Operations

Management
Reference: Strategic Production and Operations Management
Author: Prof. Rpme Sheririff G. Montoya, MBA, MRIBA Sr., (DBA ongoing)

Dr. Joann M. Amargo

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LABOR STRATEGIES
 LAYOUT
Layout - is one of the key decisions that
determines the long-run efficiency of
operations. Layout has numerous
implications because it establishes
an organization’s competitive
priorities in regard to capacity,
processes, flexibility, and costs, as
well as quality of work life,
customers, contact, and image. An
effective layout can help the
organization achieve a strategy that
supports differentiation, low cost, or
response. 3
 Layout design must consider how to achieve
the following:
a. Higher utilisation of space, equipment and people.

b. Improved flow of information, materials, or people.

c. Improved employee morale and safer working conditions.

d. Improved customer/client interaction.

e. Flexibility - whatever the layout is now, it will need to change.

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 Types of Layout
1. Office layout - it positions workers, their equipment, and spaces/offices to
provide for comfort safety, and movement of information. Desks crammed
together in clusters are called islands. Islands are arranged in long rows
managers, sit at the ends of the rows with subordinates in full review.
2. Retail layout. It allocates shelf space and response to customer behavior.
Service capes - The physical surroundings in which a service take place, and how
they affect customers and employees. Three elements to be considered are:
a. Ambient conditions, which are background characteristics such a lighting
sound, smell, and temperature.
b. Spatial layout and functionality, which involve customer direction, angle, and
shelf spacing and product grouping.
c. Sign, symbols and artifacts, which are characteristics of building design that
carry social significance (such carpeted areas of a department store that
encourage shoppers to slow down and browse)
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 Five ideas are helpful in determining the
overall arrangement for this layout
1. Locate the high-draw items around the periphery of the store. Thus, we
tend to find dairy products on on one side of the supermarket and
bread and bakery products on another.
2. Use prominent location for high-impulse and high-margin items such
as housewares, beauty aids and shampoos.
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.
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 the
mission, position the bakery and deli up front to appeal to
convenience oriented customers.
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 Types of Layout
3. Warehouse Layout - It addresses trade-offs between space and
material handling. The objective of warehouse layout is to find
the optimum trade-off between handling cost and costs
associated with warehouse space. Consequently,
management’s task is to maximise the utilisation of the total
“cube” of the warehouse - that is utilise its full volume while
maintaining low material handling costa.
Cross Ducking - This means to avoid placing materials or
supplies in storage by processing them as they are received.

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 Types of Layout
Random Stocking - This is used in warehousing to locate stock wherever
there is an open space. Computerized random stocking systems often
include the following tasks:
a. Maintaining a list of “open” locations.
b. Maintaining accurate records of existing inventory and its locations.
c. Sequencing items on orders to minimize the travel time required to
“pick” orders.
d. Combining orders to reduce picking time.
e. Assigning certain items or classes of items, such as high-usage items,
to particular warehouse is minimized.
Customizing - This uses warehousing to add value to the product through
component modification, repair, labeling, and packaging.
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 Types of Layout
4. Fixed-Position Layout - It addresses the layout requirements of large
bulky project such as ships and buildings. In this layout, the project
remains in one place and workers and equipment come to that one
work area. Examples of this type of project are a ship a highway, a
bridge, a house, and and opening table in an operating room of a
hospital.
5. Process-Oriented Layout - It can simultaneously handle a wide variety
of products or services. This is the traditional way to support
differentiation strategy. A big advantage of process-oriented layout is
its flexibility in or equipment and labor assignments. The
disadvantages come from the general-purpose use of equipment.

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 Types of Layout
6. Work-cell Layout - This arranges
machinery and equipment to
focus on production (also called
“job shop” or intermittent
production). This recognises
people and machines that would
ordinarily be dispersed in various
departments into a group so that
they can focus on making single
product or group or related
products.
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 Advantages are:
1. Reduced work-in-process
inventory because the work cell
is set-up to provide one-piece
flow from machine to machine.
2. Less floor space required
because less space is needed
machines to accommodate
work-in-process inventory.
3. Reduced raw materials and
finished goods inventories
because of improved
scheduling.
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 Advantages are:
4. Reduced direct labor cost because of improved communication
among employees better material flow, and improved scheduling.
5. Heightened sense of employee participation in the organization
and the product: employees accept the added responsibility of
product because it is directly associated with them and their work
cell.
6. Increased use of equipment and machinery because of better
scheduling and faster material flow.
7. Reduced investment in machinery and equipment because good
facility utilisation reduces the number of machines and the
amount of equipment and tooling.
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 Requirements of work cells are:
1. Identification of families of products,
often through the use of group technology
codes or equivalents.
2. A high level training and flexibility on the
part of the employees.
3. Either staff support or flexible,
imaginative employees to establish work
cells initially.
4. Test (poka-yoke) at each station in the
cell.

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 Types of Layout
7. Repetitive and Product Oriented Layout - This seeks the best personnel
and machine utilization in repetitive continuous production. Layouts
are organised around products or families of similar high-volume, low
variety of products. The assumptions are that:
1. Volume is adequate for high equipment utilization.
2. Product demand is stable enough to justify high investment in
specialised equipment.
3. Product is standardized or approaching a phase of its life cycle that
justifies investment in specialized equipment.
4. Supplies of raw materials and components are adequate and of
uniform quality (adequately standardised) to ensure that they work
with specialised equipment.
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 Types are:
1. Fabrication lines tend to be machine-paced and require
mechanical and engineering changes to facilitate balancing.
These are machine paced product-oriented facilities for
building components.
2. Assembly lines tend to be paced by work tasks assigned to
individuals or to workstations. Assembly lines, therefore, can
be balanced by moving tasks from one individual to another.

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 Main advantages of product-oriented layout
are:
1. The low variable cost per unit usually
associated with high-volume,
satndardized products.
2. Low material handling costs.
3. Reduced work-in-process inventories.
4. Easier training and supervision
5. Rapid throughput
Disadvantages are:
1. The high volume required because of the
large investment needed to establish the
process.
2. That work stoppage at any point tie as up
the whole operations.
3. A lack of flexibility when handling a
variety of products or production rates. 19
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