1. Dr. Ron Tibben-Lembke

2. Layout Types Project or Fixed-position layout Process-oriented layout Product-oriented layout Office layout Warehouse layout Retail/service layout

3. Project or Fixed-Position Design is for stationary project Workers & equipment come to site Complicating factors Limited space at site Changing material needs Examples Ship building Highway construction

4. Process-Oriented Layout Design places departments with large flows of material or people together Dept. areas have similar processes e.g., All x-ray machines in same area Used with process-focused processes Examples Hospitals Machine shops

5. Process-Oriented Layout Office Tool Room Drill Presses Table Saws © 1995 Corel Corp.

6. Process Layout + Allows specialization - focus on one skill + Allows economies of scale - worker can watch several machines at once + High level of product flexibility -- Encourages large lot sizes -- Difficult to incorporate into JIT -- Makes cross-training difficult

7. Process-Oriented Layout Steps Construct ‘from-to-matrix’ Determine space needs for each dept. Develop initial schematic diagram Determine layout cost,     X ij C ij By trial-and-error, improve initial layout Prepare detailed plan Includes factors besides cost

8. Process-Oriented Example You work in facilities engineering. You want to find the cost of this layout. The cost of moving 1 load between adjacent dept. is $1. The cost between nonadjacent dept. is $2. 60 ft. 40 ft. Dept. 1Dept. 2Dept. 3 Dept. 4Dept. 5Dept. 6 There are 6! or 720 possibilities! Clearly, we can’t look at them all.

9. From-to-Matrix 5 123456 Department Dept. 1 2 3 4 6 Number of Trips

10. 20 100 50 30 50 10 20 Schematic Diagram & Cost Dept.Dept.Cost 13$200 12$50 16$40 42$50 43$40 45$50 25$10 23$30 36$100 Total Cost$570 123 645 100

11. 20 30 50 100 50 10 20 Schematic Diagram & Cost Dept.Dept.Cost 12$50 13$100 16$20 42$50 43$40 45$50 25$10 23$60 36$100 Total Cost$480 213 645 100

12. Product-Oriented Layout Facility organized around product Design minimizes line imbalance Delay between work stations Types: Fabrication line; assembly line Examples Auto assembly line Brewery Paper manufacturing.

13. Cellular Layout (Work Cells) Special case of process-oriented layout Consists of different machines brought together to make a product May be temporary or permanent Example: Assembly line set up to produce 3000 identical parts in a job shop

14. Work Cell Floor Plan Office Tool Room Work Cell SawsDrills

15. Work Cell Advantages Reduces: Inventory Floor space Direct labor costs Increases: Equipment utilization Employee participation Quality

16. Work Cell Layout + Facilitates cross-training + Can easily adjust production volumes + Easy to incorporate into JIT -- Requires higher volumes to justify -- May require more capital for equipment

17. Office Layout Example

18. Relationship Chart 1 2 3 Ordinary closeness: President (1) & costing (2) Absolutely necessary: President (1) & secretary (4) 4 I = Important; U = Unimportant 1 President O 2 CostingU AA 3 EngineeringI O 4 President’s Secretary

19. Relationship Chart A O E O U U U U U U I O I I I O U U U U U U U O U U I I U U E U I U E U U A U A I I U U E U 3 4 2 1 8 7 6 5 9 10 1 2 3 4 5 6 7 8 9

23. Warehouse Layout Design balances space (cube) utilization & handling cost Similar to process layout Items moved between dock & various storage areas Optimum layout depends on Variety of items stored No. items picked © 1995 Corel Corp.

24. Warehouse Flow Receiving Shipping

25. Warehouse Layout Try to organize storage in such a way that order pickers can move through the product in a logical and timely manner.

28. Warehouse Layout Fastest near the front Fastest within easy reach Bulk storage vs. Single item picking Serpentine vs. oval picking order Restocking: frequency, safety stock

29. Cross-Docking Transferring goods from incoming trucks at receiving docks to outgoing trucks at shipping docks Avoids placing goods into storage In-coming Outgoing © 1984-1994 T/Maker Co. © 1995 Corel Corp.

30. Retail/Service Layout Design maximizes product exposure to customers, profitability per square foot Decision variables Store flow pattern Allocation of (shelf) space to products Types Grid design Free-flow design Video

31. Grid Design Office Carts Check- out Grocery Store MeatBread Milk

32. Free-Flow Design Feature Display Table Trans. Counter Apparel Store

37. Retail Store Flow Guidelines “Prisoner” aisles make you enter store in a particular route, and pass by certain displays Often contain less profitable (for the store) brands “Decompression Zone” people walk past first rows of items before settling into shopping mode.

38. Retail Store Flow Guidelines Bakery, coffee shop, restaurant spread aromas by entrance to stimulate taste buds Siren song of the Starbucks (Safeway) Food samplers throughout store do same

39. Retail Store Flow Guidelines Frequently purchased items at far sides of stores so you have to go through entire store (produce or meat). Profitable sections like produce placed where you keep running into them Milk Meat Produce

40. Retail Store Flow Guidelines Major items in middle of aisles so you have to walk down into middle of aisle (Cereal, peanut butter) ‘Power items’ on both sides of aisle so you have to look at both sides Cereal Peanut Butter

41. Retail Store Flow Guidelines Quality of produce section important in customer decisions about which stores to visit, so produce is often prominently displayed upon entrance People like to see what they’re looking for, not read signs Cereal Peanut Butter produce

42. Retail Flow Guidelines End caps for high- visibility sale items Large quantities of inventory serve as “psychic stock” If there is a lot of it, it must be on sale Stimulates sales © 1995 Corel Corp.

43. Retail Flow Guidelines Eliminate cross-over aisles: less wasted floor space, you have to look at more items, the more time you spend in the store, the more you will buy.

44. Shelf Space Planogram Computerized tool for shelf-space management Generated from store’s scanner data on sales Often supplied by manufacturer Example: P&G 2 ft. 5 facings VO-5 SUAVE VO-5 PERT VO-5

45. Shelf Placement Companies prefer to be at eye-level or at child- reaching level Close to leading brands or high-draw items: snack foods next to the peanut butter or across from the cereal: Lots of kids visit the area

46. Slotting Fees Manufacturer pays retailer to get a product into a store 35,000 new grocery products per year Grocery stores often stock 30,000 items Impossible to evaluate all new products to choose the best new ones Slotting fees guarantee grocer profits on a product, help balance risk of trying unknown product. Grocery is a narrow margin business, slotting fees can represent a significant revenue source.

47. Slotting Fees Senate Small Business Committee held hearings on them in 2000. Industry refused to cooperate with GAO. Growers of produce (not just brand names) now getting involved and complaining. Small businesses claim they can’t afford the big payments big companies can make. Advocates say small companies can “put their money where their mouths are” just like anyone else

48. PerimeterItems People follow perimeter pattern Sale items on end – everyone sees Half of a store’s profit comes from items on the perimeter Breakfast cereal brings in the most dollars per square foot Manufacturer incentives increase profitability of soft drinks “Anchors” at ends of a section: milk and butter at opposite ends of dairy case