LAYOUT STRATEGYOPERATIONS MANAGEMENT

AimTo develop an economic layout that will

meet the firm’s competitive requirements

TYPES

Office layout - Positions workers, equipment, and spaces to provide movement of info.

Retail layout - Allocates shelf space affected by customer behavior.

Warehouse layout - Addresses trade-offs between space and material handling.

Fixed-position layout – Addresses layout requirements of large, bulky projects such as ships and buildings

Process-oriented layout - low-volume, high-variety production (also called job shop or intermittent production)

Work cell layout - a special arrangement of machinery and equipment to focus on production of a single product or group of related products

Product-oriented layout - seeks the best personnel and machine utilizations in repetitive or continuous production

REASON BEHIND LAYOUT DECISIONS

Higher utilization of space, equipment, and people

Improved flow of information, materials, or people

Improved employees’ ZEST and safer working conditions

Improved customer/client interaction

Flexibility

A CLASSIC ex. McDonald’sINNOVATION TIMELINE + LAYOUT DECISIONS

1950sINDOOR SEATING

1970sDRIVE-THROUGH WINDOW

1980sADDING BREAKFAST TO THE MENU

1990SADDING PLAY AREAS

FOCUSING INTO KITCHEN!

Sandwiches assembled to order

Elimination of some steps, shortening of

others No food prepared ahead

except patty: Tikki as we call it

New bun toasting machine and new bun

formulation

Repositioning condiment containers

THE INNOVATION Recipe $100 MILLION

SAVING

S on FOOD

Cost

HO

W IT

LO

OKS

NEXT EX. SUPERMARKET RETAIL LAYOUT

Aim

Maximize profitability per square foot of floor space

HOW?By Customer Exposure

AffectingSales and Profit

SOME COMMON LAYOUT DECISIONS

Locate high-draw items around the periphery of the store

Use prominent locations for high-impulse and high-margin items

Distribute “power items” to both sides of an aisle to increase viewing of other items

Use end-aisle locations

Convey mission of store through careful positioning of lead-off department

BUT HOW RETAILER SLOT ITEMs

Manufacturers pay fees to retailers to get the retailers to display (slot) their product

Limited shelf space

An increasing number of new products

Better information about sales through POS data collection

Closer control of inventoryFACOT

RS

BEFO

RE

RETA

ILER

FEEDBAC

K

TECHNIQUES UTILISED

Computerized tool for shelf-space management

Generated from store’s scanner data on sales

SHELF’S PLANOGRAM

III RD ex. Warehouse layout

Aim

Optimize trade-offs between handling costs and costs associated with warehouse space

Maximize the total “cube” of the warehouse –utilize its full volume while maintaining low

material handling costs

From where mhc comes…

All costs associated with the transaction

Incoming transport

Storage

Finding and moving material

Outgoing transport

Equipment, people, material, supervision, insurance, depreciation

Some SALIENT FEATURES

Warehouse density tends to vary inversely with the number of different items stored

Automated Storage and Retrieval Systems (ASRS) can significantly improve warehouse productivity

Dock location is a key design element

Automated Storage and

Retrieval Systems

A variety of computer-controlled methods for automatically placing and retrieving loads from

specific storage locations

BEN

EFI

TS

Space savings

Increased productivity/Reduced labor

Increased accuracy

Reduced inventory levels

TRADITIONAL WAREHOUSE LAYOUT

Shipping and receiving docks

Office

Cu

sto

miz

atio

n

Conveyor

Storage racks

Staging

TOYOTA PRODUCTION SYSTEM

Their management philosophy and practices

Originally Called JIT Production

Founder : Sakichi Toyoda ( Toyota’s Founder) , his son Kiichiro Toyoda, and the engineer Taiichi Ohno.

Revolutionary

THE Toyota way

Waste of overproduction (largest waste)

Waste of time on hand (waiting)

Waste of transportation

Waste of processing itself

Waste of stock at hand

Waste of movement

Waste of making defective products

7 kinds of muda (wastage)

Continuously solving root problems drives organizational learning

Add value to the organization by developing your people and partners

The right process will produce the right results

Long-term philosophy

Respect for People

Continuous Improvement

PRINCIPLES

RESULTS

Able to greatly reduce leadtime and cost using the TPS, while

improving quality.

Enabled it to become one of the ten largest companies in the

world.

Iv th ex. A description of

Production factory layout

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.

Construct “from-to matrix”

Develop an initial schematic diagram

Determine the cost of this layout

Try to improve the layout.

STEPS

IN

VOLV

ED

formulation

Minimize cost = ∑ ∑ Xij Cij

where n = total number of work centers or departments

i, j = individual departments

Xij = number of loads moved from department i to department j

Cij = cost to move a load between department i and department j

From-to matrix

Department Assembly Painting Machine Receiving Shipping Testing(1) (2) Shop (3) (4) (5) (6)

Assembly (1)

Painting (2)

Machine Shop (3)

Receiving (4)

Shipping (5)

Testing (6)

Number of loads per week

50 100 0 0 20

30 50 10 0

20 0 100

50 0

0

Schematic diagram

Room 1 Room 2 Room 3

Room 4 Room 5 Room 6

60’

40’

Receiving Shipping TestingDepartment Department Department

(4) (5) (6)

Assembly Painting Machine ShopDepartment Department Department

(1) (2) (3)

CALCULATING COST

Cost = $50 + $200 + $40(1 and 2) (1 and 3) (1 and 6)

+ $30 + $100 + $10(2 and 3) (2 and 4) (2 and 5)

+ $40 + $100 + $50(3 and 4) (3 and 6) (4 and 5)

= $620

Cost = ∑ ∑ Xij Cij

n

i = 1

n

j = 1

PRESENt

100

50

50

10100

30

Interdepartmental Flow Graph

1 2 3

4 5 6

Refined layout

Room 1 Room 2 Room 3

Room 4 Room 5 Room 6

60’

40’

Painting Receiving ShippingDepartment Department Department

(2) (4) (5)

Assembly Machine Shop TestingDepartment Department Department

(1) (3) (6)

IMPROVED GRAPH

Interdepartmental Flow Graph

20

100

50

50

1001 3 6

2 4 550

20

10

REDUCED COST

Cost = $50 + $100 + $40(1 and 2) (1 and 3) (1 and 6)

+ $60 + $50 + $20(2 and 3) (2 and 4) (2 and 5)

+ $20 + $100 + $50(3 and 4) (3 and 6) (4 and 5)

= $490

Cost = ∑ ∑ Xij Cij

n

i = 1

n

j = 1

CONCLUSION

DEEPAK SHARMA

IIT MANDI

HERE we DISCUSSED 4 examples giving a glimpse of how layout decisions are carried out at various stages from

Production Retailing.

HOPE IT WAS WORTH SPENDING TIME!

Copyright 2012 Deepak Sharma IIT Mandi