engineering changes
to balance
 Assembly line
 Puts fabricated parts together at a series of
workstations
 Paced by work tasks
 Balanced by moving tasks
Both types of lines must be balanced so that the
time to perform the work at each station is the same
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 Product-Oriented Layouts
Advantages
1. Low variable cost per unit
2. Low material handling costs
3. Reduced work-in-process inventories
4. Easier training and supervision
5. Rapid throughput
Disadvantages
1. High volume is required
2. Work stoppage at any point ties up the
whole operation
3. Lack of flexibility in product or production
rates
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 McDonald’s Assembly Line

Figure 9.12

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