© 2008 Prentice Hall, Inc.9 – 1 Operations Management Chapter 12 – Layout Strategies PowerPoint...

© 2008 Prentice Hall, Inc. 9 – 1

Operations ManagementOperations ManagementChapter 12 – Layout Strategies

PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7eOperations Management, 9e


Learning Objectives

When you complete this chapter you should be able to:

1. Discuss important issues in office layout

2. Define the objectives of retail layout

3. Discuss modern warehouse management and terms such as ASRS, cross-docking, and random stocking

4. Identify when fixed-position layouts are appropriate


Learning Objectives

When you complete this chapter, you should be able to:

5. Explain how to achieve a good process-oriented facility layout

6. Define work cell and the requirements of a work cell

7. Define product-oriented layout

8. Explain how to balance production flow in a repetitive or product-oriented facility


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


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


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


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


Types of Layout

4. Fixed-position layout: Addresses the layout requirements of large, 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)


Types of Layout

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

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 frequent 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 of an aisle and disperse them to increase viewing of other items

4. Use end-aisle locations

5. Convey mission of store through careful positioning of lead-off department


Retail Slotting Manufacturers pay fees to retailers

to get the retailers to display (slot) their product

Contributing factorsLimited shelf spaceAn increasing number of new

productsBetter information about sales

through POS data collectionCloser control of inventory


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


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


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


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 RFIDidentification used foradvanced shipmentnotification as materialsare 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 tasks1. 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 Loading software Repairs Customized labeling and packaging


Fixed-Position Layout

Product remains in one place Workers and equipment come to site Complicating factors

Limited space at siteDifferent materials

required at different stages of the project

Volume of materials needed is dynamic


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


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


Computer Software

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


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


Advantages of Work Cells

1. Reduced work-in-process inventory2. Less floor space required3. Reduced raw material and finished

goods inventory4. Reduced direct labor5. Heightened sense of employee

participation6. Increased use of equipment and

machinery7. Reduced investment in machinery

and equipment


Requirements of Work Cells

1. Identification of families of products

2. A high level of training, flexibility and empowerment of employees

3. Being self-contained, with its own equipment and resources

4. Test (poka-yoke) at each station in the cell


Repetitive and Product-Oriented Layout

1. Volume is adequate for high equipment utilization

2. Product demand is stable enough to justify high investment in specialized equipment

3. Product is standardized or approaching a phase of life cycle that justifies investment

4. Supplies of raw materials and components are adequate and of uniform quality

Organized around products or families of similar high-volume, low-variety products


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


Product-Oriented Layouts

1. Low variable cost per unit2. Low material handling costs3. Reduced work-in-process inventories4. Easier training and supervision5. Rapid throughput

Advantages

1. High volume is required2. Work stoppage at any point ties up the

whole operation3. Lack of flexibility in product or production

rates

Disadvantages


Assembly-Line Balancing

Objective is to minimize the imbalance between machines or personnel while meeting required output

Starts with the precedence relationships

1. Determine cycle time

2. Calculate theoretical minimum number of workstations

3. Balance the line by assigning specific tasks to workstations


Operations ManagementOperations ManagementChapter 10 – Human Resources and Job Design

PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7eOperations Management, 9e


Learning Objectives

When you complete this chapter you should be able to:

1. Describe labor planning policies2. Identify the major issues in job design3. Identify major ergonomic and work

environment issues4. Use the tools of methods analysis5. Understand the contribution of the

visual workplace


Human Resource Strategy

The objective of a human resource strategy is to manage labor and

design jobs so people are effectively and efficiently utilized

1. People should be effectively utilized within the constraints of other operations management decisions

2. People should have a reasonable quality of work life in an atmosphere of mutual commitment and trust


Constraints on Human Resource Strategy

Figure 10.1

HUMAN RESOURCE STRATEGY

Product strategy• Skills needed• Talents needed• Materials used• Safety

What

Schedules• Time of day• Time of year

(seasonal)• Stability of

schedules

When

Location strategy• Climate• Temperature• Noise• Light• Air quality

Wher

e

Process strategy• Technology• Machinery and

equipment used• SafetyPro

cedure

Individual differences• Strength and

fatigue• Information

processing and response

Who

Layout strategy• Fixed position• Process• Assembly line• Work cell• Product

How


Labor Planning

1. 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

Employment Stability Policies


Labor Planning

2. 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

Employment Stability Policies


Work Schedules

Standard work schedule 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


Job Design

Specifying the tasks that constitute a job for an individual or a group1. Job specialization

2. Job expansion

3. Psychological components

4. Self-directed teams

5. Motivation and incentive systems


Labor Specialization

The division of labor into unique tasks First suggested by Adam Smith in 1776

1. Development of dexterity and faster learning

2. Less loss of time

3. Development of specialized tools

Later Charles Babbage (1832) added another consideration

4. Wages exactly fit the required skill


Job Expansion

Adding more variety to jobs Intended to reduce boredom

associated with labor specializationJob enlargementJob rotation Job enrichmentEmployee empowerment


Psychological Components of Job Design

Human resource strategy requires consideration of the psychological components of job design


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


Core Job Characteristics

Skill variety Job identity Job significance Autonomy Feedback

Jobs should include the following characteristics


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


Self-Directed Teams

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

To maximize effectiveness, managers should


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


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


Ergonomics and the Work Environment

Ergonomics is the study of the interface between man and machineOften called

human factors

Operator input to machines


Ergonomics and Work Methods

Feedback to operators The work environment

IlluminationNoiseTemperatureHumidity


Methods Analysis

Focuses on how task is performed Used to analyze

1. Movement of individuals or material Flow diagrams and process charts

2. Activities of human and machine and crew activity Activity charts

3. Body movement Micro-motion charts


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

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