1. Facilities Location, Layout and Planning

2. FACILITY PLANNING The placement of facility – customers, suppliers, other links in the supply chain Resources Strategy – 99cents Only example Access to customers Government impacts

3. Objectives of Facility Layout Minimize material handling costs Minimize material handling costs Utilize space efficiently Utilize space efficiently Utilize labor efficiently Utilize labor efficiently Eliminate bottlenecks Eliminate bottlenecks Facilitate communication and interaction between workers, between workers and their supervisors, or between workers and customers Facilitate communication and interaction between workers, between workers and their supervisors, or between workers and customers Reduce manufacturing cycle time or customer service time Reduce manufacturing cycle time or customer service time

4. Objectives of Facility Layout Eliminate waste or redundant movement Eliminate waste or redundant movement Facilitate the entry, exit, and placement of material, products, or people Facilitate the entry, exit, and placement of material, products, or people Incorporate safety and security measures Incorporate safety and security measures Promote product and service quality Promote product and service quality Encourage proper maintenance activities Encourage proper maintenance activities Provide a visual control of operations or activities Provide a visual control of operations or activities Provide flexibility to adapt to changing conditions Provide flexibility to adapt to changing conditions Increase capacity Increase capacity

5. Questions on Layout Planning How should the facility be laid out? Does my layout cause unnecessary movement/excess travel time? Does my work flow in a logical manner? Does size dictate layout or does layout/product flow dictate the size?

6. Process Layout Process Layout Machines grouped by process they perform Machines grouped by process they perform Product Layout Product Layout Linear arrangement of workstations to produce a specific product Linear arrangement of workstations to produce a specific product Fixed Position Layout Fixed Position Layout Used in projects where the product cannot be moved Used in projects where the product cannot be moved Basic Types of Layouts

7. Manufacturing Process Layout L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

8. Manufacturing Process Layout L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

9. Manufacturing Process Layout L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

10. A Product Layout In Out

11. Fixed-Position Layouts Typical of projects Equipment, workers, materials, other resources brought to the site Highly skilled labor Often low fixed Typically high variable costs

12. Designing Process Layouts Minimize material handling costs Block Diagramming Minimize nonadjacent loads Use when quantitative data is available Relationship Diagramming Based on location preference between areas Use when quantitative data is not available

13. Block Diagramming Create load summary chart Create load summary chart Calculate composite (two way) movements Calculate composite (two way) movements Develop trial layouts minimizing number of nonadjacent loads Develop trial layouts minimizing number of nonadjacent loads Example Example

15. Relationship Diagramming (Murther’s Grid) Used when quantitative data is not available Muther’s grid displays preferences Denote location preferences with weighted lines

16. Relationship Diagramming Example Production Offices Stockroom Shipping and receiving Locker room Toolroom

17. Relationship Diagramming Example A A A O O O O O U U U U E X I Production Offices Stockroom Shipping and receiving Locker room Toolroom AAbsolutely necessary EEspecially important IImportant OOkay UUnimportant XUndesirable

18. Relationship Diagramming Example 1 1 1 4 4 4 4 4 5 5 5 5 2 6 3 Production Offices Stockroom Shipping and receiving Locker room Toolroom 1Absolutely necessary 2Especially important 3Important 4Okay 5Unimportant 6Undesirable

20. Facility Location Models

21. Types Of Facilities Heavy manufacturing Auto plants, steel mills, chemical plants Light industry Small components mfg, assembly Warehouse & distribution centers Retail & service

22. Factors in Heavy Manufacturing Location Construction costs Land costs Raw material and finished goods shipment modes Proximity to raw materials Utilities Labor availability

23. Factors in Light Industry Location Construction costs Construction costs Land costs Land costs Easily accessible geographic region Easily accessible geographic region Education & training capabilities Education & training capabilities

24. Factors in Warehouse Location Transportation costs Proximity to markets (Customers)

27. Service Location Considerations Labor Cost of Living Real Estate Construction Government Incentives Examples – Amoco, Mass St, Tattoo Parlors, Walgreen’s

28. Global Location Factors Government stability Government regulations Political and economic systems Economic stability and growth Exchange rates Culture Climate Export import regulations, duties and tariffs Raw material availability Number and proximity of suppliers Transportation and distribution system Labor cost and education Available technology Commercial travel Technical expertise Cross-border trade regulations Group trade agreements

29. Regional Location Factors Community government Local business regulations Government services Business climate Community services Taxes Availability of sites Financial Services Community inducements Proximity of suppliers Education system

30. Site Location Factors Customer base Construction/ leasing cost Land cost Site size Transportation Utilities Zoning restrictions Traffic Safety/security Competition Area business climate Income level

31. Location Incentives Tax credits Wal-Mart in Wyandotte Relaxed government regulation Job training Infrastructure improvement Money

32. Locate facility at center of geographic area Based on weight and distance traveled Establish grid-map of area Identify coordinates and weights shipped for each location Center-of-Gravity Technique

33. Facility Summary Why is it important? Location analysis Location Criteria – global, local, regional - education Location and Strategy Location and Customers Layout planning

34. Project Management and Operations

35. Project Management First Essay on Project Management: 1697 – “An Essay Upon Projects” 1959 HBR Article – “The Project Manager” Air Force Manual 1964

36. Project Management In today’s global marketplace, complexity and speed are certainties. In such an environment, a good axiom for project management is, Do It, Do It Right, Do It Right Now. Creating clear direction, efficiency, timely response, and quality outcomes requires project managers who are agile -- adept at change. The associated disciplinary areas are clearly spelled out in the following PMI definition. “Project management is the application of knowledge, skills, tools, and techniques to a broad range of activities in order to meet the requirements of a particular project. Project management is comprised of five Project Management Process Groups – Initiating Processes, Planning Processes, Executing Processes, Monitoring and Controlling Processes, and Closing Processes. Source: Project Management Institute - http://www.pmi.org/info/PP_AboutProfessionOverview.asp?nav=0501http://www.pmi.org/info/PP_AboutProfessionOverview.asp?nav=0501

37. Elements of Project Management Project team Individuals from different departments within company Matrix organization Team structure with members from different functional areas depending on skills needed Project manager - Leader of project team Project Charter – high level description of what is to be accomplished in a project and delegates authority to project manager to implement actions to complete project

38. Project Planning Statement of work Written description of goals, work & time frame of project Activities require labor, resources & time Precedence relationship shows sequential relationship of project activities

39. Elements of Project Planning Define project objective(s) Identify activities Establish precedence relationships Make time estimates Determine project completion time Compare project schedule objectives Determine resource requirements to meet objective

40. Work Breakdown Structure Hierarchical organization of work to be done on a project Project broken down into modules Modules subdivided into subcomponents, activities, and tasks Identifies individual tasks, workloads, and resource requirements

41. Project Control All activities identified and included Completed in proper sequence Resource needs identified Schedule adjusted Maintain schedule and budget Complete on time

42. A Gantt Chart Popular tool for project scheduling Graph with bar for representing the time for each task Provides visual display of project schedule Also shows slack for activities - amount of time activity can be delayed without delaying project Around since 1914

43. A Gantt Chart |||||||||| Activity Design house and obtain financing Lay foundation Order and receive materials Build house Select paint Select carpet Finish work 0246810 MonthMonth 13579135791357913579

44. CPM/PERT Critical Path Method (CPM) DuPont & Remington-Rand (1956) Deterministic task times Project Evaluation & Review Technique (PERT) US Navy, Lockheed Multiple task time estimates

45. Project Network for a House 3 20 1 3 11 1 12467 3 5 Lay foundation Design house and obtain financing Order and receive materials Dummy Finish work Select carpet Select paint Build house

46. Critical Path A path is a sequence of connected activities running from start to end node in network The critical path is the path with the longest duration in the network Project cannot be completed in less than the time of the critical path

47. The Critical Path A:1-2-3-4-6-7 3 + 2 + 0 + 3 + 1 = 9 months B:1-2-3-4-5-6-7 3 + 2 + 0 + 1 + 1 + 1 = 8 months C:1-2-4-6-7 3 + 1 + 3 + 1 = 8 months D:1-2-4-5-6-7 3 + 1 + 1 + 1 + 1 = 7 months 3 20 1 3 11 1 12467 3 5 Lay foundation Design house and obtain financing Order and receive materials Dummy Finish work Select carpet Select paint Build house

48. The Critical Path 3 20 1 3 11 1 12467 3 5 Lay foundation Design house and obtain financing Order and receive materials Dummy Finish work Select carpet Select paint Build house 12467 3 5 3 20 1 3 11 Start at 3 months Start at 5 months 1 Finish at 9 months Start at 8 months Figure 6.6 Activity Start Times

49. Project Crashing Crashing is reducing project time by expending additional resources Crash time is an amount of time an activity is reduced Crash cost is the cost of reducing the activity time Goal is to reduce project duration at minimum cost

50. Crashing costs increase as project duration decreases Indirect costs increase as project duration increases Reduce project length as long as crashing costs are less than indirect costs Time-Cost Relationship

51. Life Cycle Management Long term view of projects to guide decision making – solutions that provide life time success vice short term Acquisition; development; production; introduction; sustainment; disposal Links system costs to big picture; better use of resources; minimize total cost of ownership

52. Capacity and Aggregate Planning

53. Capacity Outputs: Examples

54. The goal of capacity planning decisions (1)The capacity of the firm to produce the service or good (2)The processes for providing the service or making the good (3)The layout or arrangement of the work space (4)The design of work processes to enhance productivity

55. Capacity The max output that an organization be capable of producing Measure a single facility: – Design vs. Effective capacity – Capacity Utilization: design vs. efficient utilization For systems have more than one facility and flows of product – System capacity and bottleneck – Improve system capacity

56. Determinants of Effective Capacity Facilities Human considerations – Adding people – Increasing employee motivation Operations – Improving operating rate of a machine – Improving quality of raw materials and components External forces – Safety regulations

57. Capacity Utilization Measures how much of the available capacity is actually being used: – Always <=1(percentage of usage) – Higher the better – Denominator: If effective capacity used: efficient utilization If design capacity used: design utilization

58. Capacity Planning The process of determining the amount of capacity required to produce in the future. May be at the aggregate or product line level Master Production Schedule - anticipated build schedule Time horizon must exceed lead times for materials

59. Capacity Planning Look at lead times, queue times, set up times, run times, wait times, move times Resource availability Material and capacity - should be in synch driven by dispatch list - listing of manufacturing orders in priority sequence - ties to layout planning load profiles - capacity of each section

60. the capacity decisions: When to add capacity How much capacity to add Where to add capacity What type of capacity to add When to reduce capacity

61. Capacity Planning Rough Cut Capacity Planning - process of converting the master production schedule into requirements for key resources capacity requirements plan - time-phased display of present and future capacity required on all resources based on planned and released orders

62. Capacity Planning Capacity Requirements Planning (CRP) - process of determining in detail the amount of labor and machine resources required to meet production plan RCCP may indicate sufficient capacity but the CRP may indicate insufficient capacity during specific time periods

63. Theory of Constraints Every system has a bottle neck capacity of the system is constrained by the capacity of the bottle neck increasing capacity at other than bottle neck operations does not increase the overall capacity of the system

64. Theory of Constraints What needs to be changed What to change to How to make the change happen

65. Capacity Planning Establishes overall level of productive resources Affects lead time responsiveness, cost & competitiveness Determines when and how much to increase capacity

66. Capacity Expansion Volume & certainty of anticipated demand Strategic objectives for growth Costs of expansion & operation Incremental or one-step expansion

67. Sales and Operations Planning (S&OP) Brings together all plans for business performed at least once a month Internal and external

68. Adjusting Capacity to Meet Demand 1.Producing at a constant rate and using inventory to absorb fluctuations in demand (level production) 2.Hiring and firing workers to match demand (chase demand) 3.Maintaining resources for high demand levels 4.Increase or decrease working hours (overtime and undertime) 5.Subcontracting work to other firms 6.Using part-time workers 7.Providing the service or product at a later time period (backordering)

69. Demand Management Shift demand into other periods Incentives, sales promotions, advertising campaigns Offer product or services with countercyclical demand patterns Partnering with suppliers to reduce information distortion along the supply chain