Operations Management

MBA

Plant/facility Layout
 Introduction
Definitions
• Plant Layout determines how the transforming resources are
positioned relative to each other and how various tasks are
allocated to create value/ produce goods & services.
It is the arrangement of machines and equipment in office,
manufacturing facilities, storage areas, a retail store, an office, a
warehouse etc.
Layout is concerned with relative location of :
Facilities, machines, equipment, and people within the
operations
It is the first thing one would notice when you enter an operations
facility. Layout governs appearance, flow of resources, cost &
efficiency of operation

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 The Plant/Facilities Layout Challenge

Difficult and expensive

Layout decisions are infrequent but important
Managers are normally reluctant to do it to often

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Reasons /Triggers for Layout decisions
Introduction of new products
Changes in demand (production volumes) – has
impact on Volume-Variety Characteristics and hence
choice of productive system/layout
Changes in product design
New machines /process technology
Bottle necks, too large buffer stocks in the value
chain.
Inefficiencies in operations and utilization of
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Reasons /Triggers ctd
Congestion and uneconomical utilization of space.
Long distances in the work flow process - too long
transfer times
Simultaneous bottle necks and workstations with idle
time.
Qualified workers carrying out too many simple
operations.
Labor anxiety and discomfort. Accidents at the facility.
Marketing requirement to enhance image and attract
customers
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Major areas of concern

Therefore, layout can be carried out in the

following areas;
i. Products
ii. Process and
iii. Logistics as illustrated

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Major areas of concern ctd
Product

Layout
Logistics Process

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 Goals/Objectives of Layout Decisions
Layout decisions must start with objectives of the layout.The following
are examples of objectives:

Economies in materials, facilitate manufacturing process and
handling of semi-finished and finished goods .

Proper and efficient utilization of available floor space.

Work-flow: To ensure that work proceeds from one point to another
point inside the plant without any delay i.e. to avoid congestion and
bottlenecks . allowing workers and equipment to be more productive.

Careful planning to avoid frequent changes in layout which may
result in undue increase in cost of production – provide for the
preferred future and flexibility

To provide adequate safety to the workers from the accidents .

To meet the quality and capacity requirements in the most
economical manner- minimal investment

To provide efficiency in material handling system
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 Good Layout achieves the following..
Reduces bottlenecks in moving people or material.
Minimizes materials-handling costs.
Reduces hazards to personnel.
Utilizes labor efficiently.
Increases morale.
Utilizes available space effectively and efficiently –
sufficient space for both equipment and personnel to
perform allocated tasks
Provides flexibility.
Provides ease of supervision.
Facilitates coordination and face-to-face communication
where appropriate.

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 Factors affecting Plant Layout
The final solution for a Plant Layout has to take into account a
balance among the characteristics and considerations of all
factors affecting plant layout, in order to get the maximum
advantages.
The factors affecting plant layout can be grouped into 7
categories:
Materials
Machinery
Labor
Material Handling
Waiting Time
Customer Service
Auxiliary Services

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Factors affecting Plant Layout ctd
Materials
 Main factors to be considered:
 Size,
 Shape,
 Volume

 Weight, and
 The physical-chemical characteristics, since they
influence storage and material handling processes.

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Factors affecting Plant Layout ctd
Machinery
 Having information about the processes, machinery,
tools and necessary equipment, as well as their use and
requirements is essential to design a correct layout.
 It’s essential as well to know about

 space required,
 shape,
 height,

 weight,
 quantity and type of workers required,
 risks for the personnel

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Factors affecting Plant Layout ctd
 Labor
 Labor has to be organized in the production process
(direct labor, supervision and auxiliary services).
 Environment considerations: employees’ safety, light
conditions, ventilation, temperature, noise, etc.
 Process considerations: personnel qualifications,
flexibility, number of workers required at a given time as
well as the type of work to be performed by them.
Material Handling
 Material handling does not add value to the product; it’s
just waste.
 Objective: Minimize material handling as well as
combining with other operations when possible,
eliminating unnecessary and costly movements.
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Factors affecting Plant Layout ctd
Waiting time - Stock
 Objective: Continuous material flow through the facility,
avoiding the cost of waiting time and demurrages
that happen when the flow stops.
 On the other hand, the material waiting to flow through
the facility not always represents a cost to avoid. As stock
sometimes provides safety to protect production,
improving customer service, allowing more economic
batches, etc.
 It’s necessary then to consider space for the

required stock at the facility when designing the

layout.
 Resting time to cool down or heating up…
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Factors affecting Plant Layout
Auxiliary Services
 Support the main production activities at the plant:
 Related to labor: Accessibility paths, fire protection

installations, supervision, safety, etc.

 Related to material: quality control.

 Related to machinery: maintenance and electrical

and water lines.

 The auxiliary services represent around 30% of the
space at a facility.
 The space dedicated to auxiliary services is usually
considered as waste.
 It’s important to have efficient services to insure that

their indirect costs have been minimized.

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 Basic Types of Layout
The production process normally determines the type of plant
layout to be applied to the facility:
1. Fixed position plant layout
 Product stays and resources (tools, equipment, workers)move
to it – because of size, shape or other characteristics
(delicate)
2. Product oriented plant layout
 Machinery and Materials are placed following the product
path. – Usually standardized product, high volume
operations
3. Process oriented plant layout (Functional Layout).
 Machinery/ Facilities are placed according to what they do
and materials go to them. Similar processes and resources are
placed near each other together
4. Cellular/Hybrid Layout combines different layouts types
(functional & product layout systems)
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Fixed Layout
This type of layout is used in those situations where
the goods are of such a size and weight that their
movement from one place to another is not possible
e.g. ship-building, manufacturing of locomotives,
construction of dams and bridges .

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Fixed Product Layout

Lathe Press Grind

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Weld Paint Assembly

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Fixed Position Layout
Example:
Ship Manufacture
Open heart surgery
Road construction

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Advantages
Layout is simple and capable of frequent
adjustments both with respect with respect
to product and the process.
Labourers and workers can be employed
and remain busy throughout the process on
one work.

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Disadvantages
Since machines and equipments are
transferred to some particular place, heavy
and sophisticated equipment cannot be
used in such cases.
Due to low efficiency of men and machines,
this layout is suitable only for some special
type of project and for the production of
smaller amount of items
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 Product Layout
Here the position of a particular machine is
determined at some definite stage or place
where the machine is required to perform
some operation from a sequence of
operations designed to manufacture the
product .

Storage Machine Machine Machine Storage

1 A B C 2

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Advantages
Ensures smooth and regular flow of
material and finished goods.
Provides economy in materials and labor by
minimizing wastage .
Reduces material handling.
Low cost labor procurement and lesser
training requirement .
Lesser inspection.

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Disadvantages
Product layout is of inflexible nature: the
facilities are designed to perform special
operations. The machines cannot be inter changed
either in capacity or any other operation .
Supervision is more difficult: the system
requires more specialized and skilled supervision .
Require heavy capital investment: in this
system there is unavoidable duplication of
facilities, which increases capital investments and
risks.
Breakdowns can disrupt operations
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 Functional/Process Layout
In this layout more emphasis
is given to specialization or
functional homogeneity on
various components of the
system. P1 P2
All operations(resources, Machine
processes, ) of similar nature A
are grouped together in the Machine Machine
same department. Here B D
machines performing same Machine
type of operations are C
installed at one place i.e.
drilling, milling, packaging. – output
or x-rays, microscopes, other
test kits in hospital labs. Examples: Hospitals;
Supermarkets; Libraries, Machine
Shops; Hair Saloons, etc
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Functional/Process Layout

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Examples of Functional/Process Layout

Manufacture of automotive/aircraft parts

Hospital Operations – x-ray machines,
laboratories, operating theatre etc.
Super market operations

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Advantages
Lower capital investment: the production
facilities can be utilized to greater capacity
with less duplication of machines .
Wide flexibility in production facilities :
the system is more flexible to adjust
modifications and changes in production
strategies .
Effective supervision .
Machine breakdown does not disrupt
production schedules.
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Disadvantages
More material handling: here there is no
definite channel through which all work can flow .
There is too much movement of goods from one
place to another inside the plant enhancing the
chances of material waste and higher costs.
Requires highly skilled labour creating difficulty in
labour procurement.
Inspection is more frequent and costlier.
Machine loading is high .
High investment in raw-materials and work in
progress.
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 Cellular/ Hybrid Layout
Physically groups machines and processes into cells to work
on products that have similar shapes and processing
requirements.
Cellular layouts are now widely used in metal fabricating,
computer chip manufacture, and assembly work. The overall
objective is to gain the benefits of product and functional
layouts in job shop kinds of production. These benefits
include
1. Better human relations. Cells consist of a few workers
who form a small and coordinated workforce.
2. Teamwork methodology turns out complete units of
work and improves cohesiveness
3. Improved operator expertise. Workers see only a
limited number of different parts in a finite production
cycle, so repetition means quick learning.
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Benefits ctd

4. Less in-process inventory and material

handling. A cell combines several production
stages, so fewer parts travel through the shop.
5. Faster production setup. Fewer jobs mean
reduced tooling and hence faster operational
set-up
Examples include: Mental fabricating, computer
chip manufacture and assembly work

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Advantages/Disadvantages
Advantages
Implied reduction of necessary control
Reduced material handling
Reduced set-up time
Reduced tooling
Reduced in-process inventory
Reduced expediting
Increase operator expertise
Improved human relations.

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Disadvantages
Reduced shop flexibility
Possible reduced machine utilization
Possible extended job flow times
Possible increased job tardiness.

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Selecting appropriate layout – Volume-Variety Characteristics

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 End of lecture

Thank you for your contributions

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