Facilities planning

Facilities Planning, Edition 4

By James A. Tompkins, John A. White, Yavuz A.
Bozer, J. M. A. Tanchoco
John Wiley & Sons, 2010
 Facilities Planning
Facilities planning determines how an
activity’s tangible fixed assets best support
achieving the activity's objectives
• Examples:
a. In manufacturing, the objective is to support production.

b. In an airport, the objective is to support the passenger

airplane interface.

c. In a hospital, the objective is to provide medical care to

patients.

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 Factory/plant

MACHINES/
RESOURCES
MAN EQUIPMENTS

PRODUCTION SYSTEM
MATERIAL
ENERGY

INFORMATION
MONEY

FINISHED GOODS

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 Facility Planning Objectives
1. Support the organization’s mission through
improved material handling, materials control
and good housekeeping.
2. Effectively utilize people, equipment, space and
energy.
3. Minimize capital investment.
4. Be flexible and promote ease of maintenance.
5. Provide for employee safety and job satisfaction.
 Objectives of Facilities Planning
• Improve customer satisfaction
• Maximize speed
• Reduce costs
• Integrate the supply chain
• Support the organization’s vision
• Effectively utilize resources
• Maximize return on investment (ROI)
• Maximize return on assets (ROA)
• Be easy to adapt and to maintain
• Provide safety for employees
 Facility Planning-Hierarchy
Facility
Location
Structural
Design
Facility
Planning
Facility Layout
Design Design

Handling
System
Location : Designsuppliers, and
is the placement of a facility with respect to customers,
other facilities with which it interfaces.
Structure : consists of the building and services (e.g., gas, water, power, heat, light,
air, sewage).
Layout : consists of all equipment, machinery, and furnishings within the structure.
Handling System : consists of the mechanism by which all interactions required by the layout
are satisfied (e.g., materials, personnel, information, and equipment handling
systems).
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 Typical Design and Planning Problems

Facility Location Type, Number of Material Determining Flow of

Handling Devices Products (People)

Type, Volume of Products Determining Material Scheduling and planning of

to be Manufactured or Handling Methods Jobs (Service steps)
Service to be Provided

Overall System Design

Manufacturing (Service) Layout of Equipment
Processes Required Within Each Cell

Design of Components Layout of Machine Inventory Control

(Service) (Service) Cells

Type, Number of Determination of Machine Distribution of goods

Equipment Required (Service) Cells

Process Planning Tooling, Fixture Quality Control and

Determination Customer Service

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 Applications
• Manufacturing
• Healthcare
• Service
– Restaurants
– Banks
– Airports
– Entertainment
• Logistics and Distribution
– Ports/Terminals
– Distribution Centers

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Facilities Planning Process
Facilities Planning Process
Developing Facilities Planning Strategies
 A winning facilities planning process
• As previously stated, one method used to ensure that
the objectives are effectively translated into action is
the model of success. The model of success is effective
because it is lateral rather than hierarchical in its
approach. With the traditional top-down approach,
only a handful of people are actively involved in
ensuring that the objectives are met by driving these
goals and plans into action. The lateral structure of the
model of success communicates to everyone in an
organization where the organization is headed.
Developing Facilities Planning Strategies
Developing Facilities Planning Strategies
Developing Facilities Planning Strategies
 Examples of inadequate planning
• An engine manufacturer was planning to develop a new site.
Decisions had not been made concerning which products would be
off-loaded to the new site, nor what effect the off-load would have
on requirements for moving, protecting, storing, and controlling
material.
• An established brick-and-mortar retailer began accepting orders
through its Web site. The volume of orders received during the
holiday season peak could not be processed by its distribution
center. Gift certificates had to be mailed to all of the customers
whose orders weren’t delivered by Christmas. A study conducted
after the new year showed that poor configuration of storage racks,
ineffective replenishment processes, lack of proper product
slotting, and material handling equipment that could not efficiently
process the variety of the products’ attributes created a situation
that forced the entire fulfillment operation to grind to a halt.
 Examples of inadequate planning
• An apparel retailer built a new distribution center on the west coast
of the United States for all incoming goods from Asia. A subsequent
analysis showed the use of an all-water route from Vietnam through
the Panama Canal into the east coast of the United States to provide
significant cost savings, thus making the west coast facility obsolete.
• An aerospace-related manufacturer implemented cellular
manufacturing in its process planning and converted to
manufacturing cells in a machining department. No analyses had
been performed to determine queue or flow requirements.
Subsequent analyses showed the manufacturing cells were
substantially less efficient as a result of their impact on movement,
protection, storage, and control of work-in-process.
 Examples - cases
• Several firms have recognized the need for strategic facilities planning and are
doing it.
• A major U.S. airline developed 10-year and 20-year facilities plans to facilitate
decision making regarding fleet size and mix. Maintenance and support
facilities requirements were analyzed for wide-body and mid-sized aircraft. The
impact of route planning, mergers and acquisitions, and changes in market
regions to include international flights were considered in developing the plan.

The airline industry operates in a dynamic environment. Governmental

regulations and attitudes toward business are changeable, energy costs and
inflationary effects are significant, and long lead times are required for aircraft
procurement. For new-generation aircraft, an airline company might negotiate
procurement conditions, including options, eight years before taking delivery
of the airplane.
 Strategic Facilities Planning(SFP)
• Step 1: Understanding – Having a clear grasp of the organizations
mission, vision, value, and goals. Recognizing the company’s real
estate assets and needs in order to achieve those goals.

• Step 2: Analyzing – Asking how and if existing facilities reflect the

culture and core values of the organization. Consider location,
capability, utilization, and condition. Various types of measures can be
used to evaluate a company’s overall needs, including: GAP analysis,
strengths, weaknesses, threats, and opportunities analysis (SWOT),
strategic creative analysis (SCAN), and a host of others. The goal of
this data gathering is to get a clear picture of the company’s current
needs and space utilization, and how/when that will change over the
next five years. This is the basis of every Strategic Facilities Plan.
 SFP
• Step 3: Planning – The data gathered during the
analysis phase is then used to develop a realistic
and cost effective plan to meet company’s needs.
This detailed two to five-year plan must be accurate
enough to budget effectively, but flexible enough to
accommodate changes as conditions require.
• Step 4: Acting – Implementing the SFP and
reviewing it regularly, making adjustments and
updates as priorities and needs change.
 FP
• Facilities planning involves a continuous loop
– Feedback from the previous year’s guide, plans
for the current year, and plans for the following
year. 
• The planning process yields three plans with
different timelines and levels of detail:
• Master Plan
• Strategic Facilities Plan
• Tactical Plan
 FP
• The Master Plan – The strategic, high-level,
long term plan. 
• It may include the aesthetics of current and
potential buildings and grounds, phasing plans
for building sequencing, construction options,
and engineering assessments.  
• The master plan defines the overarching long-
term vision and how facilities contribute to the
business initiatives of the organization.
 FP
• The Strategic Facilities Plan – This identifies the
types of facilities needed in the coming two to five
years, the geographic location of the space, the
expected costs, and a timeline for achieving the
goals set out in the master plan. The SFP is built
by first gathering and analyzing data on current
space requirements and utilization, and then
forecasting future needs and expectations. It
allows you to be proactive, rather than reactive.
 FP
• The Tactical Plan – Day-to-day maintenance
schedules, operational plans and budget,
architectural designs and configurations, floor
plans, and capacity charts. The steps that will
be taken to achieve the goals set out in the
SFP.
 Strategic Facility Planning
• A Strategic Facility Plan (SFP) is typically defined as a two
to five year strategy for the management of a company’s
entire portfolio of owned and/or leased space. 
• A SFP identifies the type, quantity, and location of the
space required to fully support the organization’s
business initiatives. 
• It should align with the company’s overall strategic
business goals and be used to formulate short and long
term tactical plans, including the prioritization and
funding of facilities related projects.
 Why SFP?
• Successful companies focus on core competencies, whether that
is manufacturing, sales, logistics, professional services, or any
other type of business.
• Managing real estate is typically just a necessary function, not a
fundamental business strength. However, because work
environment is such a significant factor in employee satisfaction
and productivity, every company’s strategic vision should include
Real Estate Portfolio goals that mirror and support their short
and long-term plans.
• The company’s strategic facilities plan should identify specific
projects, allocate budget and incorporate a quality control
management system for oversight.
 Why SFP?
• The most common reasons for creating a formal SFP include:
• Growth
• Mergers & Acquisitions
• Relocation
• Downsizing
• Reorganization
• Even if there are no major changes anticipated, it is prudent
to include facilities planning when allocating financial
resources and identifying short and long-term company
goals.
 SFP
• Once the organizations culture, vision, and
goals are clearly understood, the go to
Strategic Facilities Plan – collecting and
utilizing information. 
• 1) Gather / Analyze Current Data
• 2) Validate Existing Conditions & Forecast
Future Requirements
• 3) Explore Options / Compare Costs
 SFP- Gather current data
• Solicit information from key stakeholders, asking each department
to validate existing headcount and space and to forecast each
from their perspective (bottom-up validation).
•  Identify the current square footage used for each type of
workspace: office, lab, common, warehouse, special use, and
circulation. 
• Assess the conditions, usage, lifecycle costs, highest and best use,
stay/move options, and financial evaluations. 
• Gather building statistics about the capacity of the current site /
building / floor / suite. 
• Determine any existing conditions that must remain, like current
offices and cube count and or square footage.
 SFP- Gather current data
• Stay / Move analysis
• Lease vs. Buy analysis
• Analysis of highest and best use
• Buy / Build / Expand / Renovate options
• Feasibility analysis
• Alternative workplace strategy
• Consolidation study
• Decentralization study
• Space optimization plan (Restacking Plan)
SFP - Validate Existing Conditions & Forecast Future Requirements

• Traditionally, this has been done by creating spreadsheets, interviews and boots
on the ground. Stakeholder’s input is critical, as well as many other metrics that
provide data (such as sensors).
• The data is gathered, consolidated and analyzed. Excel has a large presence as
the go-to tool; technology and automation are changing the approach to
capturing and analyzing the data.
• Then consider the need for quiet, social, and meeting space. Confirm adjacency
requirements (who should be located next to whom and for what reason).
• And finally, calculate space requirements per site, (average square footage
needed per person for office space, plus the square footage for common,
meeting, quiet, kitchen space, etc).
• The objective is to not only forecast future space needs, (the type, quantity,
location, and fit-out) but to ensure adequate lead time to procure and prepare
the space, and sufficient budget to fund short and long-term projects.
 SFP- Explore Options / Compare Costs

• Next, consider options for securing and outfitting

the space.
• That includes creating a baseline budget and
calculating the cost of each alternative. 
• Presenting options in a way that clearly compares
costs, opportunities and challenges will help
management choose the best path forward.
 SFP
• Once the strategic facilities plan has been
approved, the Tactical Plan spells out how each
step will be accomplished.  Will the company
buy, build or lease? When will the space be
available? How will the migration occur if a
move is necessary?
• A Strategic Facilities Plan provides the
direction and detail necessary to successfully
manage a corporation’s real estate portfolio.
 Quiz
1. The five key elements of a strategic facilities plan
model are: trends analysis (environmental scan);
specific objectives; a written short and long-term
facilities plan; a review of the corporate mission
and workplace culture; and an:
a. written contingency plan,
b. rigid time line.
c. evaluation mechanism.
d. mechanism to control churn.
 Quiz
1. In the corporate organizational hierarchy, the facility manager should be
positioned:
A. As a senior Vice President
B. As a consultant to senior managers
C. a level below the CEO
D. an advisor to the board
2. A product that you can not see or touch but you can only feel is
tangible/intangible
3. Is not a function coming under facilities management
1. Layout
2. Material handling and storage
3. Build environment management
4. Benchmarking
5. Demand forecasting