LESSON 09 :
DEVELOPING LAYOUT STRATEGIES
Strategic Importance of Layout Decisions The objective of layout strategy is to develop a cost-effective cost-effective layout that will meet a firm’s competitive needs Layout Design Considerations 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 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 trade-offs between space and material handling 4. Fixed-position layout: Addresses the layout requirements of lar ge, 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) 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 Good Layouts Consider 1. Material handling equipment (decide on what equipment to be used in delivering/storing materials) 2. Capacity and space requirements 3. Environment and aesthetics 4. Flows of information 5. Cost of moving between various work areas 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 fre quent technological changes Supermarket Retail Layout Objective is to maximize profitability per square foot of floor space Sales and profitability vary directly with customer exposure 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 o f an aisle and disperse them to increase v iewing of other items 4. Use end-aisle locations 5. Convey mission of store through careful positioning of lead-off department
Reference: Operations Management Jay Heizer & Barry Render
Retail Slotting Manufacturers pay fees to retailers to get the retailers to display (slot) their product
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 c arry social significance Warehousing Warehousing and Storage Layouts Objective is to optimize trade-offs betwee n 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 Material Handling Costs All costs associated with the transaction Incoming transport o Storage o Finding and moving material o Outgoing transport o Equipment, people, material, supervision, insurance, deprec iation o Minimize damage and spoilage 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 e lement 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 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 Customizing Value-added activities performed at the warehouse Enable low cost and rapid response strategies Assembly of components o Loading software o Reference: Operations Management Jay Heizer & Barry Render
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Repairs Customized labeling and packaging
LEARNINGS: Layout has numerous strategic implications because it establishes an organization’s competitive priorities in regard to
capacity, processes, flexibility, snd cost, as well as quality of work life, customer contact and image . Layout can be in different ways depending on what kind of business a company has. There are seven types of layout, (1) office, (2) retail, (3) warehouse, (4) fixed position, (5) process oriented, (6) work cells, and (7) product oriented. Office layouts often see k to maximize information flows, retail forms focus on product exposure, and warehouses attempt to optimize the tradeoff between storage space and material handling cost. Good layout considers material handling equipment, capacity and space requirements, environment and aesthetics, flows of information, and cost of moving between various work are as Office layout is more about the design or arrangement of the elements that can be found in an office – the workers, their equipment and spaces. Retail Layout is an approach that addresses flow, allocates space, and responds to customer behavior. Retail layouts are based on the idea that sales and profitability vary directly with customer exposure to products. Slotting fees are fees manufacturer’s manufacturer’s pay to get shelf space for their products. Servicescape Servicescape is the physical surroundings in which a service
takes place and how they affect customers and employees. Warehouse layout is a design that attempts to minimize minimize total cost by addressing trade-offs between space and material handling. Cross-docking is the process of avoiding the placement of materials or supplies in storage by processing thme as they are received for shipment. It requires both tight scheduling and accurate inbound product identification. Random stocking is used in warehousing to locate stock whereve r there is an open location. Customizing is using warehousing to add value to product through component modification, repair, labeling, and packaging.
Reference: Operations Management Jay Heizer & Barry Render