Facility Layout

After the site location decision has been made, the next focus in production planning is the facility’s layout. The
goal is to determine the most efficient and effective design for the particular production process. A manufacturer
might opt for a U-shaped production line, for example, rather than a long, straight one, to allow products and
workers to move more quickly from one area to another.
Service organizations must also consider layout, but they are more concerned with how it affects customer
behavior. It may be more convenient for a hospital to place its freight elevators in the center of the building, for
example, but doing so may block the flow of patients, visitors, and medical personnel between floors and
departments.

Factors affecting Facility Layout

Facility layout designing and implementation is influenced by various factors. These factors vary from industry to
industry but influence facility layout. These factors are as follows:

 The design of the facility layout should consider overall objectives set by the organization.
 Optimum space needs to be allocated for process and technology.
 A proper safety measure as to avoid mishaps.
 Overall management policies and future direction of the organization

There are four main types of facility layouts:

1. Process
2. Product
3. Fixed-position
4. Cellular.

The process layout arranges workflow around the production process. All workers performing similar tasks are
grouped together. Products pass from one workstation to another (but not necessarily to every workstation). For
example, all grinding would be done in one area, all assembling in another, and all inspection in yet another. The
process layout is best for firms that produce small numbers of a wide variety of products, typically using general-
purpose machines that can be changed rapidly to new operations for different product designs. For example, a
manufacturer of custom machinery would use a process layout.

Figure 1. An Example of a Process Facility Layout. Source: Adapted from Operations Management, 9th edition, by
Gaither/Frazier.
Process Layout at Vermont Teddy Bear Company

Advantages of process layouts include:

 Flexibility. The firm has the ability to handle a variety of processing requirements.
 Cost. Sometimes, the general-purpose equipment utilized may be less costly to purchase and less
costly and easier to maintain than specialized equipment.
 Motivation. Employees in this type of layout will probably be able to perform a variety of tasks on
multiple machines, as opposed to the boredom of performing a repetitive task on an assembly line.
A process layout also allows the employer to use some type of individual incentive system.
 System protection. Since there are multiple machines available, process layouts are not
particularly vulnerable to equipment failures.

Disadvantages of process layouts include:

 Utilization. Equipment utilization rates in process layout are frequently very low, because machine
usage is dependent upon a variety of output requirements.
 Cost. If batch processing is used, in-process inventory costs could be high. Lower volume means
higher per-unit costs. More specialized attention is necessary for both products and customers.
Setups are more frequent, hence higher setup costs. Material handling is slower and more
inefficient. The span of supervision is small due to job complexities (routing, setups, etc.), so
supervisory costs are higher. Additionally, in this type of layout accounting, inventory control, and
purchasing usually are highly involved.
 Confusion. Constantly changing schedules and routings make juggling process requirements more
difficult.

Product Layout

Products that require a continuous or repetitive production process use the product (or assembly-line) layout.
When large quantities of a product must be processed on an ongoing basis, the workstations or departments are
arranged in a line with products moving along the line. Automobile and appliance manufacturers, as well as food-
processing plants, usually use a product layout. Service companies may also use a product layout for routine
processing operations.
Figure 2. An Example of a Product Facility Layout. Source: Adapted from Operations Management, 9th edition, by
Gaither/Frazier.

Advantages of product layouts include:

 Output. Product layouts can generate a large volume of products in a short time.
 Cost. Unit cost is low as a result of the high volume. Labor specialization results in reduced
training time and cost. A wider span of supervision also reduces labor costs. Accounting,
purchasing, and inventory control are routine. Because routing is fixed, less attention is required.
 Utilization. There is a high degree of labor and equipment utilization.

Disadvantages of product layouts include:

 Motivation. The system's inherent division of labor can result in dull, repetitive jobs that can prove
to be quite stressful. Also, assembly-line layouts make it very hard to administer individual
incentive plans.
 Flexibility. Product layouts are inflexible and cannot easily respond to required system changes—
especially changes in product or process design.
 System protection. The system is at risk from equipment breakdown, absenteeism, and downtime
due to preventive maintenance.

Fixed Position Layout

Some products cannot be put on an assembly line or moved about in a plant. A fixed-position layout lets the
product stay in one place while workers and machinery move to it as needed. Products that are impossible to
move—ships, airplanes, and construction projects—are typically produced using a fixed-position layout. Limited
space at the project site often means that parts of the product must be assembled at other sites, transported to the
fixed site, and then assembled. The fixed-position layout is also common for on-site services such as housecleaning
services, pest control, and landscaping.
Figure 3. An Example of a Fixed-Position Facility Layout. Source: Adapted from Operations Management, 9th
edition, by Gaither/Frazier.

Figure 4 Product Layout at Just Born, Inc.

Both product and process layouts arrange work by function. At the Vermont Teddy Bear Company, for example,
the cutting function is performed in one place, the stuffing-and-sewing function in another place, and the dressing
function in a third place. If you’re a cutter, you cut all day; if you’re a sewer, you sew all day: that’s your function.
The same is true for the production of Marshmallow Peeps at Just Born: if your function is to decorate peeps, you
stand on an assembly line and decorate all day; if your function is packing, you pack all day.

Arranging work by function, however, isn’t always efficient. Production lines can back up, inventories can build
up, workers can get bored with repetitive jobs, and time can be wasted in transporting goods from one workstation
to another.

Cellular Layout

Cellular layouts combine some aspects of both product and fixed-position layouts. Work cells are small, self-
contained production units that include several machines and workers arranged in a compact, sequential order. Each
work cell performs all or most of the tasks necessary to complete a manufacturing order. There are usually five to
10 workers in a cell, and they are trained to be able to do any of the steps in the production process. The goal is to
create a team environment wherein team members are involved in production from beginning to end.
Facility Layout Objective

A model facility layout should be able to provide an ideal relationship between raw material, equipment, manpower
and final product at minimal cost under safe and comfortable environment. An efficient and effective facility layout
can cover following objectives:

 To provide optimum space to organize equipment and facilitate movement of goods and to create safe and
comfortable work environment.
 To promote order in production towards a single objective
 To reduce movement of workers, raw material and equipment
 To promote safety of plant as well as its workers
 To facilitate extension or change in the layout to accommodate new product line or technology upgradation
 To increase production capacity of the organization

An organization can achieve the above-mentioned objective by ensuring the following:

 Better training of the workers and supervisors.

 Creating awareness about of health hazard and safety standards
 Optimum utilization of workforce and equipment
 Encouraging empowerment and reducing administrative and other indirect work

Key Takeaways

Managers have several production layout choices, including process, product, cellular, and fixed-position.

The process layout groups together workers or departments that perform similar tasks. At each position, workers
use specialized equipment to perform a particular step in the production process.

In a product layout, high-volume goods are produced in assembly-line fashion—that is, a series of workstations at
which already-made parts are assembled.

In a cellular layout, small teams of workers handle all aspects of building a component, a “family of components,”
or even a finished product.

A fixed-position layout is used to make large items (such as ships or buildings) that stay in one place while
workers and equipment go to the product.
Just-in-Time (JIT) Manufacturing

Just-in-time (JIT) manufacturing is strategy that companies employ to increase efficiency and decrease waste by
receiving goods only when they are needed in the production process, thereby reducing inventory costs. In theory, a
JIT system would have parts and materials arriving on the warehouse dock at the exact moment they are needed in
the production process. To make this happen, manufacturers and suppliers must work together closely to prevent
just-in-time from becoming “just-isn’t-there”. Operations managers must accurately forecast the need for materials,
since even the slightest deviation can result in a slowdown of production.

Unexpected events like the shutdown of ports due to Hurricane Harvey and the devastation and flooding caused by
Hurricane Maria in Puerto Rico can cause chaos in the supply chains of manufacturers, resulting in problems for
firms relying on JIT. But if employed properly, and in spite of these risks, a JIT system can greatly reduce
inventory-holding costs and smooth production highs and lows.