OP02 - Facilities Planning

Prof. A. D. Raoot, NITIE

What is a facility?
Organization, part of supply chain, remain competitive in global market Something that facilitates an action or a process Something created to serve a particular function Dynamic entity flexible and adaptable to changed requirements Achieve supply chain excellence

Supply Chain Excellence

Business as usual Link excellence Visibility Collaboration Synthesis Velocity

Supply Chain Excellence

Business as Usual - Organization works hard to maximize individual functions
- Each function tries to perform well within its individual silo

Link Excellence
- Remove functional boundaries - Process orientation - Begin journey of continuous improvement

Visibility
- Organizations need to work together - Visibility minimizes supply chain surprises - Provides information links needed to understand ongoing order status

Supply Chain Excellence

Collaboration
- SC works as a whole to maximize customer satisfaction & minimize inventory. - Collaboration is achieved through application of technology and true partnership.

Synthesis
- Unification of supply chain to form a whole, which creates a complete pipe line from customer perspective - Results of synthesis : Increased ROA, Increased customer satisfaction, Reduced cost, an integrated SC

Velocity
- Business environment demands speed

Supply Chain Excellence

Facilities critical components of multilevel networks for supply chain excellence Each organization in supply chain should plan facilities with their supply chain partners in mind Facilities in SC with following characteristics: 1. Flexibility Handle variety of requirements 2. Modularity Cooperate efficiently over wide range of operating rates 3. Upgradability Incorporate advances in equipments and technology 4. Adaptability Accommodate changes in facility usage 5. Selective Operability Understanding how each facility segment works and allows contingency plans to be put in place

Definition of Facility Planning

Facility Planning determines how an activitys tangible fixed assets best support achieving the activitys 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.

Continuous Improvement for Supply Chain Excellence must be an integral element of Facilities Planning cycle

Hierarchy of Facility Planning

Location: is the placement of a facility with respect to customers, suppliers, and 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).

Facility Planning
The capital investment in land, buildings, technology, and machinery is enormous A firm must live with its facility planning decisions for a long time, and these decisions affect:
Operating efficiency Economy of scale Ease of scheduling Maintenance costs Profitability!

Importance of Facilities Planning

Majority of an organization's capital investment is in facilities - 8% of GNP spent annually on facilities 1999: $320 billion on structures ($297 billion on new structures) Single most important cause of high material handling costs : lack of strategic facilities planning Material handling accounts for 20 - 50% of operating costs in manufacturing Effective material handling can reduce costs by 10 -30%

Facility Planning
HOW MUCH long range capacity is needed WHEN additional capacity is needed WHERE the production facilities should be located WHAT the layout and characteristics of the facilities should be

WHY PLAN FACILITIES?

Expanding production/ services Replacement of obsolete/ inadequate facilities Relocation of facilities Business Process Reengineering Economic considerations force constant reevaluation and reorganization of existing facilities, systems, equipments and personnel Employee health, safety, environmental factors, community considerations

PHYSICAL COMPONENTS OF FACILITIES

BUILDING : Structures which house the facilities LAYOUT
the facilities

: Physical arrangement of the facilties

MATERIALS HANDLING : Way materials are moved within COMMUNICATIONS : Systems that transmit information UTILITIES : Distribution of heat, light , power, waste etc.
RELATIVE IMPORTANCE OF EACH COMPONENT VARIES FROM ONE FACILITY TO ANOTHER

PLANNING FUNDAMENTALS
BUILDINGS : Form, Materials, Design LAYOUT : Relationships, Space, Adustments

MATERIALS HANDLING : Materials, Move, Methods

COMMUNICATION : Information, Transmission, Means

UTILITIES : Substances, Distribution, Conductors

INTEGRATION of PHYSICAL COMPONENTS and FUNDAMENTALS is basic to developing EFFECTIVE FACILITY PLANS.

Engineering Design Process

Typically, design problems do not have welldefined, unique, optimum solutions. General Procedure for Solving Engineering Design Problems 1. Formulate the problem. 2. Analyze the problem. 3. Search for alternative solutions. 4. Evaluate the design alternatives. 5. Select the preferred design. 6. Implement the design.

Facilities Planning Process

Problem Symptoms 1. Problem Definition 2. Analysis 3. Synthesis Design 1 Design 2 Design n
New Needs

4. Evaluation

5. Selection

6. Implementation

Application of the Engineering Design Process to Facility Planning

1. Define (or redefine) the objective of the facility: Specify quantitatively the products to be produced or service to be provided. 2. Specify the primary and support activities to be performed in accomplishing the objective: Requirements for primary activities include operations, equipment, personnel, and material flows. 3. Determine the interrelationships among all activities: Both qualitative and quantitative relationships should be defined. 4. Determine the space requirements for all activities: These are determined considering the equipment, materials, and personnel requirements.

Application of the Engineering Design Process to Facility Planning

5. Generate alternative facility plans: Including alternative facility locations and alternative designs for the facility. 6. Evaluate alternative facility plans: Determine the important factors .For each candidate plan, evaluate if and how those factors will affect the facility and its operations. 7. Select a facility plan: Cost may not be the only major consideration. Pair wise comparison is a good ranking procedure.

Application of the Engineering Design Process to Facility Planning

8. Implement the facility plan: Considerable amount of planning must precede the construction of a facility or the layout of an area. 9. Maintain and adapt the facility plan: The facility plan must be modified as new requirements are placed, e.g., new energy saving measures, changes in product design may require different flow pattern or handling equipment, etc. 10. Redefine the objective of the facility: Changes in product design and/or quantities may require changes into the layout plan.

Cost of Design Change

Amount ($)

Planning

Designing Building Installing Commissioning

Important Factors to Evaluate Facility Plans

In developing well-thought facilities design alternatives it is important to look into issues such as: a) Layout characteristics - total distance traveled, manufacturing floor visibility, overall aesthetics of the layout, ease of adding future business b) Material handling requirements - use for the current material handling equipment, investment requirements on new equipment, space and people requirements

Important Factors to Evaluate Facility Plans

c) Unit load implied - impact on WIP levels, space requirements, impact on material handling equipment d) Storage strategies - space and people requirements, impact on material handling equipment, human factors risks e) Overall building impact - estimated cost of the alternatives, opportunities for new business

Strategies for Facility Planning

Business Strategy
The art and science of employing the resources of a firm to achieve its business objectives. Resources: Marketing Resources Manufacturing Resources Distribution Resources.

Strategic Facilities Plan

Facilities requirements to support the receipt, storage, manufacture, assembly and distribution of products Layout of manufacturing facility, storage and warehouses Materials handling at site, including to, from and within manufacturing

LEVELS OF FACILITIES PLANNING

CAPACITY : Rate of output, make or buy, amount of space, own or lease LOCATIONS : Number of sites, geographic locations SITES : Access, traffic patterns, future growth BUILDING : Size, orientation, type of structure DEPARTMENTS : Effective use of space, flexibility WORK AREAS : Individual work space productivity IMPLEMENTATION : Budget, sequencing time

Facility Strategies
Facility Planning
To determine how the firms resources (fixed asset) best support achieving the business objectives.

Interacts directly with

Marketing Strategies.

Manufacturing Strategies Distribution Strategies.

Marketing decisions
Unit volume Product Mix Packaging Service level

Affect:
Location of facilities Handling system design

Product decisions
Materials Processing methods Component shapes Product complexity Package sizes, stability of product design

Affects
Layout Handling

Manufacturing
Vertical Integration Type and level of automation General purpose/Specialized equipment

Affects
location Design of facilities

Production Planning and Inventory Control

Lot size Schedule In-process inventory In-process turnover

Affect
facilities design Handling

Human resources and finance

Capital availability Labor skill and stability Staffing level Employee service and benefits

Affect
Size and design of facilities

Strategic Facilities Planning Issues

1. Number, location, and sizes of warehouses and/or distribution centers. 2. Centralized versus decentralized storage supplies, raw materials, work-in-process, and finished goods for single- and multi-building sites, as well as single- and multi-site companies. 3. Acquisition of existing facilities versus design of model factories and distribution centers of the future. 4. Flexibility required because of market and technological uncertainties. 5. Interface between storage and manufacturing

Strategic Facilities Planning Issues

6. Level of vertical integration, including "subcontract versus manufacture" decisions. 7. Control systems, including materials control and equipment control. 8. Movement of materials between buildings, between sites. 9. Changes in customers' and suppliers' technology as well as firm's own manufacturing technology and materials handling, storage, and control technology. 10. Design-to-cost goals for facilities.

Strategic Facilities Plan

Strategic facilities plan facilities acquisition, new construction, integration and improvement of operations of exiting facilities. Overall plan must support manufacturing, distribution, and marketing plans and include functions receiving, inspection, storage, production, assembly, maintenance, WIP, materials control, packaging, warehousing, and dispatching.

Strategic facilities Plan

Strategic facilities plan input required from marketing, product development, product design, process design, production planning & control, utilities, maintenance, quality control, purchasing, inventory control, packaging, warehousing, distribution, personnel requirements, information systems and management.

S P I F Planning Model
INVESTIGATE inputs and influences and clarify parameters INTERACT major elements and establish conceptual plan for the lead component INTEGRATE conceptual plan of lead component into plans for each component and develop preliminary plans MODIFY preliminary plans into specific alternative plans EVALUATE alternatives and select a plan

FACILITIES PLANNING PHASES

ORIENTATION
Location of the area to be planned External handling integration External communications/ controls tie-in External utilities/ auxiliary access Site characteristics

OVERALL PLAN
Overall (block) layout Overall handling plan Overall communication plan Overall utilities plan Overall building plan

FACILITIES PLANNING PHASES

DETAIL PLANS
Detailed machinery and equipment layouts Detailed handling plans Detailed communications / control plans Detailed utilities distribution plans Detailed building plans

IMPLEMENTATION
Building construction Manufacturing machinery procurement / installation Utilities / auxiliaries procurement/ installation Handling equipment procurement / installation Communication / control equipment installation