Chapter 1-Introduction to Facility PlanningIM313 Facilities PlanningSoutheast Missouri State UniversityCompiled by Bart WeihlFall 2001

Competitive Business ChallengesWhat makes some companies products seem to have a cost advantage over others? Better manufacturing processes Desire to continuously improve Streamlined plant layout

Cycle TimeOne of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost. Henry Ford, 1926

Cycle TimeOne factor contributing to this lengthy production cycle is the facility layout. Manufacturing facilities design and material handling affect the productivity and profitability of a company more than almost any other corporate decision.

Plant LayoutRaw StockQCRecShipShearScrew MachineQCStampAssemblyBrakeMillLatheWeldFinishGrindParts StockDrill

How Can We Improve?Lean Manufacturing and Cellular Flow6 Assemblers Batch Assembly C/T 4.5 daysBefore:

How Can We Improve?Lean Manufacturing and Cellular Flow6 Assemblers Flow / Pull C/T 53 minutesAfter:

Manufacturing SavingsWhere can we save costs in manufacturing?Reduce or Eliminate- Work-in-process inventories (WIP) Non-value added activities Material handling costs Processing time Product defects

Lean = Eliminating the WastesValue AddedTypically 95% of all lead time is non-value addedOverproductionWaitingTransportationNon-Value Added ProcessingExcess InventoryDefectsExcess MotionUnderutilized PeopleNon-Value Added

Eight Wastes

Manufacturing SavingsThe largest components of factory labor and the cost of materials purchased and used in a factory are: Internal transportation costs Material handling costs Storage costsThis includes both our manufacturing plants and those of our suppliers!

Competitive Global MarketplaceTodays world is much more competitive than the world in which our parents and grandparents worked.Open-market countries depend heavily upon imported manufactured goods.

Competitive Global Marketplace ExampleAll components assembled in USA . . .Then shipped to China for assembly into gas grills which are then shipped back to the USA for retail sale!

Market Driven Competitiveness

Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death.

It doesnt matter whether you are a lion or a gazellewhen the sun comes up, you had better be running.Survival of the fittest!

Facilities Layout GoalsGoals should include:Minimize unit cost. Minimize project cost.Optimize quality.Promote the effective use of (a) people, (b) space, (c) equipment, and (d) energy.Provide for (a) employee convenience, (b) employee safety, and (c) employee comfort.Control project cost.Achieve the production start date.Build flexibility into the plan.Reduce of eliminate excessive inventory.Achieve miscellaneous goals.

Five Types of Facility Design Projects New Facility fewer restrictions and constraints on the layout since it is new

New Product integration of a new product into the existing process and layout

Design Changes incorporate the impact of design changes into the manufacturing process

Cost Reduction redesign the existing layout to facilitate cost reduction programs and ideas

Retrofit similar to a new facility layout except with the constraints present

Brief History of Plant Layout Companies of the past utilized a draftsperson to complete the plant layout.

The general belief was that there was a void of expertise in facility layout design.

Problems could be overcome with an extra forklift or conveyor length.

Impact of Poor Plant LayoutHigh material handling costsCycle and lead time delaysHigh WIP inventoriesLower qualityProduct damageSafety and morale problemsPoor equipment utilizationCongested aislesWasted floor space

Facility Improvement PitfallsPoorly planned layoutLack of employee involvementLack of management commitmentBudgetary constraints leading to a piecemeal approachFocus on the almighty ROI versus the future of the businessShort term management focus

Continuous Improvement Doctrine (CID)The continuous improvement doctrine (CID) mandates that a company will commit to continuous, ongoing improvement plans for production processes, materials handling, and plant layout. They further recognize that these items are essential to achieve competitive advantage. The CID plan will be developed and maintained on an ongoing basis.#1

Lean Building BlocksContinuous ImprovementVSM

Continuous ImprovementOld Adage:

If you always do what you always did, youll always get what you always got.

Competitive Corollary:

If the other guy gets BETTER, youre gonna get LESS.

Cycle Times and Materials HandlingOld Adage:

the smaller the lot size, the higher the materials handling and setup costs

the faster the assembly line conveyor speed, the higher the production output

Response:

Ask the right answer and get the right question . . .Focus on the true problems that prevent smaller lotsizes and faster production speeds.

Cycle Times and Materials HandlingGetting the right answer to the right question. . .Units / shift:60 sec / cycle time per unit = 60 / 18 = 3.33 units per minute3.33 units per minute X 60 minutes X 7 hours = 1400 units / shift

Cycle Times and Materials HandlingGetting the right answer to the right question. . .Units / shift:60 sec / cycle time per unit = 60 / 15 = 4 units per minute4 units per minute X 60 minutes X 7 hours = 1680 units / shift

Cycle Times and Materials HandlingThe right question was how to increasing production while reducing cycle time. . .the wrong answer was speeding up the line!Results:1,680 / 1,400 = 1.2 = 20% Production Increase

Materials Handling Materials handling is a non-value activity that your customer is unwilling to pay for.

Constantly question material handling methods and manufacturing methods. . . your competitors do!

Just because you have always done it that way does not make it right.

Materials Handling MistakesA Local Companys Materials Handling Process-Step 1-Begin AssembliesStep 2- Move to WIP WarehouseStep 3- Store in WIP WarehouseStep 4- Move back to Manufacturing

Materials Handling MistakesLocal Companys Materials Handling Process-Step 5- Begin AssemblyContinue Until Complete36 Trailers / DayStep 6- Back to the Warehouse

Materials Handling MistakesMaterial was handled so much that damage was inevitable.

Their customer began penalizing them $100 per damaged part received due to the poor finished goods quality.

The materials handling inefficiencies manifested themselves in higher product costs, larger amounts of WIP, poor product quality and longer lead times.

The parts were inspected eight (8) times on average, product yield was a dismal 60%.

A reduction in two (2) inspections steps generated over $1M in annual savings. . .the right question should have been Why are we moving these parts so much?Company Results:

Materials Handling Example

Key Manufacturing FundamentalsFour Fundamental Customer Expectations:

Product QualityDelivery as scheduled / requestedFlexibility to handle change and serviceLow $$$One method to achieve this is by implementing Lean Manufacturing principles

Benefits of LeanLead Time Reduction

0255075100Percentage of Benefits AchievedProductivity Increase

WIP Reduction

Quality Improvement

Space Utilization

ConclusionTwo Major Elements of the Direct and Indirect Factory Labor Costs Equation are Effected by:1. The way we handle materials2. The way our facilities are laid outThis will be our focus this semester