1. Operations Management
Chapter 12 –
Layout Strategies
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e

2. Learning Objectives
When you complete this chapter you should be able to:
Discuss important issues in office layout
Define the objectives of retail layout
Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking
Identify when fixed-position layouts are appropriate

3. Learning Objectives
When you complete this chapter, you should be able to:
Explain how to achieve a good process-oriented facility layout
Define work cell and the requirements of a work cell
Define product-oriented layout
Explain how to balance production flow in a repetitive or product-oriented facility

4. Innovations at McDonald’s
Indoor seating (1950s)
Drive-through window (1970s)
Adding breakfast to the menu (1980s)
Adding play areas (late 1980s)
Redesign of the kitchens (1990s)
Self-service kiosk (2004)
Now three separate dining sections

5. Strategic Importance of Layout Decisions
The objective of layout strategy is to develop a cost-effective layout that will meet a firm’s competitive needs

6. Layout Design 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

7. Types of Layout
Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information
Retail layout: Allocates shelf space and responds to customer behavior
Warehouse layout: Addresses trade-offs between space and material handling

8. Types of Layout
Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings
Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)

9. Types of Layout
Work cell layout: Arranges machinery and equipment to focus on production of a single product or group of related products
Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production

10. Good Layouts Consider Material handling equipment
Capacity and space requirements
Environment and aesthetics
Flows of information
Cost of moving between various work areas

11. 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 frequent technological changes

12. Supermarket Retail Layout
Objective is to maximize profitability per square foot of floor space
Sales and profitability vary directly with customer exposure

13. Five Helpful Ideas for Supermarket Layout
Locate high-draw items around the periphery of the store
Use prominent locations for high-impulse and high-margin items
Distribute power items to both sides of an aisle and disperse them to increase viewing of other items
Use end-aisle locations
Convey mission of store through careful positioning of lead-off department

14. Retail Slotting
Manufacturers pay fees to retailers to get the retailers to display (slot) their product
Contributing factors
Limited shelf space
An increasing number of new products
Better information about sales through POS data collection
Closer control of inventory

15. 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 carry social significance

16. Warehousing and Storage Layouts
Objective is to optimize trade-offs between 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

17. Warehousing and Storage Layouts
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 element

18. 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

19. 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
Maintain list of open locations
Maintain accurate records
Sequence items to minimize travel, pick time
Combine picking orders
Assign classes of items to particular areas

20. Customizing Value-added activities performed at the warehouse
Enable low cost and rapid response strategies
Assembly of components
Loading software
Repairs
Customized labeling and packaging

21. Fixed-Position Layout
Product remains in one place
Workers and equipment come to site
Complicating factors
Limited space at site
Different materials required at different stages of the project
Volume of materials needed is dynamic

22. Alternative Strategy
As much of the project as possible is completed off-site in a product-oriented facility
This can significantly improve efficiency but is only possible when multiple similar units need to be created

23. Process-Oriented Layout
Like machines and equipment are grouped together
Flexible and capable of handling a wide variety of products or services
Scheduling can be difficult and setup, material handling, and labor costs can be high

24. Computer Software
Three dimensional visualization software allows managers to view possible layouts and assess process, material handling, efficiency, and safety issues

25. Work Cells
Reorganizes people and machines into groups to focus on single products or product groups
Group technology identifies products that have similar characteristics for particular cells
Volume must justify cells
Cells can be reconfigured as designs or volume changes

26. Advantages of Work Cells
Reduced work-in-process inventory
Less floor space required
Reduced raw material and finished goods inventory
Reduced direct labor
Heightened sense of employee participation
Increased use of equipment and machinery
Reduced investment in machinery and equipment

27. Requirements of Work Cells
Identification of families of products
A high level of training, flexibility and empowerment of employees
Being self-contained, with its own equipment and resources
Test (poka-yoke) at each station in the cell

28. Repetitive and Product-Oriented Layout
Organized around products or families of similar high-volume, low-variety products
Volume is adequate for high equipment utilization
Product demand is stable enough to justify high investment in specialized equipment
Product is standardized or approaching a phase of life cycle that justifies investment
Supplies of raw materials and components are adequate and of uniform quality

29. Product-Oriented Layouts
Fabrication line
Builds components on a series of machines
Machine-paced
Require mechanical or engineering changes to balance
Assembly line
Puts fabricated parts together at a series of workstations
Paced by work tasks
Balanced by moving tasks
Both types of lines must be balanced so that the time to perform the work at each station is the same

30. Product-Oriented Layouts
Low variable cost per unit
Low material handling costs
Reduced work-in-process inventories
Easier training and supervision
Rapid throughput
Advantages
High volume is required
Work stoppage at any point ties up the whole operation
Lack of flexibility in product or production rates
Disadvantages

31. Assembly-Line Balancing
Objective is to minimize the imbalance between machines or personnel while meeting required output
Starts with the precedence relationships
Determine cycle time
Calculate theoretical minimum number of workstations
Balance the line by assigning specific tasks to workstations

32. Operations Management
Chapter 10 –
Human Resources and Job Design
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e

33. Learning Objectives
When you complete this chapter you should be able to:
Describe labor planning policies
Identify the major issues in job design
Identify major ergonomic and work environment issues
Use the tools of methods analysis
Understand the contribution of the visual workplace

34. Human Resource Strategy
The objective of a human resource strategy is to manage labor and design jobs so people are effectively and efficiently utilized
People should be effectively utilized within the constraints of other operations management decisions
People should have a reasonable quality of work life in an atmosphere of mutual commitment and trust

35. Constraints on Human Resource Strategy
Product strategy
Skills needed
Talents needed
Materials used
Safety
What
Process strategy
Technology
Machinery and equipment used
Safety
Procedure
Schedules
Time of day
Time of year (seasonal)
Stability of schedules
When
Individual differences
Strength and fatigue
Information processing and response
Who
HUMAN RESOURCE STRATEGY
Location strategy
Climate
Temperature
Noise
Light
Air quality
Where
Layout strategy
Fixed position
Process
Assembly line
Work cell
Product
How
Figure 10.1

36. Labor Planning Employment Stability Policies Follow demand exactly
Matches direct labor costs to production
Incurs costs in hiring and termination, unemployment insurance, and premium wages
Labor is treated as a variable cost

37. Labor Planning Employment Stability Policies Hold employment constant
Maintains trained workforce
Minimizes hiring, termination, and unemployment costs
Employees may be underutilized during slack periods
Labor is treated as a fixed cost

38. Work Schedules Standard work schedule Flex-time Flexible work week
Five eight-hour days
Flex-time
Allows employees, within limits, to determine their own schedules
Flexible work week
Fewer but longer days
Part-time
Fewer, possibly irregular, hours

39. Job Design
Specifying the tasks that constitute a job for an individual or a group
Job specialization
Job expansion
Psychological components
Self-directed teams
Motivation and incentive systems

40. Labor Specialization The division of labor into unique tasks
First suggested by Adam Smith in 1776
Development of dexterity and faster learning
Less loss of time
Development of specialized tools
Later Charles Babbage (1832) added another consideration
Wages exactly fit the required skill

41. Job Expansion Adding more variety to jobs
Intended to reduce boredom associated with labor specialization
Job enlargement
Job rotation
Job enrichment
Employee empowerment

42. Psychological Components of Job Design
Human resource strategy requires consideration of the psychological components of job design

43. Hawthorne Studies
They studied light levels, but discovered productivity improvement was independent from lighting levels
Introduced psychology into the workplace
The workplace social system and distinct roles played by individuals may be more important than physical factors
Individual differences may be dominant in job expectation and contribution

44. Core Job Characteristics
Jobs should include the following characteristics
Skill variety
Job identity
Job significance
Autonomy
Feedback

45. Self-Directed Teams
Group of empowered individuals working together to reach a common goal
May be organized for long-term or short-term objectives
Effective because
Provide employee empowerment
Ensure core job characteristics
Meet individual psychological needs

46. Self-Directed Teams To maximize effectiveness, managers should
Ensure those who have legitimate contributions are on the team
Provide management support
Ensure the necessary training
Endorse clear objectives and goals
Financial and non-financial rewards
Supervisors must release control

47. Benefits of Teams and Expanded Job Designs
Improved quality of work life
Improved job satisfaction
Increased motivation
Allows employees to accept more responsibility
Improved productivity and quality
Reduced turnover and absenteeism

48. Motivation and Incentive Systems
Bonuses - cash or stock options
Profit-sharing - profits for distribution to employees
Gain sharing - rewards for improvements
Incentive plans - typically based on production rates
Knowledge-based systems - reward for knowledge or skills

49. Ergonomics and the Work Environment
Ergonomics is the study of the interface between man and machine
Often called human factors
Operator input to machines

50. Ergonomics and Work Methods
Feedback to operators
The work environment
Illumination
Noise
Temperature
Humidity

51. Methods Analysis Focuses on how task is performed Used to analyze
Movement of individuals or material
Flow diagrams and process charts
Activities of human and machine and crew activity
Activity charts
Body movement
Micro-motion charts

52. Labor Standards
Effective manpower planning is dependent on a knowledge of the labor required
Labor standards are the amount of time required to perform a job or part of a job
Accurate labor standards help determine labor requirements, costs, and fair work