MODULE 4

DESIGNING SERVICE ENVIRONMENT

SELECTING A LOCATION

Choosing a business location is not something that can be done on a whim—it's a crucial
step in starting a business. First things first, the business location you choose will depend on the
type of business you operate. Business parks, shopping malls, strip malls, professional
buildings, and others are all designed to meet the specific needs of various businesses. If you’re
expanding from online-only to online and brick-and-mortar, for example, your needs will be
much different than if you’re an accountant looking to grow your firm and bring in new clients.
A business location strategy takes planning and research and a willingness to thoroughly vet all
of your options. With these helpful tips, you can identify the best place to locate your expanding
business.

SITE SELECTION CRITERIA

1. Decide on a business location type

Here are five common types of business locations, but more creative options, like co-
working spaces, are popping up all the time. Be on alert for these and other location types that
would meet your specific needs.
 Home-based business - If you work from home but need more space, you might
consider moving to a new home or adding on to your existing home to create the office
space you need.
 Retail business - Don’t limit yourself to downtown storefronts and strip malls. You can
also find retail space in airports, free-standing buildings, and special event kiosks.
 Mobile business - It used to be that the only businesses that moved around were
circuses and festival vendors. But today with mobile card readers, your restaurant can
add a roaming food truck location and your used book store can open a new pop-up
shop near the beach.
 Commercial business space - Commercial business spaces offer flexibility for even more
growth down the road, but are typically best for businesses that don’t rely on heavy
consumer traffic.
  Industrial site - If you operate a manufacturing or distribution business, you’ll have
special needs and will likely have limited choices when it comes to opening a new
location. Industrial sites are needed for companies that require large amounts of
warehousing space, for companies that need access to major transportation routes, or
for companies that may produce pollutants as part of the manufacturing process.

In almost every case, where you can locate your business will be dictated by local zoning
ordinances in your community. Don’t sign on the dotted line until you’re sure it’s legal for you to
operate your business in your desired location.

2. Make sure the business location is within your budget

Of course, one of your major priorities will be finding a location that fits within your
company’s budget. However, that’s not all you need to examine when it comes to money. There
often other location-specific costs to consider beyond the purchase price or monthly rent.
Almost every location has different hidden costs that you need to account for: taxes,
renovations, utility upgrades, minimum wage requirements, and economic incentives. Even
mobile businesses need to consider the cost of permits and vehicle licensing when choosing a
new business location.
Considering all the above will help you make a well-educated choice for your next
business location. Before committing to anything, be sure to speak with other business owners
in the area to make sure they’re happy with the location. Although you can never predict if a
new location will be successful, you can do as much research as possible beforehand to ensure
it is the best available fit for your growing business.

3. Consider your brand

Keep your brand in mind when developing your business location strategy and looking at
options. For instance, you probably wouldn’t want to plant your new office supply location right
in the middle of a high-end, boutique shopping district. Likewise, an upscale restaurant might
not fare so well in the middle of a college town or rural area, where customers are used to
spending less money on cuisine.
4. Think about vendors and suppliers
You'll need to secure a location that makes it easy for you to connect with your vendors
and suppliers; otherwise, you might experience significant delays or run into frequent issues
with inventory levels. When considering your options, ask yourself which location site makes it
easier and cheaper for you to get the raw goods you need to operate.

5. Find a safe location

Operating a business where you feel safe and protected should not be underestimated.
And besides your own safety and the safety of your employees, also consider your business's
safety as well. This is especially important for businesses with inventory that may be at a higher
risk for burglary and theft or if you'll frequently be running your business alone at night.

6. Go where there is demand

Ideally, you want to secure a business location that’s not saturated by your competition.
Look for areas where your product or service is in high demand or where your competition is
fairly low. If at all possible, you’ll want to expand to a location where the other businesses on the
block are complementary, to ensure your business fits into the local market.

7. Think about recruiting efforts

If you'll be hiring employees and managers for your business, you'll want to make sure
you open in an area where there's good access to public transportation or where potential
employees will be attracted. Finding high-quality employees is crucial to your business success,
so plan your location around where employees want to work.

8. Look for sites with parking options

No matter how attractive your business is, sufficient parking should be a key
consideration. Does your business location have a convenient parking lot, or will your customers
need to pay for parking—and will they be willing to? If paid parking is your only option, you'll
also want to consider if your business will offer validation. And don't forget about your
employees here—they'll also need somewhere to park.

How to Choose a Business Location - NerdWallet

Capacity Planning:

The effective management of capacity is the most important responsibility of production

and operations management. The objective of capacity management i.e., planning and control
of capacity, is to match the level of operations to the level of demand.

Capacity planning is concerned with finding answers to the basic questions regarding capacity
such as:
(i) What kind of capacity is needed?
(ii) How much capacity is needed?
(iii) When this capacity is needed?

Capacity planning is to be carried out keeping in mind future growth and expansion
plans, market trends, sales forecasting, etc. Capacity is the rate of productive capability of a
facility. Capacity is usually expressed as volume of output per period of time.

Capacity planning is required for the following:

• Sufficient capacity is required to meet the customers demand in time,

• Capacity affects the cost efficiency of operations,
• Capacity affects the scheduling system,
• Capacity creation requires an investment,
• Capacity planning is the first step when an organisation decides to produce more or
new products.

Capacity planning is mainly of two types:

(i) Long-term capacity plans which are concerned with investments in new facilities
and equipments. These plans cover a time horizon of more than two years.
(ii) Short-term capacity plans which takes into account work-force size, overtime
budgets, inventories etc.
Capacity refers to the maximum load an operating unit can handle. The operating unit might be
a plant, a department, a machine, a store or a worker. Capacity of a plant is the maximum rate
of output (goods or services) the plant can produce.

The production capacity of a facility or a firm is the maximum rate of production the
facility or the firm is capable of producing. It is usually expressed as volume of output per period
of time (i.e., hour, day, week, month, quarter etc.). Capacity indicates the ability of a firm to meet
market demand - both current and future.

Effective Capacity can be determined by giving due consideration to the following

factors:

Facilities - design, location, layout and environment.

Product - Product design and product-mix.
Process - Quantity and quality capabilities of the process or to be followed.
Human factors - Job content, Job design, motivation, compensation, training and experience of
labour, learning rates and absenteeism and labour turn over.
Operational factors - Scheduling, materials management, quality assurance, maintenance
policies, and equipment break-downs. External factors - Product standards, safety regulations,
union attitudes, pollution control standards.

Measurement of capacity

Capacity of a plant is usually expressed as the rate of output, i.e., in terms of units produced per
period of time (i.e., hour, shift, day, week, month etc.). But when firms are producing different
types of products, it is difficult to use volume of output of each product to express the capacity of
the firm. In such cases, capacity of the firm is expressed in terms of monetary value (production
value) of the various products produced put together.

Capacity Planning Decisions Capacity planning involves activities such as:

(i) Assessing the capacity of existing facilities.
(ii) (ii) Forecasting the long-range future capacity needs.
(iii) Identifying and analysing sources of capacity for future needs.
 (iv) Evaluating the alternative sources of capacity based on financial, technological and
economical considerations.
(v) Selecting a capacity alternative most suited to achieve strategic mission of the firm.

Capacity planning is necessary when an organization decides to increase its production or

introduce new products into the market or to increase the volume of production to gain the
advantages of economies of scale. Once the existing capacity is evaluated and a need for new
or expanded facilities is determined, decisions regarding the facility location and process
technology selection are undertaken.

When the long-range capacity needs are estimated through long-range forecasts for products, a
firm may find itself in one of the two following situations:
(i) A capacity shortage situation where present capacity is not enough to meet the
forecast demand for the product.
(ii) An excess or surplus capacity situation where the present capacity exceeds the
expected future demand.
Factors affecting determination of plant capacity
(i) Capital investment required,
(ii) Changes in product design, process design, market conditions and product life
cycles,
(iii) Flexibility for capacity additions,
(iv) Level of automation desired,
(v) Market demand for the product
(vi) Product obsolescence and technology obsolescence and
(vii) Type of technology selected.

Factors Affecting Capacity Planning: Two kinds of factors affecting capacity planning are:
(i) Controllable Factors: amount of labour employed, facilities installed, machines,
tooling, shifts of work per day, days worked per week, overtime work, subcontracting,
preventive maintenance and number of production set ups.
(ii) Less Controllable Factors: absenteeism, labour performance, machine break-
downs, material shortages, scrap and rework, strike, lock-out, fire accidents, natural
calamities (flood, earthquake etc.) etc
Facility Layout - Objectives, Design and Factors Affecting the Layout

Introduction

For an organization to have an effective and efficient manufacturing unit, it is important

that special attention is given to facility layout. Facility layout is an arrangement of different
aspects of manufacturing in an appropriate manner as to achieve desired production results.
Facility layout considers available space, final product, safety of users and facility and
convenience of operations.

An effective facility layout ensures that there is a smooth and steady flow of production
material, equipment and manpower at minimum cost. Facility layout looks at physical allocation
of space for economic activity in the plant. Therefore, main objective of the facility layout
planning is to design effective workflow as to make equipment and workers more productive.

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
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

Facility Layout - Objectives, Design and Factors Affecting the Layout (managementstudyguide.com)

SPACE ALLOCATION
Space allocation is the process of experimenting with placements of your organizational
units (business unit, division, department, or functional group) within your company's current or
future space. The planning exercise indicates if your current owned or leased space can
efficiently accommodate your needs or if a space reduction or expansion is required. You
experiment with different placements of organizational units on various floors (allocations) to
determine the best way to use your space.

Process Flow Analysis is used to help fully understand the current condition of any
manufacturing process facility.  Process Flows can be used to identify all elements within a
manufacturing facility from raw materials through to people and waste routes.
Process flows are the life blood of food manufacturing process.  Efficient flows equates to
efficient production.  Our expertise drives through efficiencies, layout improvements and
enhanced material flows giving you robust insight into how your facility can evolve more
efficiently.
We believe that a key way to understand your product range is by Value Stream
Mapping.  This allows the efficient assessment of process flows and the clear identification of
the right process.

Process Flow Analysis, value stream mapping, process flows (protolan.com)

 Ergonomics is the science of fitting jobs to people. The discipline encompasses a body
of knowledge about physical abilities and limitations as well as other human characteristics that
are relevant to job design. Essentially, ergonomics is the relationship between the worker and
the job and focuses on the design of work areas to enhance job performance. Ergonomics can
help prevent injuries and limit secondary injuries as well as accommodate individuals with
various disabilities, including those with musculoskeletal disorders (MSDs).

The benefits of implementing an ergonomics program apply to all workers, but

ergonomics can be particularly important when accommodating employees with disabilities. The
Americans with Disabilities Act (ADA) mandates that employers accommodate employees
with disabilities, which may include individuals with MSDs. An accommodation is any change or
adjustment to a job or work environment that allows a qualified employee with a disability to
participate in the job application process, to perform the essential functions of a job, or to enjoy
the benefits or privileges of employment. For individuals with MSDs, accommodations may be
as diverse as alternative keyboards, tool balancers, or scissor lifts. Before determining what
accommodations might be effective, an employer must know the essential functions of the job in
question as well as the limitations of the individual performing the job. Though not required by
the ADA, a job analysis can aid in determining the essential functions of a position and is an
important precursor to an ergonomic analysis.

AMERICANS WITH DISABILITIES ACT (ADA)

The Americans with Disabilities Act (ADA) and the ADA Amendments Act (ADAAA) require
that employers provide reasonable accommodation to applicants and employees who are qualified
individuals with disabilities, unless doing so would be an undue hardship. Ergonomics can assist
employers in accommodating disabled employees with various disabilities, ranging from muscular-
skeletal disabilities to chronic diseases such as lupus and multiple sclerosis. The course will discuss
some of the important definitions and provisions in the ADA and ADAAA, focusing on what
constitutes reasonable accommodation under the law. We will focus on the role of ergonomics at
various stages of the application, hiring and employment process.
Ergonomics (askjan.org)

Operations Management in the Hospitality Industry - Google Books