1 Office Space Requirements

2 Universal Axioms Manufacturing managers in large companies tend to overestimate their individual cell or departmental space needs Manufacturing space is like a closet, clutter will continue to collect until it fills the space provided

3 General Considerations No magic formulas to follow Experienced managers will overstate their requirements Inexperienced managers will understate their requirements Main aisles in a light manufacturing plant will account for approximately 10% - 18% of total under roof floor space

4 The Big Three Budget Limitations 1. Cost Limitations 2. Schedule Limitations 3. Human Resources Limitations

5 Gross Business Ratios Space versus sales ratios Revenue ratio Plant ratios or ratio ranges Estimate data for large companies Use public domain information Office area is fairly consistent Manufacturing size varies by type (cellular, assembly line, etc.)

6 Space-Related Ratios Total Production Space Number of Production Workers Space-related Ratio = Useful for existing plant expansion... Take note of the current working conditions: Congested = “worst” case scenario Functional = “optimal” scenario Baseline the expansion on these numbers

7 Space-Related Ratio Example A local manufacturer has determined the following: Space is considered “tight” They have 50 employees They currently occupy a 5,000 sq. ft. facility Expected 5 year growth = 75 employees What do we know? Employee / Space Ratio = 5,000 / 50 = 100 sq. ft / employee Anticipated facility size in 5 years= 75 X 100 sq. ft. = 7,500 sq. ft.

8 Ratio Caution forecast A ratio is like a forecast... it’s only an estimate of the future Review the past sales / production history Review the economic conditions during the growth periods Use the ratios as a guide

9 Space Balance Analysis Most often used classifications: Primary operations Secondary operations Inspection and test areas Storage areas Raw materials WIP Finished goods

10 Space Balance Analysis Service and support Maintenance Tool cribs Shipping / Receiving dock areas Offices Aisles

11 Space Utilization 7% 8% 12% 17% 19% 20% Service / Support Molding Offices Light Assy Aisles Shipping / Receiving Warehouse

12 Site Saturation Planning Completely utilized configuration No room for building additions No room for expansion Framework for master facility plan Estimates are derived for maximum facility layout Used to determine maximum production output on existing site

13 Site Saturation Planning Completely utilized configuration No room for building additions No room for expansion Framework for master facility plan Estimates are derived for maximum facility layout Used to determine maximum production output on existing site

14 Site Saturation Planning Neglecting site saturation planning can result in long-term consequences costing the organization significant capital

15 Equipment Utilization Consideration Equipment utilization impacts layout space Don’t plan on 100% equipment utilization levels Take PFD into consideration Rely on historical data including utilization and maintenance

16 Equipment Utilization Consideration Example: Equipment currently runs at 65%, producing 500 pcs./day OEM states production runs of 769 pcs./day Growth projections require 1,300 pcs./day Management expects 85% utilization through improvements How many machines are required to meet production growth? (500 pcs./day X 85%) / 65% = 653 pcs./day 1,300 / 653 = 2 machines required [negligible OT projected]

17 Adjusting Today’s Needs Also known as conversion or converting Tally all currently used space Calculate the space for aisles Interview and observe the workers Collect data from the workers Confirm and correct estimates Base projections on the data

18 Adjusting Today’s Needs – From the Trenches Space required for increasing capacity or production levels in not linear The Conversion methodology uses a subjective or approximate approach Evaluate each situation carefully Used for basic level planning

19 Equipment Utilization Consideration Example: A walk-through of the existing 1,225 sq. ft. department (operating 24 / maximum capacity) indicates congestion. This area could use an increase of 5% - 10% of space. Develop a baseline SWAG of future space allotment if the area doubles in capacity through increased demand. Using the Conversion method: (1,225 sq. ft. X 108%) X 2 = 2,646 sq. ft. estimated Average = 8% Double capacity

20 Determining Space Needs Known as a Rough Layout or Production Center method Detail each piece of equipment Indicate door swings Special access areas Approximate equipment spacing Utility requirements (water, air, power, etc.)

21 Elements of a Push System Production Schedule Assembly Schedule Processing Schedule Procurement Schedule Suppliers Materials Warehouse Product Warehouse FabricationAssembly Work Orders Work Orders In-Process Inventory In-Process Inventory Material Orders  Trigger or process driver  Information flow and material flow  Inventory management  Work order control vs. visual control  Integration of suppliers

22 Elements of a Pull System Suppliers FabricationAssembly Product Warehouse Customer Demand Point of use Storage In-Process Inventory Assembly Usage Fabrication Usage  Trigger or process driver  Information flow and material flow  Inventory management  Work order control vs. visual control  Integration of suppliers

23 Pull Production System In a Pull System, coordinating the production and movement of parts and components between processes is critical in avoiding over production or shortages. To achieve this coordination, you can use a system called “Kanban.” Kanban is a mechanism for managing a pull production system.

24 Kanban Kanbans have been in use in the US prior to the mid-1960s One of the most widely used systems before MRP and MRP-II Requires maintaining minimal inventory levels Kanban starts at the end... Shipping

25 Kanban Kanban is also known as “pull” manufacturing Kanban loosely translated to “card” Kanban is a simple visual scheduling and replenishment approach Kanban signals can be cards, containers, lights, “Poker Chips”, etc.

26 Pull Signal Calculation Production Kanban An example of a simple pull signal (Kanban) calculation where a constant quantity of product is withdrawn at varying intervals: K= D r * T r * (1+F m ) UkUk Where: K = Number of Kanban (number of signals) And: D r = Demand Rate T r = Replenishment Lead Time (for feeder) U k = Units per Kanban (per signal) F m = Management Factor (safety factor)

27 Pull Signal Calculation Supplier Kanban An example of a simple pull signal (Kanban) calculation where a variable quantity of product is provided at constant intervals: K= D r * (2 + T d ) * (1+F m ) (U k * D d) Where: K = Number of Kanban (number of signals) And: D r = Demand Rate T d = Transit Delay (for supplier) U k = Units per Kanban (container capacity) D d = Deliveries per Day F m = Management Factor (safety factor)

28 Inventory Convert inventory to physical space terms Inventory holding costs have a significant impact on the bottom line of a company Increased production does not directly reflect increased inventory Reduce inventory where possible

29 Inventory Customer Order Lead Time On-Time Delivery Current Capability Do we have to make trade-offs?

30 Space Need Pitfalls Ratios and projections are approximations Many companies guess at space needs Forecasting errors Overestimating space requirements Poor understanding of the manufacturing process

31 Questions & Comments