Operations Management

Dr.M.Krishnakumar
Professor, DCSMAT
 Module 2
PROCESS DESIGN & PRODUCT DEVELOPMENT:
OPERATIONS STRATEGY
PRODUCT STRATEGY AND INTEGRATED
PRODUCT DEVELOPMENT
 PRODUCT STRATEGY
• Businesses need to engage constantly in value creation
for shareholders as well as customers.
• Innovation can enhance the value and the existing
competence of the organisation
• Firms that offer a homogenous set of products and
services have very little opportunity for value creation
• The consumers expectation with respect to the
products and services offered are changing and rising.
• Firms can be successful if they offer highly
differentiated products and services or cost effective
products.
• Product development process provides a set of tools,
techniques, and concepts that enable an organisation to
provide distinctiveness in its offering by rolling out new
products and services fast and at a lower cost.
• Firms have experienced several tangible benefits from good
product development process
• Objective of any organization is to provide customer
satisfaction by building product and services, which not only
satisfy needs and want but also create value for them.
• This requires product design based on the customer feedback
and production process which not only minimizes cost but
also provides a competitive advantage.
 Integrated Product Development
• In the global age of new technology and competition
organization have to re-invent the way they cater to needs of
customer, focus on specialization and customization is ever
increasing.
• Given this scenario it is imperative for the organization to
integrate technology and innovation within the framework
of integrated product and process development.
• Integrated product and process development combines the
product design processes along with the process design
process to create a new standard for producing competitive
and high-quality products.
• With integration of production method and
technology with product design, it is natural for
integration of product design and process design.
• Therefore, integrated product and process
development can be defined as a process starting
from product idea to development of final product
through modern technology and process
management practices while minimizing cost and
maximizing efficiency.
• Eg. Seamless garments, 3D printing
PHASES IN PRODUCT DESIGN AND DEVELOPMENT
• 1. Idea or concept generation
• 2. Feasibility analysis
• 2. Product specifications
• 3. Process specifications
• 4. Prototype development
• 5. Design review
• 6. Market test
• 7. Product introduction
• 8. Follow-up evaluation
PHASES IN PRODUCT DESIGN AND DEVELOPMENT
• 1. Idea or Concept generation
• This is the first stage in product development process
• New products and services are the outcome of the changing customer
needs
• Innovative thinking is very much required
• 2. Feasibility analysis
• Feasibility analysis entails market analysis (demand), economic
analysis (development cost and production cost, profit potential), and
technical analysis (capacity requirements and availability, and the skills
needed).
• Also, it is necessary to answer the question, Does it fit with the
mission?
• It requires collaboration among marketing, finance, accounting,
engineering, and operations.
• 3. Product specifications
• This involves detailed descriptions of what is needed to meet (or
exceed) customer wants, and requires collaboration between
legal, marketing, and operations.
• 4. Process specifications
• Once product specifications have been set, attention turns to
specifications for the process that will be needed to produce the
product.
• Alternatives must be weighed in terms of cost, availability of
resources, profit potential, and quality.
• 5. Prototype development
• With product and process specifications complete, one (or a few)
units are made to see if there are any problems with the product
or process specifications.
• 6. Design review
• At this stage, any necessary changes are made or the project is
abandoned. Marketing, finance, engineering, design, and
operations collaborate to determine whether to proceed or
abandon.
• 7. Market test
• A market test is used to determine the extent of consumer
acceptance. If unsuccessful, the product returns to the design
review phase. This phase is handled by marketing.
• 8. Product introduction
• The new product is promoted. This phase is handled by marketing.
• 9. Follow-up evaluation
• Based on user feedback, changes may be made or forecasts
refined. This phase is handled by marketing.
 Tools of efficient product development
• 1. Understanding Customer Needs
– Market research
– Competitor analysis
• 2. Quality Function Deployment
– A Japanese tool that helps organisations translate customer
requirements into design, process planning, and production
specifications using a 4-stage process
• 3. Value Engineering
– A set of activities undertaken to investigate the design of
components in a product development process strictly from
a cost-value perspective
 Tools of efficient product development
• 4. Design for manufacturability
– A structure approach to ensure that production
requirements and preferences are considered fairly early
in the design process.
• 5. Mass production
– Provides a structured set of ideas and tools to provide
high levels of customisation without increasing the
complexity of planning and control operations
 Advantages of Integrated Product and Process
Development
• Using modern technologies and implement logical steps in
production design, thereby reducing product delivery time.
• Through optimum usage of resources and using efficient
process, organizations are able to minimize cost of
production thus improving profitability of the organization.
• Since extensive uses of CAD model are employed chances are
of product or design failure are greatly reduced thus reducing
risk for organization.
• As the focus is solely in delivering value to customer, quality
is paramount importance and achieved through technology
and methods.
PROCESS STRATEGY & PROCESS DESIGN
 Process Design
• Process is a basic building block of operations.
• Set of activities that need to be performed by consuming some
resources and time.
• This is eventually determines the performance of the
operations systems in terms of cost, time, productivity, profit
etc.
• Process Design: The arrangement or the order of sequence of
activities in which they have to be performed which would
optimize the resources and time consumption and provide
customer satisfaction.
• The design of the process will determine the performance of
the operation system.
 Process selection
• Process selection refers to deciding on the way production of
goods or services will be organized.
• It has major implications for capacity planning, layout of
facilities, equipment, and design of work systems.
• Process selection occurs as a matter of course when new
products or services are being planned
• Depends on two V’s
– How much variety will the process need to handle?
– How much volume will the process need to handle?
• There are five basic process types:
– job shop, batch, repetitive, continuous, and project
 Process Types
• Job Shop.
• A job shop usually operates on a relatively small
scale.
• A manufacturing example of a job shop is a tool
and die shop that is able to produce one-of-a-kind
tools.
• A service example is a veterinarian’s office, which
is able to process a variety of animals and a
variety of injuries and diseases.
• Batch.
• Batch processing is used when a moderate volume of
goods or services is desired, and it can handle a
moderate variety in products or services.
• Examples of batch systems include bakeries, which
make bread, cakes, or cookies in batches;
• Other examples of products that lend themselves to
batch production are paint, ice cream, soft drinks,
beer, magazines, and books.
• Other examples of services include plays, concerts,
music videos, radio and television programs, and
public address announcements.
• Repetitive.
• When higher volumes of more standardized goods
or services are needed, repetitive processing is used.
• In fact, this type of process is sometimes referred to
as assembly.
• Familiar products made by these systems include
automobiles, television sets, pencils, and computers.
• An example of a service system is an automatic
carwash.
• Other examples of service include cafeteria lines and
ticket collectors at sports events and concerts.
• Continuous.
• When a very high volume of non-discrete, highly standardized
output is desired, a continuous system is used.
• Examples of non-discrete products made in continuous systems
include petroleum products, steel, sugar, flour, and salt.
• Continuous services include supplying electricity to homes and
businesses, and the Internet..
• Project.
• A project is used for work that is non-routine, with a unique set of
objectives to be accomplished in a limited time frame.
• Examples range from simple to complicated, including such things
as putting on a play, consulting, making a motion picture,
launching a new product or service, publishing a book, building a
dam, and building a bridge.
PROCESS STRATEGY
• For example, an operation manager may want to
understand the some of the following issues:
– Do I have adequate resources to meet the demand? If I
need to add some extra resource where should I add
them?
– What is the extent of the utilization of my resource?
– If I need to increase the capacity of my system, how
should I modify the process? Should I add some more
resources? What will happen to the cost of my
operations?
 Process Flow Charting
• Every activity in the process must be identified
• The time taken for each activity and the nature of
flow of material/information in the process also
must be known.
• A pictorial representation of all this information
could be developed using process flow-charting
• It employs a set of standard symbols and graphical
tools to represent all the information about the
process.
Planning premises and Process Implications
• Process and capacity analysis has a closer
relationship to the planning premises that the
firm uses.
• Three generic planning premises:
– i) Make To Stock (MTS)
– ii) Make To Order (MTO)
– iii) Assemble To Order (ATO)
 i) Make To Stock (MTS)
• Scheduling the production for the purpose of replenishing the
stock to some predetermined level.
• Based on the estimate of the demand and the available
inventory of the finished goods on the hand, the exact
production quantity is arrived.
• The objective of MTS planning system is to ensure that the
production system efficiently responds to the depletion of
finished goods inventory through the planning system.
• This system is more suitable for fewer product verities and
high production volume
 ii) Make To Order (MTO)
• Production scheduling is done against a specific orders.
• Once a customer order is given in to production system,
the requirement details are computed and production
is planned.
• The key implication of this method is result in long
planning and execution for the order delivery.
• Involves long lead times
• More suitable for manufacturers of products with more
variety and low volumes
 iii) Assemble To Order (ATO)
• A planning methodology that is intermediate to MTS and
MTO.
• Incorporate some features of MTS into MTO planning
methodology to create a hybrid version.
• This system follows MTS in initial stages and of production
process and at the final stage the planning changes to MTO.
– Eg. TITAN watches – many models, core movement mechanism
few varieties, for casing little more variety , Dial more product
differentiation
– Core movement and case production MTS is followed,
– for Dial and watch assembly MTO is followed
• More suitable for mid-volume, mid-variety manufacturing
systems.
 Analysing Process
• Let us assume a manufacturing process involves
cutting, welding, moulding and finishing.
• The time taken for cutting is 20 minutes, welding is
25 minutes, moulding is 10 minutes and finishing is
5 minutes.
 Analysing Process
• The performance metrics for process analysis are
different for MTS and MTO systems.
• The relevant performance measures for these systems
are:
• Throughput time (TPUT):
• It is the elapsed time from the first stage of the process
to the last stage of the process.
• Also known as Lead time
• For example, the lead time for ordering in Amazon ??
• Cycle time:
• It is the elapsed time between two successive outputs from a
process that is continuously operating in a given period of
time.
• For example, in bread making, if loaf of baked n=bread comes
out of the system every 20seconds, then the cycle time for
the process is 20 seconds.
• Bottle neck:
• That stage of the process that dictates the output of a process
is bottle neck.
• In the bread making, if baking in oven requires 20 seconds
and all other process requires 15 seconds then here the
baking operation is the bottle neck.
 Capacity Planning
• Capacity denotes the maximum output of products or
services one can achieve by using the firm’s resources.
• Capacity utilisation is measured as a ratio of the
capacity put to use to the total available capacity in a
unit time.
• Capacity planning is a systematic approach to three
issues pertaining to capacity
– Estimating the amount of capacity required
– Evaluating the alternative methods of augmenting capacity
– Devising methods to use capacity effectively
Measures of capacity
 Capacity Planning Framework
• 1. Estimating the Total Requirement
• 2. Estimating Labour and Machine
Requirements
• 3. Computing Capacity Availability
• 4. Process Mapping and Capacity Analysis
• 5. Alternatives for Capacity Augmentation
 Capacity Planning Framework
• 1. Estimating the Total Requirement
• Begins with the inputs from demand forecasting based on
medium-term and long-term demand projection methods
• These methods use past data collected at the end-user level,
analysed systematically and projected into the future in terms
of sales forecast.
• On the other hand, the estimation of capacity requirements
can also be in response to some targeted capacity build-up in
the factory.
• Once the total requirement are estimated, the detailed
estimation of individual resources or divisions levels are done.
• 2. Estimating Labour and Machine Requirements
• The computation of the labour requirements
depends on two major factors:
• Capacity requirement (Labour) = (D x SL)/EL
– The amount of standard labour hours required per unit of
the product (SL)
– The efficiency of the labour (EL)
– Projected Demand per unit time (D)
• Capacity requirement (Labour) = (D x SL)/EL
• Capacity requirement (Machine) = (D x SM)/EM
• A company wants to make 100 T shirts and 50 Trousers per
day. One year consists of 300 working days. The standard
stitching time for T-shirts is 15 mins and Trouser is 30 mins.
The efficiency of the labour is 80%.
– Annual demand (T-shirts) = 300 x 100 = 30000
– Annual demand (Trouser) = 300 x 50 = 15000
– Std. Time for T-shirt = 15 min/60 min = 0.25 hour
– Std. Time for Trouser = 30 min/60 min = 0.5 hour
• Capacity requirement (Labour) = (D x SL)/EL
– T-shirt = (30000 x 0.25)/0.8 = 9375 man-hours
– Trouser = (15000 x 0.5)/0.8 = 9375 man-hours
– Total man-hours = 18750 man-hours
• 3. Computing Capacity Availability
• Now how much capacity is already available in the system is to be
estimated.
• Then comparing this with requirement one can identify the gaps or excess
capacity available for each resource question.
• The availability of capacity in a system depends on two things:
– i) System availability and ii) Resource availability
• i) System availability = No. of working days x No. of working hours per day
• Ii) Resource availability
– Labour availability= No. of workers x attendance rate
– Machine availability = No. of machines x machine availability rate (after
breakdown & maintenance )
• Iii) Capacity available
– Labour = System availability x Labour availability
– Machine = System availability x Labour availability
• In the previous example, if the working hours per day
is 16 hrs and the workers available are 2 and their
attendance rate is 90%. Calculate the capacity
availability.
• i) System availability = 300 x 16 = 4800 hours
• ii) Labour availability = 2 x 0.9 = 1.8
• iii) Capacity available = 4800 x 1.8 = 8640 hours
• But the total capacity requirement is = 18750 hours
• So there is a gap of (18750 – 8640) 10110 hours
• So the company has to engage more labours.
• 4. Process Mapping and Capacity Analysis
• In the previous examples we have seen the capacity requirement
for stitching section only. But the capacity of stitching is a
function of alternative resources available in the factory.
• Therefore in order to understand the capacity of one stage of
production system, we need to understand the how the available
resources are utilised in production.
• This can be done by process mapping exercise.
• By process mapping, the capacity of each resource available in
the factory and the limiting capacity of the factory can be
computed.
• In the pervious example, the process mapping of stitching section
has to be done with other sections like fabric section, cutting, etc.
– Fabric section > Cutting section > Stitching > Checking > Ironing >
Packing
• 5. Alternatives for Capacity Augmentation
• Waste elimination
– Waste elimination related to excess material, time waste,
machine stoppage, idle worker etc can be done by using
Japanese methods of planning which will increase the
capacity of the resources
• Multi-skilling of the workforce
– Workers may be trained to do multiple works like cutting,
stitching, checking etc so that the resource capacity may be
increased.
• Subcontracting and outsourcing
– Capacity augmentation can be done by subcontracting the
work to competent vendors and service providers.
FACILITIES LOCATION STRATEGIES
 Location Decisions
• Location decisions are pertain to the choice of appropriate
geographical sites for locating various manufacturing and
service facilities of an organisation.
• Location decisions are integral part of designing a supply
chain for an organisation as it determines the flow of
materials in the supply chain.
• Location decisions affect overall profitability of the firm.
• Choice of location is an important input to marketing to plan
the marketing strategy in relation to location of facilities and
the customers.
• Operations managers need to evaluate intermediate solutions
to arrive an optimal location facilities.
 Factors affecting location decisions
• 1. Market related issues
• Market for products and services
• Raw material availability
• Number and proximity of suppliers
• Availability of skilled labour
• Quality of infrastructure
• Demand-supply gap
• Nature of competition
 Factors affecting location decisions
• 2. Cost related issues
• Factor costs of inputs
• Transportation costs
• Taxes and other tariff issues
• Cost of manufacture/service
• Currency and exchange rate fluctuations
 Factors affecting location decisions
• 3. Regulatory and policy related issues
• Government and economic stability
• Quality of legal and other institutions
• Trading blocks and trading agreements
• 4. Other issues
• Culture
• Climate
• Quality of life
 Location Planning methods
• Location decisions could be one the two:
• i) One facility-multiple candidates
– Selecting one location out of several alternatives
• ii) Multiple facility-multiple candidates
– Selecting few locations out of several alternatives
• The selection of location can be done using the following methods:
– 1. Location Factor Rating
– 2. The Centre-of-Gravity Method
– 3. The Load-Distance Method
– 4. The transportation Model
• 1. Location Factor Rating
• A simple method to assess the attractiveness of each location
• Involves four steps:
• 1. Identify and list all the factors for the location decisions like
availability of raw material, labour, transportation etc.
• 2. Establish the relative importance of each factor in final decision.
(on the scale of 0 to 100). Once all the factors are rated, these ratings
can be normalised to the relative weights.
• 3. Rate the performance of each candidate location using a rating
mechanism.
• 4. Compute a total score for each location, based on its performance
against each factor and rank them in the decrease order of the score.
• 2. The Centre-of-Gravity Method
• In this method all the demand points and supply points are
represented in a Cartesian coordinate system.
• Each demand or supply point will also have weights which indicates
the quantum of demand or supply per unit time.
• In this context, it is possible to identify the centre of gravity of the
various demand or supply points.
• Locating the new facility at this point will be most appropriate.
• The centre of gravity method merely indicates the ideal location on
the grid map that would ensure that the weighted distance travelled
on the whole is minimal.
• 3. The Load-Distance Method
• As opposed to the centre-of-gravity method, the load-distance
method enables a location planner to evaluate two or more potential
candidates for locating a proposed facility.
• This method provides an objective measure of the total distance for
each potential candidates or locations.
• Choosing the location with best load distance among these will
satisfy the objective of identifying an suitable location.
• 4. The transportation Model
• In the case of multiple plants and multiple demand points, the
location problem can be solved using the standard transportation
problem.
• The transportation model is an interesting variation of the basic
linear programming (LP) model, which could be used to optimally
identify a subset of supply points from a potential list that can satisfy
the demand at various demand points.
AGGREGATE PLANNING AND
MASTER SCHEDULING, MRP, CRP
• Operating systems are characterised by complex
relationships between people, resources, market
and materials and often involve lead time,
affecting several of the processes.
• Prior planning and strategies for dealing with real-
time changes play a very important role in
managing operating systems and ensuring a
continuous flow of goods and services to the
market.
 Aggregate Planning
• A decision deals with the amount of resources
(productive capacity and labour hours) to be committed,
the rate at which goods and services need to be produced
during a period and the inventory to be carried forward
from period to the next.
• It is the planning exercise done for operations using data
at an aggregate level.
• It is the critical role of translating business and strategic
plan in to operational decisions
• For example, at the end of an aggregate production
planning exercise, a garment manufacturer may arrive at
the following plans:
• Produce 9000 meters of cloth every day during January-
March,
– increase it to 11,000 mtrs during April – August and
– reduce it to 10,000 mtrs during September – December
• Carry 10% of monthly production as inventory during the
first 9 months of production
• Work on a one-shift basis throughout the year with 20%
overtime during July - October
 Need for Aggregate planning
• Demand fluctuations
– Demand is not a stable one, a fluctuating one
• Capacity fluctuations
– Happens due to number of days in a month, shutdowns etc
• Difficulty in altering production rates
– Production systems are complex, production rates cannot be
changed suddenly
• Benefits of multi-period planning
– Based on forecast and potential events in the future
 Basic strategies for aggregate planning
• 1. Level Strategy
– The emphasis is not on disturbing the existing
production system
– Employing a constant workforce and maintain constant
working hours
– Inventory plays the vital role linking one period with
other
 Basic strategies for aggregate planning
• 2. Chase Strategy
• Supply-demand mismatch is addressed during each period
by employing a variety of capacity related alternatives
• Very little inventory is carried from one period to another
• More workers are hired, working hours are increased,
permission for overtime
• 3. Mixed Strategy
• This strategy employs combination of the available
alternatives for aggregate planning.
 Aggregate planning Methods
• 1. Heuristic Methods
– a)Trial and error method : Few options are considered and each
option employs a certain combination of aggregate planning
alternatives.
– b) Search method: Certain parameters are chosen and
alternatives are generated by systematically varying the
parameter values.
• 2. optimal Methods
– Includes the use of linear programming (LP) and the
transportation and dynamic programming (DP) models
 Master Scheduling
• Master Scheduling represents the critical linkage
between planning and execution of operations.
• This makes use of actual customer orders for the
purpose of capacity planning and resource
allocation to specific customer orders.
• It is the process by which disaggregation of varieties
is done.
• It determines what needs to be ultimately produced
and not what is demanded
• Two stages/steps in Master Scheduling:
• i) Update the projected demand based on earlier forecast
and current market information
– Example: the earlier forecast of 9000 mtrs of cloth per day and
what is the current situation while planning? Is it 9000 mtrs or
more or less order received? 8000 mtrs
• ii) Disaggregation of product information and relating it to
specific material capacity requirements.
– Example: Out of 8000 mtrs, how much PES, Cotton, Rayon?
 Material Requirements Planning (MRP)
• MRP is a computerised information system that aids the
planning of materials in manufacturing organisations.
• It is developed during 1960s to address the vexing problem
of high inventories in manufacturing organisations.
• Before that firms were using the same type of
methodology for controlling all type of inventories.
• MRP focuses on the fact that the planning of requirements
for production, such as raw material and work-in-progress,
require different approach from that used for managing
finished goods.
• MRP systems exploit certain unique characteristics of the
production items.
• They utilise information on lead time, inventory status, and
master schedule to ensure production items are available
at the time of requirement.
• Two types of inventories exist in an operating system:
– i) Operating inventory
– ii) Distribution inventory
• i) Operating inventory
– Includes all the resources (broadly of material and capacity) that
are available for the operating system to consumer in the
production process
• Ii) Distribution inventory
– Meant for market consumption or distribution
– Ex. Finished products waiting for dispatch, No. Of hotel rooms to
be made available
 MRP Framework
• 1. Multiple level in Products
• 2. Product structure
• 3. Bill of Material (BOM)
• 4. Time-phasing the requirement
• 5. Determining the lot size
• 6. Incorporating lead-time information
• 7. Establishing the planning premises
• 1. Multiple level in Products
– Multiple level of relationship exist in a product
– Each level may dependent or independent with the other levels
– While computing the requirement for an item, it is important
that we proceed level by level.
– Otherwise the amount of inventory will be different from what is
required.
– Ex. Telephone has 4 parts: Base telephone (1), Handset (Mike &
Speaker - 1), Wire (1), Cover plates for handsets (2)
– While planning, calculations to be made level by level basis and
this is known as Explosion
• 2. Product structure
– If calculations to be made on level basis, then
knowledge of product structure is important
– Graphically depicts the dependency relationship among
various items that make up the final product.
– Every level in the product structure has a parent
relationship with those below it.
• 3. Bill of Material (BOM)
– A list of all parts, ingredients, or materials required to
assemble of put together one unit of a product
– Consists of a complete list of each part in the product
structure, the components that are directly used in the
part and the quantity of each component needed to
make one unit of that particular part.
– Sometimes part number and its price may be also
included
• 4. Time-phasing the requirement
– The previous calculations are on ‘how much’ qty, not
‘when’.
– We need to schedule an order for the item so that it
arrives at the beginning of the period.
– A time frame (Time bucket) need to be chosen (Weeks
or months or quarterly etc.)
• 5. Determining the lot size
– Lot sizing is the process of determining the size of the order
quantities for each component in a product.
– Two set of costs to be considered: (inventory cost and set-up
cost)
– Bigger lot size may result in inventory cost
– Smaller lot size may result in set-up cost
– Three lot-sizing rules:
– i) Lot-for-lot (LFL) : Lot size = Net requirement
– ii) Fixed order quantity (FOQ): Every lot ordered is fixed qty.
– Iii) Periodic order quantity (POQ) : Based on Economic order qty
• 6. Incorporating lead-time information
– Timing of the orders is very important
– In timing one aspect is incorporating lead-time
information in the planning exercise.
– Based on the lead time, the orders to be placed at the
appropriate times
– Each component may have different lead times
• 7. Establishing the planning premises
– The planning so far done is based on the demand
requirements for a particular product and its different
levels
– At a given time, a firm may have to produce different
models with different levels.
– So at the time of planning, we need to know the exact
number of different models that should be produced in
each time period and the associated BOM.
– A Master Production Schedule serves this purpose and
fixes the requirement of each end product.
• 7. Establishing the planning premises
 Capacity Requirements Planning (CRP)
• It a technique that applies Master Scheduling logic to
address the capacity issues in an organisation.
• In addition to MRP, we need capacity in the form of
resources such as machines and labour.
• CRP is necessary to ensure that what needs to be produced
during a period can in fact be produced.
• CRP develops schedule for planned releases of capacities to
specific work orders as in an MRP schedule
 Capacity Requirements Planning (CRP)
• Like BOM provides information on material required to
complete one unit of parent component , a routing file or
process plan will provide information on the resources that
are required to complete the processing of one unit of the
parent component.
• CRP system employs the detailed schedule generated by an
MRP system as the basis for capacity planning.
FACILITIES LAYOUT AND MATERIAL
HANDLING STRATEGY
Layout
Objectives of Layout design
 Types of layout
• 1. Process Layout
• 2. Product Layout
• 3. Fixed Position Layout
• 4. Combination Layout
• 5. Group Technology
• 1. Process Layout
• Process layouts are facility configurations in which
operations of a similar nature or function are grouped
together.
• Also are referred to as functional layouts or Job shop
layout.
• Their purpose is to process goods or provide services that
involve a variety of processing requirements.
• Here machines are not arranged as per a production
sequence
 Advantages Disadvantages

• Lower initial capital investment • More floor space required

• Optimum level of degree of • Better coordination and
machine use planning required
• Breakdown of one machine will
not affect the entire production
process
• 2. Product Layout
• In a product layout, resources are arranged sequentially, based on the
routing of the products.
• This sequential layout allows the entire process to be laid out in a
straight line, which at times may be totally dedicated to the
production of only one product or product version.
• Product layout efficiency is often enhanced through the use of line
balancing.
• Line balancing is the assignment of tasks to workstations in such a
way that workstations have approximately equal time requirements.
• Advantages:
– Low cost of material handling, Lesser inventory & WIP, continuous flow of work
• 3. Fixed Position Layout
• A fixed-position layout is appropriate for a product that is
too large or too heavy to move.
• e.g., a hospital operating room where doctors, nurses, and
medical equipment are brought to the patient.
• construction (e.g., buildings, dams, and electric or nuclear
power plants), shipbuilding, aircraft, aerospace, farming,
drilling for oil, home repair, and automated car washes.
• In order to make this work, required resources must be
portable so that they can be taken to the job for "on the
spot" performance.
 Advantages Disadvantages

• Effective planning • Requires high skilled

• Great flexibility for change in
product design
manpower
• Time consuming due to
movement of machines to
production centre
• Complicate work schedule
• 4. Combination Layout
• Many situations call for a mixture of the three main layout
types. These mixtures are commonly called combination or
hybrid layouts.
• For example, one firm may utilize a process layout for the
majority of its process along with an assembly in one area.
• Alternatively, a firm may utilize a fixed-position layout for
the assembly of its final product, but use assembly lines to
produce the components and subassemblies that make up
the final product (e.g., aircraft).
• 5. Cellular Layout
• Cellular manufacturing is a type of layout where machines
are grouped according to the process requirements for a
set of similar items (part families) that require similar
processing.
• These groups are called cells.
• Therefore, a cellular layout is an equipment layout
configured to support cellular manufacturing.
• Workers in cellular layouts are cross-trained so that they
can operate all the equipment within the cell and take
responsibility for its output.
 Group Technology
• Processes are grouped into cells using a technique
known as group technology (GT).
• Group technology involves identifying parts with similar
design characteristics (size, shape, and function) and
similar process characteristics (type of processing
required, available machinery that performs this type of
process, and processing sequence).
 Flexible Manufacturing System (FMS).
• An automated version of cellular manufacturing is
the flexible manufacturing system (FMS).
• With an FMS, a computer controls the transfer of
parts to the various processes, enabling
manufacturers to achieve some of the benefits of
product layouts while maintaining the flexibility of
small batch production.
Service layouts
 Material Handling Strategy
• When manufacturing is automated, the Material
Handling System (MHS) also to be automated
• An integrated MHS is made up of three basic elements
– i) Automated Storage System
– ii) Automated Transport System
– iii) Automated Material Transfer System
• i) Automated Storage System:
• Used for large scale bulk storage as well as for small inline
buffer storage.
• Automated storage and retrieval system is the technology
that takes the maximum advantage of the cubic space
while inherently offering security and inventory control.
• Can be used for storage operations ranging from
maintenance supplies to raw materials for production,
packaging and work in process.
• They are in the forefront of warehouse automation
• ii) Automated Transport System
• Automated transport systems are used to move parts and
products from the storage systems to the production
operations
• Automated guided Vehicle (AGV) system forms one of the
most exciting and dynamic tools in material handling today.
• AGVs are battery powered vehicles that can move and
transfer materials by following prescribed paths around the
manufacturing floor.
• iii) Automated Material Transfer System
• Used to load and unload materials at workstation.
• The use of robots for material handling can be beneficial for
number of reasons.
• The industrial application of robots is wide-ranging
particularly in assembly operations.
• They typically perform most of the loading and unloading
chores at each machining centre or buffer location.
• A rail-guided transport system have been developed in the
recent years which is effectively a compromise between a
conveyor system and an AGV.
Module 3
MATERIALS MANAGEMENT AND
VENDOR MANAGEMENT