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

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

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

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 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

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)

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

Good Layouts Consider Material handling equipment Capacity and space requirements Environment and aesthetics Flows of information 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 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

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

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 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 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

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 site Different 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 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

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

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

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 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

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

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

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

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

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

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

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

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

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

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

Job Expansion Adding more variety to jobs Intended to reduce boredom associated with labor specialization Job enlargement Job rotation Job enrichment Employee 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 Jobs should include the following characteristics Skill variety Job identity Job significance Autonomy Feedback

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 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

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 machine Often called human factors Operator input to machines

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

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

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