FACILITY LOCATION AND LAYOUT
Objectives:
By the end of the chapter the student should be able to:
(1) Define the term facility location
(2) Explain the factors influencing facility location
(3) Define the term facility layout
(4) Outline the principles of facilities layout
(5) Define the term work measurement
Facility Location
Location Factors
Many factors affect the location decision including the following:
(i) Proximity to Customers: For many service organisations in particular the location of the facility must be convenient for the potential customer. T his can range from restaurants were customers may be prepared to travel a short distance to hospitals were the speed of response is vital to the service. High transportation costs for heavy or bulky materials may also lead to locating close to the customer.
(ii) Proximity to suppliers: The volume and bulk of the raw material involved in operations such as steel production means that a location decision will tend to favour areas near to suppliers. A manufacturer and seller of custom-built furniture however will need to be near potential customers. For service companies such as supermarkets and restaurant sthe need to be in a market-oriented locations means that the cost of transportation of goods will not be a major factor in the location decision. Distribution across country borders means that a whole series of additional costs and delays must be taken into account, including import duties and delays in moving freight between different transportation methods. A site near to an airport or a rail link to an airport may be an important factor if delivery speed i simportant.
(iii) Proximity to labour: Labour costs have generally become less important as the proportion of direct labour cost in high volume manufacturing have fallen. What is becoming more important is the skills and flexibility of the labour force to adapt to new working methods and to engage in continuous improvement efforts. The wage rate of labour can be a factor in location decisions, especially when the service can be provided easily in alternative locations. Information Technology companies involved in data entry can locate in alternative countries without the customer being aware.
(iv) Government policy: Regulatory policies on location of enterprises may at times limit the option available for the location of a firm. Such laws would include zoning laws which set out the types of businesses to be set out in different areas
(v) Availability of the necessary infrastructure: A firm is limited to establishing its operations in location with suitable infrastructure. A shipping company will not establish its operations far away from the port.
Layout Design
Layout design concerns the physical placement of resources such as equipment and storage facilities. Layout design is important because it can have a significant effect on the cost and efficiency of an operation and can entail substantial investment in time and money. In many operations the installation of a new layout, or redesign of an existing layout, can be difficult to alter once implemented due to the significant investment required on items such as equipment. There are four basic layout types of:
(i) Process layout
(ii) Product layout
(iii) hybrid layout
(iv) Fixed-position layout
The above layout Types are discussed below:
Process layout: A process layout is one in which resources (such as equipment and people) which have similar processes or functions are grouped together. Process layouts are used when there is a large variety in the products or services being delivered and it may not be feasible to dedicate facilities to each individual product or service. A process layout allows the products or customers to move to each group of resources in turn, based on their individual requirements. Because of their flexibility process layouts are widely used. One advantage is that in service systems they allow a wide variety of routes that may be chosen by customers depending on their needs. Another advantage
is that the product or service range may be extended and as long as no new resources are required may be accommodated within the current layout.
Product Layout: Product layouts, also termed line layouts, arrange the resources required for a product or service around the needs of that product or service. In manufacturing applications such as assembly lines with a high volume of a standard product the products will move in a low from one processing station to the next. In contrast to the process layout in which products move to the resources, here the resources are arranged and dedicated to a particular product orservice.t he term product layout refers to the arrangement of the resources around the product or service. In services the requirements of a specific group of customers are identified and resources setup
sequentially so the customers flow through the system, moving from one stage to another until the service is complete.
Hybrid Layout: A hybrid layout attempts to combine the efficiency of a product layout with the flexibility of a process layout. Hybrid layouts are created from placing together resources which service a subset of the total range of products or services. When grouping products or services together in this way the grouping istermed a family. the process of grouping the products or services to create a family is termed group technology.
Group technology has three aspects:
1. Grouping parts into families; Grouping parts or customers into families has the objective of reducing the changeover time between batches, allowing smaller batch sizes, and thus improving flexibility. Parts family formation is based on the idea of grouping parts or customers together according to factors such as processing similarity.
2. Group physical facilities into cells to reduce transportation time between processes; Physical facilities are grouped into cells with the intention of reducing material or customer movements. Whereas a process layout involves extensive movement of materials or customers between departments with common processes, a cell comprises all the facilities required to manufacture a family of components or delivery a service. Material and customer movement is therefore restricted to within the cell and throughput times are therefore reduced. Cells can be U-shaped to allow workers to work at more than one process whilst minimising movement.
3. Creating groups of multi-skilled workers; Creating groups of multi-skilled workers enables increased autonomy and flexibility on the part of operators. This enables easier change overs from one part to another and increases the job enrichment of members of the group. This in turn can improve motivation and have a beneficial effect on quality.
Creating cells with dedicated resources can significantly reduce the time it takes for products and services to pass through the process by reducing queuing time. It also offers the opportunity for automation due to the close proximity of the process stages. Thus process technology can be used to replace a number of general purpose resources with a single dedicated multi-functional system such as a Flexible Manufacturing System. A disadvantage of hybrid layouts can be the extra expenditure due to the extra resources required in creating cells. Examples of hybrid layouts include custom manufacture, maternity unit in a hospital, cafeteria with multiple serving areas. In services a cell layout could involve an insurance organisation organised by type of claim (e.g. car, home, travel).
Fixed-Position layout: this layout design is used when the product or service cannot be moved and so the transforming process must take place at the location of product creation or service delivery. In a fixed position layout all resources for producing the product, such as equipment and labour must move to the site of the product or service. The emphasis when using a fixed-position layout is on the scheduling and coordination of resources to ensure that they are available in the required amounts at the required time. For example on a construction site most activities are dependent on the completion of other activities and cannot be undertaken simultaneously. The space available on the site may also constrain the amount of work activity that can take place at any one time. This means detailed scheduling of resources is required to minimise delays. In a restaurant it is important that the order is taken and food delivered to the table at the appropriate time. Examples of fixed position layouts include construction sites such as for buildings or for large ships, aircraft manufacture and full service restaurants.
Review questions
1. Define the term facility location
2. Define the term facility
3. Outline five factors influencing facilty location decisions
4. Outline four types of organization layouts
5. Explain the three aspects of hybrid layout
References
Slack, N. and Lewis, M. (2011) Operations Strategy, 3 rd edn, Pearson Education Limited, Harlow.
Ohno, T. 1988 Toyota Production System: Beyond Large-Scale Production, Productivity Press.
Hayes,R.H. and Wheelwright, S.C. (1984) Restoring our Competitive Edge,John
Wiley & Sons Ltd. Hill, T 2005, Operations Management, 2 nd edn, Palgrave
Macmillan, Basingstoke.
