Download - 6 -location_and_layout
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Alex Hill and Terry Hill
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Lecture outline
• Choosing a LOCATION
• Choosing a LAYOUT
• Critical REFLECTIONS
• SUMMARY
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•Size of the INVESTMENT•The FIXED NATURE of the choice•The UNCERTAINTY of the future
DECIDING WHERE TO LOCATE
Choosing a location
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Once chosen, many organisations NEVER CHANGE location
The two tasks of deciding location and layout are distinct yet related. They are distinct in that
location concerns where best to site a facility, whereas layout concerns how best to arrange the staff, processes and equipment within that facility. And they are related in that they form two parts of
a key decision – how best to position facilities in order to perform the operations task and meet the
needs of the business.
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•CONTINENT or REGION•COUNTRY•AREA or CITY•SITE
Choosing a location
Levels of decision
> KEY IDEA
The number of LEVELS and FACTORS involved differ DECISION
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•The ORIGIN of existing location decisions•POLITICALLY based constraints•TECHNOLOGY developments•Market ACCESS or local PRESENCE in large
consumer markets•CURRENCY value fluctuations
Background factors influencing location decisions
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•A well developed INFRASTRUCTURE•Proximity to MARKETS•Proximity to SUPPLIERS•Hospitable BUSINESS CLIMATE•Availability of STAFF•Quality of LIFE for employees•COSTS and INVESTMENTS•Favourable GOVERNMENT policies•Proximity to CUSTOMERS
Factors affecting the choice of location
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CASE 6.1
GROWTH AT SOFTWARE TECHNOLOGY PARKS OF INDIA
1.What are the REASONS for the rapid growth in Noida’s IT-based services?
2.What FACTORS have affected the choice of continent/region, country and area/city?
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CASE 6.1
Question
Answer
REASONS for growth
FACTORS affecting decision
• Well-developed INFRASTRUCTURE• Hospital BUSINESS CLIMATE• Availability of STAFF• Quality of LIFE for employees• Lower VARIABLE COSTS• Favourable GOVERNMENT policies
• IT services EASY to source from abroad
• STPI FACILITATES the transfer• Plentiful supply of English-speaking
STAFF• Lower COSTS to provide service
GROWTH AT SOFTWARE TECHNOLOGY PARKS OF INDIA
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•FACILITIES for staff and customers
•Building’s DESIGN•RENTAL costs and local taxes•SPACE•Proximity to SUPPORT SERVICES•Room for EXPANSION•Level of cutsomer TRAFFIC•VISIBILITY to customers•Proximity to CUSTOMERS•Proximity to COMPETITORS
Choosing a locationFactors affecting the choice of site
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Choosing a locationFactors affecting the choice of site
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CASE 6.2
GROWTH AT PLASTIC OMNIUM
1.How has PLANT LOCATION been central to its growth in the last 25 years?
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Question Answer
GROWTH
Impact of LOCATION
• Over last 25 years GROWN:- From 4 factories in France- To 25 factories in 25 countries
CASE 6.2 GROWTH AT PLASTIC OMNIUM
• Decide to locate near CUSTOMER- BMW in Munich• Grew with CUSTOMER
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CASE 6.3
HSBC RELOCATES CALL CENTRE OPERATIONS
1.How did it CHANGE its approach in the 1990s?
2.What were the ADVANTAGES and DISADVANTAGES of these changes?
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CASE 6.3
Question Answer
Changes
Advantages
Disadvantages
• Lower COSTS• Used profits to REINVEST and grow
sales• Large number of well educated,
English speaking STAFF
• Moved IT services OFFSHORE- 4,000 jobs moved
• Start-up COSTS• Initial RISK
HSBC RELOCATES CALL CENTRE OPERATIONS
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Choosing a locationSite location techniques
•WEIGHTED factor•Centre of
GRAVITY
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Choosing a locationSite location techniques
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Choosing a locationSite location techniques
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CASE 6.4
CREATING SPACE ON PASSENGER JETS
1.Why is ELBOW ROOM an increasingly important factor on passenger airlines?
2.Why is LEGROOM often easier to provide than elbow room?
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Question Answer
ELBOW ROOM important
LEG ROOM easier
• Increasing LEG ROOM will remove:- 1 or 2 rows (4 to 12 seats)• Increasing ELBOW ROOM will remove:- 1 or 2 seats per room (30 to 60 seats)
• COMFORT is important for customers:- Leg room, elbow room and seat
cushioning• ELBOW room is shared with other
passengers
CASE 6.4 CREATING SPACE ON
PASSENGER JETS
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Choose a LAYOUT
Chosen a LOCATION
Choosing a layout
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Choosing a layoutFactors influencing layout
•Core TASK•Available SPACE•Making space for future
EXPANSION and layout changes•HEALTH and SAFETY
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Choosing a layoutBasic types of layout
•FIXED position•PROCESS or
FUNCTIONAL•SERVICE or PRODUCT
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> KEY IDEA
The BASIC TYPES of layout are:• FIXED POSITION,• PROCESS or FUNCTIONAL and• SERVICE or PRODUCT
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Choosing a layoutBasic types of layout
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Choosing a layoutBasic types of layout
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Choosing a layoutBasic types of layout
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Choosing a layoutBasic types of layout
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CarBirdGovernment Pit stop
Choosing a layoutService or product type, process and layout
Ikiru(1952)
A Bug’s Life
(1998)
Le Mans
(1971)
GungHo
1986)
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Film clip Government
FilmTitleDirector (year)
Ikiru (Living)Kurosawa (1952)
ClipStartFinish
00:58:58Duration 00:03:07
What clip showsA group of slaves who are served (unsuccessfully) by a government department
Key learning objective
The characteristics of a:•Process or functional layout•Repeat high-volume service delivery system
Choosing a layoutService or product type, process and layout
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Film clip Bird
FilmTitleDirector (year)
A Bug’s LifeJohn Lasseter and Andrew Stanton (1998)
ClipStartFinish
00:47:0000:51:22
What clip showsThe bugs building a bird to protect their community
Key learning objective
The characteristics of a:•Fixed position layout•Project manufacturing process
Choosing a layoutService or product type, process and layout
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Film clip Factory
FilmTitleDirector (year)
Gung HoRon Howard (1986)
ClipStartFinish
01:33:1301:34:31
What clip shows Cars being manufactured on a production line
Key learning objective
The characteristics of a:•Product layout•Line manufacturing process
Choosing a layoutService or product type, process and layout
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Film clip Pit stop
FilmTitleDirector (year)
Le MansLee H. Katzin (1971)
ClipStartFinish
00:47:4000:50:43
What clip showsThe pit crew decide to bring in the racing cars to put on new tyres that will drive better in the rain
Key learning objective
The characteristics of a:•Cell layout•Repeat low-volume service delivery system
Choosing a layoutService or product type, process and layout
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Low VOLUME High
Hig
hV
AR
IET
YLo
w
Choosing a layoutService or product type, process and layout
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QuestionGovernme
ntBird Car Pit stop
Service or product
Process
Layout
Choosing a layoutService or product type, process and layout
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Low VOLUME High
Hig
hV
AR
IET
YLo
w
Choosing a layoutService or product type, process and layout
Car
Bird
Government
Pit stop
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QuestionGovernme
ntBird Car Pit stop
Service or product
Process
Layout
Repeathigh-volume delivery system
Project manufacturing process
Process or functional
Fixed position
Mass product
Product
Service shop
Special productMade on-site
Line manufacturing process
Repeat low-volume delivery system
Cell
Service shop
Choosing a layoutService or product type, process and layout
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Choosing a layoutDetailed layout design
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Choosing a layoutDetailed layout design
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CASE 6.5
FUNCTIONS AT A TELECOMMUNICATIONS COMPANY CALL CENTRE
1.How did the ORIGINAL call centre result in delays?
2.How did the CELL-BASED redesign reduce delays?
3.What other ADVANTAGES could a cell-based structure offer this company?
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CASE 6.5
Question Answer
Causes of delays
Cell reduced delays
Other advantages
• SERVICE based teams handle a customer• ELIMINATED hand offs
• Customers HANDED OFF between different departments
• BACKLOGS become more visible• Can introduce friendly COMPETITION between
teams• Common GOALS and TARGETS within cells• Identify and share BEST PRACTICE between
cells
FUNCTIONS AT A TELECOMMUNICATIONS COMPANY CALL CENTRE
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Critical reflections
• The choice of location and layout significantly impacts COSTS and SALES
• Therefore, they must clearly reflect the NEEDS of
- CUSTOMER and MARKET (external)- BUSINESS (internal)
• In particular, the CHOICE of location is:- DIFFICULT to change- LARGE and FIXED investment
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Summary• TASKS of deciding location and layout- Distinct, but related
• Decisions need to be made at a number of LEVELS
- Continent/region, country, area/city and site
• Various FACTORS impact the choice of location
- Exiting sites, proximity, political, economic, etc
• Three basic TYPES of layout- Fixed position, process or functional, service or
product
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Revision questions
1 Organisations:
a) Frequently change location
b) Often never change location
c) Are not concerned about their location
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Revision questions
1 Organisations:
a) Frequently change location
b) Often never change location
c) Are not concerned about their location
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Revision questions
2 The choice of location needs to reflect that:
a) It is a fixed and large investment
b) The uncertainty of the future
c) Both a) and b)
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Revision questions
2 The choice of location needs to reflect that:
a) It is a fixed and large investment
b) The uncertainty of the future
c) Both a) and b)
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Revision questions
3 Choosing a location concerns decisions around:
a) Continent/region, country and area/city
b) Site
c) Both a) and b)
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Revision questions
3 Choosing a location concerns decisions around:
a) Continent/region, country and area/city
b) Site
c) Both a) and b)
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Revision questions
4 Factors affecting the choice of site include:
a) Proximity to customers, staff and suppliers
b) Proximity to competitors
c) Both a) and b)
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Revision questions
4 Factors affecting the choice of site include:
a) Proximity to customers, staff and suppliers
b) Proximity to competitors
c) Both a) and b)
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Revision questions
5 The basic types of layout are:
a) Jobbing, batch and line
b) Non-repeat, repeat low volume and repeat high volume
c) Fixed position, process or functional and service or product
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Revision questions
5 The basic types of layout are:
a) Jobbing, batch and line
b) Non-repeat, repeat low volume and repeat high volume
c) Fixed position, process or functional and service or product
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CASE FOR TUTORIALMcDONALD’S AND
McCAFE