Operations Management

Chapter 9 Layout Strategies

PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7e Operations Management, 9e
2008 Prentice Hall, Inc. 91

Learning Objectives
When you complete this chapter you should be able to:
1. Discuss important issues in office layout

2. Define the objectives of retail layout

3. Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking 4. Identify when fixed-position layouts are appropriate
2008 Prentice Hall, Inc. 92

Learning Objectives
When you complete this chapter, you should be able to:
5. Explain how to achieve a good processoriented facility layout 6. Define work cell and the requirements of a work cell 7. Define product-oriented layout 8. Explain how to balance production flow in a repetitive or product-oriented facility
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Innovations at McDonalds
Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu (1980s) Adding play areas (late 1980s) Redesign of the kitchens (1990s) Self-service kiosk (2004) Now three separate dining sections
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Strategic Importance of Layout Decisions

The objective of layout strategy is to develop a cost-effective layout that will meet a firms competitive needs

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Layout Design Considerations

Higher utilization of space, equipment, and people Improved flow of information, materials, or people

Improved employee morale and safer working conditions

Improved customer/client interaction Flexibility
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Types of Layout
1. Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information 2. Retail layout: Allocates shelf space and responds to customer behavior 3. Warehouse layout: Addresses tradeoffs between space and material handling
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Types of Layout
4. Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings 5. Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)

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Types of Layout
6. Work cell layout: Arranges machinery and equipment to focus on production of a single product or group of related products 7. Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production

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Good Layouts Consider

1. Material handling equipment 2. Capacity and space requirements

3. Environment and aesthetics

4. Flows of information

5. Cost of moving between various work areas

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Office Layout
Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information Movement of information is main distinction Typically in state of flux due to frequent technological changes
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Supermarket Retail Layout

Objective is to maximize profitability per square foot of floor space Sales and profitability vary directly with customer exposure

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Five Helpful Ideas for Supermarket Layout

1. Locate high-draw items around the periphery of the store 2. Use prominent locations for high-impulse and high-margin items 3. Distribute power items to both sides of an aisle and disperse them to increase viewing of other items 4. Use end-aisle locations 5. Convey mission of store through careful positioning of lead-off department
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Retail Slotting
Manufacturers pay fees to retailers to get the retailers to display (slot) their product Contributing factors
Limited shelf space An increasing number of new products Better information about sales through POS data collection

Closer control of inventory

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Servicescapes
Ambient conditions - background characteristics such as lighting, sound, smell, and temperature Spatial layout and functionality - which involve customer circulation path planning, aisle characteristics, and product grouping Signs, symbols, and artifacts - characteristics of building design that carry social significance
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Warehousing and Storage Layouts

Objective is to 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

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Warehousing and Storage Layouts

Warehouse density tends to vary inversely with the number of different items stored Automated Storage and Retrieval Systems (ASRSs) can significantly improve warehouse productivity by an estimated 500% Dock location is a key design element
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Cross-Docking
Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse Requires tight scheduling and accurate shipments, bar code or RFID identification used for advanced shipment notification as materials are unloaded
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Random Stocking
Typically requires automatic identification systems (AISs) and effective information systems Random assignment of stocking locations allows more efficient use of space Key tasks
1. Maintain list of open locations
2. Maintain accurate records 3. Sequence items to minimize travel, pick time 4. Combine picking orders 5. Assign classes of items to particular areas
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Customizing
Value-added activities performed at the warehouse
Enable low cost and rapid response strategies
Assembly of components Loading software

Repairs
Customized labeling and packaging
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Fixed-Position Layout
Product remains in one place Workers and equipment come to site Complicating factors
Limited space at site

Different materials required at different stages of the project Volume of materials needed is dynamic
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Alternative Strategy
As much of the project as possible is completed off-site in a productoriented facility This can significantly improve efficiency but is only possible when multiple similar units need to be created
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Process-Oriented Layout
Like machines and equipment are grouped together Flexible and capable of handling a wide variety of products or services Scheduling can be difficult and setup, material handling, and labor costs can be high
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Computer Software
Three dimensional visualization software allows managers to view possible layouts and assess process, material handling, efficiency, and safety issues

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Work Cells
Reorganizes people and machines into groups to focus on single products or product groups Group technology identifies products that have similar characteristics for particular cells Volume must justify cells Cells can be reconfigured as designs or volume changes
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Advantages of Work Cells

1. Reduced work-in-process inventory 2. Less floor space required 3. Reduced raw material and finished goods inventory 4. Reduced direct labor 5. Heightened sense of employee participation 6. Increased use of equipment and machinery 7. Reduced investment in machinery and equipment
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Requirements of Work Cells

1. Identification of families of products 2. A high level of training, flexibility and empowerment of employees 3. Being self-contained, with its own equipment and resources 4. Test (poka-yoke) at each station in the cell
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Repetitive and ProductOriented Layout

Organized around products or families of similar high-volume, low-variety products
1. Volume is adequate for high equipment utilization

2. Product demand is stable enough to justify high investment in specialized equipment

3. Product is standardized or approaching a phase of life cycle that justifies investment 4. Supplies of raw materials and components are adequate and of uniform quality
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Product-Oriented Layouts
Fabrication line Builds components on a series of machines Machine-paced Require mechanical or engineering changes to balance Assembly line Puts fabricated parts together at a series of workstations Paced by work tasks Balanced by moving tasks Both types of lines must be balanced so that the time to perform the work at each station is the same
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Product-Oriented Layouts
Advantages
1. 2. 3. 4. 5. Low variable cost per unit Low material handling costs Reduced work-in-process inventories Easier training and supervision Rapid throughput

Disadvantages
1. High volume is required 2. Work stoppage at any point ties up the whole operation 3. Lack of flexibility in product or production rates
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Assembly-Line Balancing
Objective is to minimize the imbalance between machines or personnel while meeting required output Starts with the precedence relationships
1. Determine cycle time 2. Calculate theoretical minimum number of workstations

3. Balance the line by assigning specific tasks to workstations

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Operations Management
Chapter 10 Human Resources and Job Design
PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7e Operations Management, 9e
2008 Prentice Hall, Inc. 9 32

Learning Objectives
When you complete this chapter you should be able to:
1. Describe labor planning policies 2. Identify the major issues in job design 3. Identify major ergonomic and work environment issues 4. Use the tools of methods analysis 5. Understand the contribution of the visual workplace
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Human Resource Strategy

The objective of a human resource strategy is to manage labor and design jobs so people are effectively and efficiently utilized
1. People should be effectively utilized within the constraints of other operations management decisions

2. People should have a reasonable quality of work life in an atmosphere of mutual commitment and trust
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Constraints on Human Resource Strategy

Product strategy Skills needed Talents needed Materials used Safety
Schedules Time of day Time of year (seasonal) Stability of schedules Location strategy Climate Temperature Noise Light Air quality Figure 10.1
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Process strategy Technology Machinery and equipment used Safety Individual differences Who Strength and fatigue Information processing and response Layout strategy Fixed position Process Assembly line Work cell Product

When

HUMAN RESOURCE STRATEGY

Labor Planning
Employment Stability Policies 1. Follow demand exactly
Matches direct labor costs to production Incurs costs in hiring and termination, unemployment insurance, and premium wages Labor is treated as a variable cost
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Labor Planning
Employment Stability Policies 2. Hold employment constant
Maintains trained workforce Minimizes hiring, termination, and unemployment costs Employees may be underutilized during slack periods Labor is treated as a fixed cost
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Work Schedules
Standard work schedule
Five eight-hour days

Flex-time
Allows employees, within limits, to determine their own schedules

Flexible work week

Fewer but longer days

Part-time
Fewer, possibly irregular, hours
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Job Design
Specifying the tasks that constitute a job for an individual or a group
1. Job specialization 2. Job expansion

3. Psychological components
4. Self-directed teams 5. Motivation and incentive systems
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Labor Specialization
The division of labor into unique tasks First suggested by Adam Smith in 1776
1. Development of dexterity and faster learning 2. Less loss of time 3. Development of specialized tools

Later Charles Babbage (1832) added another consideration

4. Wages exactly fit the required skill
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Job Expansion
Adding more variety to jobs Intended to reduce boredom associated with labor specialization
Job enlargement

Job rotation
Job enrichment Employee empowerment
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Psychological Components of Job Design

Human resource strategy requires consideration of the psychological components of job design

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Hawthorne Studies
They studied light levels, but discovered productivity improvement was independent from lighting levels Introduced psychology into the workplace The workplace social system and distinct roles played by individuals may be more important than physical factors Individual differences may be dominant in job expectation and contribution
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Core Job Characteristics

Jobs should include the following characteristics Skill variety Job identity Job significance Autonomy Feedback
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Self-Directed Teams
Group of empowered individuals working together to reach a common goal May be organized for long-term or short-term objectives Effective because
Provide employee empowerment Ensure core job characteristics Meet individual psychological needs
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Self-Directed Teams
To maximize effectiveness, managers should Ensure those who have legitimate contributions are on the team Provide management support Ensure the necessary training

Endorse clear objectives and goals

Financial and non-financial rewards Supervisors must release control
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Benefits of Teams and Expanded Job Designs

Improved quality of work life Improved job satisfaction Increased motivation

Allows employees to accept more responsibility

Improved productivity and quality Reduced turnover and absenteeism
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Motivation and Incentive Systems

Bonuses - cash or stock options
Profit-sharing - profits for distribution to employees

Gain sharing - rewards for improvements

Incentive plans - typically based on production rates

Knowledge-based systems - reward for knowledge or skills

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Ergonomics and the Work Environment

Ergonomics is the study of the interface between man and machine
Often called human factors

Operator input to machines

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Ergonomics and Work Methods

Feedback to operators

The work environment

Illumination Noise

Temperature
Humidity
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Methods Analysis
Focuses on how task is performed

Used to analyze
1. Movement of individuals or material
Flow diagrams and process charts

2. Activities of human and machine and crew activity

Activity charts

3. Body movement
Micro-motion charts
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Labor Standards
Effective manpower planning is dependent on a knowledge of the labor required Labor standards are the amount of time required to perform a job or part of a job Accurate labor standards help determine labor requirements, costs, and fair work
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