Chapter 09

Layout strategy

1
Global Company Profile:

McDonalds- Layout strategies

• Introduced indoor seating-1950s

• Drive through windows-1970s

• Addition of breakfast- Product strategy-1980s

• Addition of playing areas- Late 1980s

• Re-design of kitchens- Made by you- 1990s

• Self-service Kiosk- 2004

2
The strategic importance of Layout decisions
• Higher utilization of space, equipment, and people

• Improved flow of information, material, and people

• Safer working condition

• To ensure improved customer interaction

• Flexibility calls for a change

3
Types of layout
• Office layout- Positioning workers/equipment/space/offices to
assist in the information flow.

• Retail layout- Utilization of shelf space according to customer

demand.

• Warehouse layout- To consider the trade-off between space and

material flow.

4
Continue…
• Fixed-position layout- For positioning equipment/layout requirement
around project-bulky products.

• Process-oriented layout-Designed for low volume and high variety ‘job

shop’ production.

• Work-cell layout- To arrange equipment/machine to focus on the production

of single/related products.

• Product-oriented layout- To improve utilization of repetitive jobs.

5
What is a good layout ?
One that contributes to/improves:

• Material handling equipment

• Capacity and space requirements

• Environment and aesthetics

• Flow of information

• Cost of moving between various work areas

6
Office layout
• Emphasis is on the ‘flow of information’.

• They are in constant flux.

• Part arts and part science.

• Should offices be private or open cubicles ?

• Information flow-noise limitations?
• Same entrance, rest rooms, lockers and cafeteria used by all employees?
7
8
Retail layout
• It is based on the idea of ‘exposure of products’ to customers.
• The greater the rate of exposure, the greater the sales.
• Five important steps:
1. Locate the high-draw items around the periphery of the store.

2. Use prominent locations for high-impulse/high-margin products.

3. Distribute power-items (items that may dominate the purchasing trip) to both sides of the aisle.

4. Use end-aisle locations due to their high exposure.

5. Convey the mission by selecting/positioning the lead-off department.

o Slotting.
9
10
Servicescapes- the physical surroundings and their impact.
• Ambient conditions- Background, lightening, sound, smell and
temperature.

• Spatial layout and functionality- Customer circulation path

planning, product grouping etc.

• Signs, symbols and artifacts- Characteristic of building design

e.g., carpeted areas/ picture frames.

11
Warehousing and storage layouts
• To find an optimum trade-off between handling cost and costs
associated with warehouse space.

• Handling cost is concerned with costs associated with incoming

transport, storage, movement of material, outgoing stock, people,
material and supervision.

12
Cross-docking
• It is used for avoiding placing material/supplies in storage by
processing them as they are received.

• In manufacturing-product is received directly to assembly line.

• In distribution- pre-sorted load arrive at the shipping dock for
immediate shipment.
Challenges in cross-docking:
I. Tight scheduling
II. Accurate information of inbound products
13
Random stocking
• The combination of Automatic Identification System (AISs) with
effective management information system.

• It is used to know the quantity and location of each product unit.

14
Fixed position layout
• Project remains in one place and workers and equipment come to that one
work area.
• Ship, highway, bridge, house etc., are examples of fixed position layout.

• Three complications in a fixed position layout:

1. Limited space.
2. Different items become critical as the project develops.
3. A dynamic level of material volume is needed.

15
16
Process oriented layout
• Similar machines/equipment are grouped together.

• Such arrangement is capable of handling variety of products/services.

• The challenges, however, are related to:

1. Difficult scheduling
2. Setup, material handling and labour costs can be high

17
Process oriented layout

18
19
Continue…
• Arrangement of work centres to minimize the costs of material
handling.

• The main cost components involved are:

1. Quantity of load/people moving between centres and,

2. Distance between the centres.

20
• The cost and/or distance can be minimized by using the relationship:

21
Example
• Arrange six departments in a factory to minimize the material handling costs. Each department is
20 x 20 feet and the building is 60 feet long and 40 feet wide.

1. Construct a “from-to matrix”

2. Determine the space requirements
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. Try to improve the layout
6. Prepare a detailed plan

22
23
24
25
26
27
28