Dr.

Ron Tibben-Lembke

Layout Types
y Project or Fixed-position layout y Process-oriented layout y Product-oriented layout y Office layout y Warehouse layout y Retail/service layout

Project or Fixed-Position
y Design is for stationary project y Workers & equipment come to site y Complicating factors y Limited space at site y Changing material needs y Examples y Ship building y Highway construction

Process-Oriented Layout
y Design places departments with large flows of

material or people together y Dept. areas have similar processes

y

e.g., All x-ray machines in same area

y Used with process-focused processes y Examples y Hospitals y Machine shops

Process-Oriented Layout
Table Saws
1995 Corel Corp.

Office

Drill Presses Tool Room

1995 Corel Corp.

Process Layout
+ Allows specialization - focus on one skill + Allows economies of scale - worker can watch several machines at once + High level of product flexibility -- Encourages large lot sizes -- Difficult to incorporate into JIT -- Makes cross-training difficult

Process-Oriented Layout Steps

y Construct from-to-matrix y Determine space needs for each dept. y Develop initial schematic diagram y Determine layout cost, 77Xij Cij y By trial-and-error, improve initial layout y Prepare detailed plan y Includes factors besides cost

Process-Oriented Example
You work in facilities engineering. You want to find the cost of this layout. The cost of moving 1 load between adjacent dept. is $1. The cost between nonadjacent dept. is $2.
Dept. 1 Dept. 4 Dept. 2 Dept. 5 60 ft. Dept. 3 40 ft. Dept. 6

There are 6! or 720 possibilities! Clearly, we cant look at them all.

From-to-Matrix
1 1 2 Dept. 3 4 Number of Trips 5 6 2
50

Department 3 4
100 30 0 50 20

5
0 10 0 50

6
20 0 100 0 0

Schematic Diagram & Cost

100
1
Dept. Dept.
3 2 6 2 3 5 5 3 6

Cost
$ $ $ $ $ $ $ $ $ 200 50 40 50 40 50 10 30 100

50

30

20 50
4

10 20 100
5 6

1 1 1 4 4 4 2 2 3

50

Total Cost

$570

Schematic Diagram & Cost

Dept. Dept.
2 3 6 2 3 5 5 3 6

Cost
$ $ $ $ $ $ $ $ $ 50 100 20 50 40 50 10 60 100

30
2

50 10 20

100

50
4

20
5

1 1 1 4 3 4 4 2 100 2 3

6 Total Cost $480

50

Product-Oriented Layout
y Facility organized around product y Design minimizes line imbalance y Delay between work stations y Types: Fabrication line; assembly line y Examples y Auto assembly line y Brewery y Paper manufacturing.

Cellular Layout (Work Cells)

y Special case of process-oriented layout y Consists of different machines brought together to

make a product y May be temporary or permanent y Example: Assembly line set up to produce 3000 identical parts in a job shop

Work Cell Floor Plan

Saws Drills Office

Tool Room

Work Cell

Work Cell Advantages

Reduces: Inventory Floor space Direct labor costs Increases: Equipment utilization Employee participation Quality

Work Cell Layout

+ Facilitates cross-training + Can easily adjust production volumes + Easy to incorporate into JIT -- Requires higher volumes to justify -- May require more capital for equipment

Office Layout Example

Relationship Chart
1 President 2 Costing 3 Engineering O 4 Presidents Secretary
I = Important; U = Unimportant

Ordinary 1 closeness: 2 President (1) 3 & costing (2) O U 4

A I

A
Absolutely necessary: President (1) & secretary (4)

Relationship Chart
1 2 3 4 5 6 7 8 9 10
1
O I O U U U I E U U E U A E U I U O A U U U A U U U U U I U U U I I I O I I

2
E

3
O

4
U

5
U

6
U

7
U

8
U

10

Warehouse Layout
y Design balances space (cube)

utilization & handling cost y Similar to process layout

y

Items moved between dock & various storage areas

y Optimum layout depends on

Variety of items stored y No. items picked

y

1995 Corel Corp.

Warehouse Flow
Receiving Shipping

Warehouse Layout
Try to organize storage in such a way that order pickers can move through the product in a logical and timely manner.

Warehouse Layout
y Fastest near the front y Fastest within easy reach y Bulk storage vs. Single item picking y Serpentine vs. oval picking order y Restocking: frequency, safety stock

Cross-Docking
In-coming

y Transferring goods

Outgoing

from incoming trucks at receiving docks to outgoing trucks at shipping docks y Avoids placing goods into storage
1984-1994 T/Maker Co. 1995 Corel Corp.

Retail/Service Layout
y Design maximizes product exposure to customers,

profitability per square foot y Decision variables

y y

Store flow pattern Allocation of (shelf) space to products

y Types y Grid design y Free-flow design

Video

Grid Design
Grocery Store
Bread Milk Meat

Office

Carts

Checkout

Free-Flow Design
Apparel Store

Feature

Trans. Counter

Display Table

Retail Store Flow Guidelines

y Prisoner aisles make you enter store

in a particular route, and pass by certain displays y Often contain less profitable (for the store) brands y Decompression Zone people walk past first rows of items before settling into shopping mode.

Retail Store Flow Guidelines

y Bakery, coffee shop,

restaurant spread aromas by entrance to stimulate taste buds y Siren song of the Starbucks (Safeway) y Food samplers throughout store do same

Retail Store Flow Guidelines

y Frequently purchased items

Meat

at far sides of stores so you have to go through entire store (produce or meat). y Profitable sections like produce placed where you keep running into them

Milk Produce

Retail Store Flow Guidelines

y Major items in middle of

aisles so you have to walk down into middle of aisle (Cereal, peanut butter) y Power items on both sides of aisle so you have to look at both sides

Peanut Butter Cereal

Retail Store Flow Guidelines

y Quality of produce section

Cereal

important in customer decisions about which stores to visit, so produce is often prominently displayed upon entrance y People like to see what they re looking for, not read signs

Peanut Butter

produce

Retail Flow Guidelines

y End caps for high-

visibility sale items y Large quantities of inventory serve as psychic stock y If there is a lot of it, it must be on sale y Stimulates sales
1995 Corel Corp.

Retail Flow Guidelines

y Eliminate cross-over

aisles:
y less wasted floor space, y you have to look at more

items, y the more time you spend in the store, the more you will buy.

Shelf Space Planogram

y Computerized tool
5 facings
PERT PERT PERT PERT PERT

for shelf-space management y Generated from store s scanner data on sales y Often supplied by manufacturer
y

SUAVE

VO-5

VO-5

VO-5

VO-5

Example: P&G

VO-5

2 ft.

SUAVE

Shelf Placement
y Companies prefer to be at eye-level or at child-

reaching level y Close to leading brands or high-draw items: snack foods next to the peanut butter or across from the cereal: y Lots of kids visit the area

Slotting Fees
y Manufacturer pays retailer to get a product into a store y 35,000 new grocery products per year y Grocery stores often stock 30,000 items y Impossible to evaluate all new products to choose the best new ones y Slotting fees guarantee grocer profits on a product, help balance risk of trying unknown product. y Grocery is a narrow margin business, slotting fees can represent a significant revenue source.

Slotting Fees
y Senate Small Business Committee held hearings

on them in 2000. y Industry refused to cooperate with GAO. y Growers of produce (not just brand names) now getting involved and complaining. y Small businesses claim they can t afford the big payments big companies can make. y Advocates say small companies can put their money where their mouths are just like anyone else

Perimeter Items
y People follow perimeter pattern y Sale items on end everyone sees y Half of a store s profit comes from items on the

perimeter y Breakfast cereal brings in the most dollars per square foot y Manufacturer incentives increase profitability of soft drinks y Anchors at ends of a section: milk and butter at opposite ends of dairy case