Facility –Location & Layout

N.K.Agarwal

• Location of facilities involves commitment of resources to a long range plan

• Need for selection of location– Business newly started– Existing business has outgrown the capacity of the original

facilities– Volume of business or extent of market needs establishing

of branches– Lease expires and the landlord does not renew the lease– Other social or economic reasons e.g. Inadequate labour

supply, shifting of markets etc

Plant Location

• Proper selection of location for the plant ensures– An easy and regular supply of

• Raw materials• Labour force

– Efficient plant layout– Proper utilisation of plant production capacity & related cost of

production• Resulting into smooth and efficient working of the organisation

Plant Location

Steps in plant location• National decision (within or outside the country)

– Political stability– Export & import policy– Currency and exchange rate– Cultural & economic peculiarities– Natural environment

• Selection of the region– Availability of raw materials– Nearness to market– Availability of power– Transport facilities– Suitability of climate – Government policy– Competition among states

• Selection of locality or community– Availability of labour– Civic amenities for workers– Existence of complementary & competing industries– Finance & research facilities– Availibility of water and fire fighting services– Local taxes & restrictions– Momentum of an early start– Personal factors

• Selection of exact site– Soil, size & topography– Disposal of waste

Steps in plant location

Off shore location

• Availibility of relatively cheaper labour appears to be a lure to many manufacturers to establish plants in foreign countries

• However, lower productivity of the labour can be a contradicting factor

• Effect of capital productivity needs to be considered also

• Many other costs like cost of materials, fuel, power, equipment, credit, transportation, taxation etc have to be also considered for striking a balance between the various costs for the most economic decision

Plant Layout

• A floor plan for determining and arranging the desired machinery and equipment of a plant

• It permits –The quickest flow of materials in processing the product

•From the receipt of the raw materials to the shipment of the finished product

–At the lowest cost, and –With the least amount of handling

Critical factors

• Materials– Type, availability, provision for storage and movement

• Product– Type i.e. Heavy,light, wet operation (cement), market

demand (decision on machinery type)• Workers

– Male, female (special needs), facilities• Machinery

– Fixed or mobile position of men, machinery, job to decide machinery layout-depending on type, volume of production

Critical factors

• Location– Size and terrain decides type of building– Location decides mode of transportation of raw material and

finished products– Fuel requirement for the plant– Future expansion provision

• Managerial policies– Volume of production and expansion– Extent of automation– Making or buying decision– Rapid delivery to customers– Purchasing policy– Personnel policies

Process layout

• Grouping together of similar machines in one department

• Material moves from one group of machines to the other

• Movement over longer distance and along criss-cross paths

• May also involve part finished inventory waiting

Best suited for intermittent type of production/light and heavy industries

PRODUCTION SUB-SYSTEM

RECEIVING

STORAGE

OPERATION A OPERATION B

OPERATION COPERATION DSHIPPING

INFORMATION FLOWS

INTERMITTENT FLOW PRODUCTION SYSTEM (JOB SHOP )

WIP

WIP WIP

WIP

FINISHED GOODS

EDP CONTROL SYSTEMS

RAW MATERIALS

MATERIAL FLOW

FINISHED GOODS

• Advantages– Reduced investment on machines, being general purpose machines– Greater flexibility in production– Better and more efficient supervision– Greater scope of expansion– Better utilisation of resources– Handling breakdown of equipment easier-jobs can be transferred

to other machines– Full utilisation of machinery

• Limitations– Difficulty in movement of materials– Layout requires more space– Difficulty in production control– Production time increased because of extra travel– Accumulation of work-in-process at different machines

Process layout

Product layout

• Machines arranged in a line depending upon sequence of operations

• Material moves in a line from the first machine to the finished product on the last machine.

• Investment higher as compared to process layout

Better suited for standardised products on a mass scale production. Ex chemicals,paper

FINISHED GOODS

MATERIAL FLOW

RAW MATERIALS

PRODUCTION SUB-SYSTEM

RECEIVING

STORAGE

OPERATION A

OPERATION B

OPERATION C

OPERATION D

SHIPPING

EDP CONTROL SYSTEMS

INFORMATION FLOWS

CONTINUOUS FLOW PRODUCTION SYSTEM (FLOW SHOP)

• Advantages– Reduction in material handling cost due to mechanisation– Layout avoids production bottlenecks– Economy in manufacturing time– Better production control– Requires less floor area per unit of production– Work-in-progress in reduced– Early detection of mistakes

• Limitations– Layout inflexible– Layout expensive– Difficulty in supervision– Expansion is difficult– Any breakdown along the line can disrupt total production

Product layout

Fixed position layout

• Movement of men & machinery to the product• Product remains stationary

– Cost of moving product is high,being bulky• Advantages

– Men/machinery can be moved for a wide variety of operations producing different products

• Worker identifies himself with the product & takes pride when the work is completed

• Investment on layout is small• High cost & difficulty in transporting a bulky job avoided

Best suited for bulky & heavy products ex.Ships, aero planes etc.

AIRCRAFT ASSEMBLYFINISHED PRODUCT (AIRCRAFT)

RAW MATERIALS

MACHINE & EQUIPMENT

LABOUR

FIXED POSITION OR STATIC LAYOUT

Cellular manufacturing (CM) layout

• Grouping of machines into cells • Cells function somewhat like product layout within a

larger shop or process layout• Each cell in the cm formed to produce a single part /

a few parts– All with common characteristics which usually requires

similar machines and settings

• Flow of parts within the cell can take many forms

U-Shaped Cell Layout

A

C B

D A

B C

D

C

A D

B C

D A

B

= work station

CM Layout

• Advantages– Lower work-in-process inventories– Reduced material handling costs– Shorter flow times in production– Simplified production planning (men, material etc.)– Overall performance often increases by lowering production

costs & improving on-time delivery– Improved quality

• Limitations– Reduced manufacturing flexibility & potentially increased machine

downtime– Duplicate pieces of machinery may be needed so as to avoid

movement of parts between cells

Combined layout

• Combination of product & process layout with an emphasis on either

• Generally adopted in industry• In fabrication plants including assembly, fabrication

tends to employ process layout while assembly areas employ product layout

• It is the layout that produces the desired volumes of products at least total cost

F.P.

F.P.

G.C.

G.C.

G.C.

H.T.

H.T.

G.G.

G.G.

RAW MATERIAL

RAW MATERIAL

PR

OC

ES

S L

AY

OU

T

FINISHED PRODUCTS (GEARS)

F.P. = FORGING PRESS G.C. = GEAR CUTTING

H.T. = HEAT TREATMENT FURNACE G.G. = GEAR GRINDING MACHINE

COMBINATION LAYOUT OR HYBRID LAYOUT FOR GEAR MANUFACTURING

PRODUCT LAYOUT

• Generally, as in manufacturing– Line layout preferred in high volume, standardised products

• Fast food service– Process layout preferred in service operations also

• General offices, banks, general hospitals, municipal offices etc.

Service facility layout

SERVICE WAITING LINE MODULES

SINGLE CHANNEL, SINGLE PHASE MODULE

WAITING LINE SERVICE FACILITY

MULTIPLE CHANNEL, SINGLE PHASE MODULE

SERVICE FACILITY

WAITING LINE

SINGLE CHANNEL, MULTIPLE PHASE MODULE

WAITING LINE SERVICE FACILITY

SERVICE FACILITY

WAITING LINE

MULTIPLE CHANNEL, MULTIPLE PHASE MODULE

Plant Layouts

• Plant layout has to provide for other facilities also– Location for receiving and shipping departments– Storage – Inspection– Maintenance– Employee facilities– Others, as applicable to various plants

• Power generators

• Water treatment plants

• Oil tankers

• Compressed air, Chilled water plants etc.

Layout Planning-Methodology

• Travel chart method• Load-distance analysis method• Systematic layout planning method• Analysing layouts with computers

– ALDEP(Automated Layout Designing Programme)– CORELAP (COmputerised RElationship Layout Planning)

– CRAFT (Computerised Relative Allocation of Facilities

Technique)

References

• Production &Operations Management: Aswathappa / Bhat

• Modern Production / Operations Management: Buffa / Sarin

Thank you

LOCATION THEORIES

• PRIMARY FACTORS– INDUSTRIAL UNITS MATERIAL ORIENTED IF

THEIR MATERIAL TRANSPORTATION COST TO THE UNIT IS HIGHER

– INDUSTRIAL UNITS MARKET ORIENTED WHEN COST OF TRANSPORTING FINISHED PRODUCTS TO MARKETS IS HIGHER

– CENTRES FLUSH WITH CHEAP AND SKILLED LABOUR PULL INDUSTRIES TOWARDS THEM

LOCATION THEORIES

• SECONDARY FACTORS– SOME OF THESE ATTRACT INDUSTRIES TO

CERTAIN AREAS FROM DIFFERENT PLACES • CALLED AGGLOMERATING FACTORS

– WHEREAS SOME OTHERS CONTRIBUTE TO THEIR DISPERSAL FROM ORIGINAL PLACES

• CALLED DEGGLOMERATING FACTORS

CRITICAL FACTORS

• TYPE OF INDUSTRY– SYNTHETIC

• CONSTITUENT ELEMENTS COMBINING TO MAKE THE FINAL PRODUCT E.G. CHEMICAL INDUSTRY

– ANALYTICAL• CONVERSION OF RAW MATERIALS INTO VARIOUS

ELEMENTS E.G. PETROLEUM INDUSTRY

– CONDITIONING• CHANGING IN SHAPE / FORM OR PHYSICAL PROPERTIES

E.G. FOUNDARY, METAL WORKING INDUSTRY

– EXTRACTIVE• INVOLVING SEPARATION OF ONE ELEMENT FROM THE

OTHER E.G. METAL FROM IRON ORE

– EACH OF ABOVE FURTHER CLASSIFIED INTO• INTERMITTENT INDUSTRIES• CONTINUOUS INDUSTRIES

• IMPORTANT CONSIDERATIONS– ALL MACHINES PLACED AT POINTS DEMANDED BY

SEQUENCE OF OPERATION– NO CROSSING OVER OF ONE LINE WITH THE OTHER– MATERIALS MAY BE FED WHERE THEY ARE

REQUIRED FOR ASSEMBLY BUT NOT NECESSARILY ALL AT ONE POINT

– ALL OPERATIONS INCLUDING ASSEMBLY, TESTING AND PACKING INCLUDED IN THE LINE

PRODUCT LAYOUT

• IMPORTANT CONSIDERATIONS– DISTANCE BETWEEN DEPARTMENTS AS SMALL AS

POSSIBLE

– DEPARTMENTS TO BE LOCATED AS PER SEQUENCE OF OPERATION

– CONVENIENCE FOR INSPECTION AS WELL AS SUPERVISION

PROCESS LAYOUT

• LAYOUT IMPORTANT TO ACHIEVE CLIENT-CUSTOMER GOAL OF FAST SERVICE– FAST SERVICE SUPPORTED BY POINT OF SALE SYSTEM,

SCANNERS, SELF SERVICE TO PROVIDE SPEED AS WELL AS REDUCE COST, ATMs BY BANKS ETC.

• FLOW LINE APPROACH FOLLOWED IN FAST FOOD SERVICE

• PROCESS LINE LAYOUT OCCURS IN MANY SERVICES LIKE MEDICAL CLINICS, OFFICES ETC.

SERVICE FACILITY LAYOUT

1 2

3

45

1 2 3

1 2

34

21

CELL # 3

CELL # 4

CELL # 1 CELL # 2

PRODUCTION OPERATION PRODUCT OR MATERIAL FLOW

CELLULAR MANUFACTURING LAYOUT

PART D

PART Y

PART X

PART A

PART B

3

Group Technology Layout

A

C

B

D

A

B

C

D

C

A

D

B

C

D

A

B

Layout planning

• Need for future revisions caused due to expansions, technological advances, improved layouts etc

• Major criteria for selecting and designing layouts– Material handling cost

• Material handling costs minimised by using mechanised material handling equipments

– Worker effectiveness• Good layout provides workers with a satisfying job and permits

them to work more effectively at the highest skill level

• Good communication system and well placed supporting activity locations important