4 - Facilities Management - Process Strategy,Facilities Location, Plant Layout

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Process Strategy – Process Selection / Process Strategy, Four Process Strategies and their Comparison, Process Analysis and Design, Production Technology Facilities Location. Factors governing plant location. Steps in location selection. Plant Lay Out. Objectives of plant layout. Principles of good layout. Types of layout. Tools and techniques for layout analysis. Line Balancing, Transportation Model Chapter – IV: Facilities Management Chapter – IV: Facilities Management Process Strategy Facilities Location Plant Layout

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Operations management

Transcript of 4 - Facilities Management - Process Strategy,Facilities Location, Plant Layout

Process Strategy – Process Selection / Process Strategy, Four Process Strategies and their Comparison, Process Analysis and Design, Production Technology

Facilities Location. Factors governing plant location. Steps in location selection.

Plant Lay Out. Objectives of plant layout. Principles of good layout. Types of layout. Tools and techniques for layout analysis. Line Balancing, Transportation Model

Chapter – IV: Facilities ManagementChapter – IV: Facilities Management

• Process Strategy• Facilities Location• Plant Layout

Chapter – IV: Facilities ManagementChapter – IV: Facilities Management

• Process Strategy• Facilities Location• Plant Layout

Process Strategy / Process Selection and Types of Process Strategies

Process-Focused (Job Shop): Low Volume, High Variety

Product-Focused (Batch Production) – High Volume, Low Variety

Repetitive Focus (Assembly Line) – High Volume, Standardized

Continuous Focus – V. High Volume, Highly Standardized

A Process (or transformation) strategy / Selection is an organization’s approach to transforming resources into goods and services. It is deciding on the way production of goods or

services will be organized.

Objective of Process Strategy is to build to Production Processs that meets customer requirements and producer specifications

within the cost and managerial constraints.

The Four Strategies

Process-Focused (Job Shop)

Planning

DrillingDrilling

Shaping

TurningTurning

1111 5555 7777

3333

2222

1111 6666

3333

6666

4444

2222Job AJob AJob AJob A

Job BJob B

4444 5555

Customized Woodwork ShopCustomized Woodwork Shop

Cutting Sanding FinishingAssembly

Process-Focused Strategy Examples (Job Shop)

Bank

Machine Shop

Hospital

Process Technologies – Process Focused - JOB SHOP

Process-Focused OR Job - Shop

Processes (conversions) are arranged based on the type of process, i.e., similar processes are grouped together

Products / services (jobs) move from department (process group) to department based on that particular job’s processing requirements

Also called “Job Shop” or “Intermittent Production”

Examples Auto body repair – Welding, Denting, Lathe, Grinding, Drilling, Wheel

Balancing, Wheel alignment, Washing, Painting………etc. Custom woodworking shop, Empty cylinder manufacturing company,

Bottling Companies etc. Hospitals, Restaurants

Characteristics and Advantages Low Volume and High Variety High product flexibility Lower initial investment level High variable costs and extremely

low utilization of facilities.

Disadvantages Higher labor-skill requirements More worker training More supervision More complex production planning and

controlling

Product-Focused (Batch Production)

PurchasedPurchased

Components,Components,SubassembliesSubassemblies

2222

3311

44

1

77

66

55

ComponentsComponents Subassembly.Subassembly.

AssembliesAssemblies

Product/Material FlowProduct/Material Flow

Production OperationProduction Operation

Assem

blies

Assem

blies

Raw MaterialRaw Material ComponentsComponents

Components

Subassembly.

Subassembly.

Raw MaterialRaw Material

Fin. GoodsFin. Goods

OperationProduct A

Product B

1111 2222 3333

Process Technologies – Product Focused – BATCH PRODUCTION

Light Bulbs (Discrete)Paper (Continuous)

Soft Drinks (Continuous, then

Discrete)

Product-Focused OR Batch Processing

Facilities are organized around products Processes (conversions) are arranged based on the sequence of operations

required to produce a product or provide a service Also called “Production Line” or “Continuous Processes” Two general forms

Discrete unit – Movie Theaters, Airlines, Transport systems, dishwashers, TV Programs, cars, cafeteria, canned corn, paper, Bakeries,

Process (Continuous) – petrochemicals, paper, glass, beer, bolts

Characteristics and Advantages Medium to High – Volume and Low variety High Fixed Cost and Low Variable Costs Lower labor-skill requirements Reduced worker training Standardization and effective quality control Reduced supervision Ease of planning and controlling production

Disadvantages Higher initial investment

level Relatively low product

flexibility

Product-Focused OR Batch Processing

Process Technologies – Repetitive Focus - ASSEMBLY LINE PRODUCTION

Repetitive Focus OR Assembly Line

This falls between Product and Process focuses. Repetitive processes use modules. Modules are parts or components previously

prepared, often in a continuous process. More Higher volumes of more standardized goods or services are needed,

repetitive processing issued. Standardized output needs only slight flexibility of equipment, low skill of workers. Repetitive Focus is the classic “Assembly Line” production system. Examples

Automobiles, Television Sets, Pencils, Computers, Automatic Carwash, Fast – Food firms, etc.

Characteristics and Advantages More High Volume and Medium

Variety Cost of manufacturing is very low Product cost if also low

Disadvantages High initial cost Lot of cost is involved to bring more

variety More supervision and maintenance

Repetitive-Focused Strategy - Examples

Truck

Clothes DryerFast Food

McDonald’sMcDonald’s

Flow Diagram Showing the Production Process for Harley Davidson, York, PA.

Process Technologies – CONTINUOUS FLOW PRODUCTION

CONTINUOUS FLOW PRODUCTION - Suitable for producing a continuous flow of products.

Manufactured product is in continuous quantities i.e., the product is not a discrete object. Moreover, for such processes, the volume of production is generally very high, while the product variation is relatively low.

These systems have almost NO variety in output and hence NO need for equipment flexibility.

Examples: Oil Refineries, Iron and Steel Plants, Cement and Chemical Plants.

*** Refer “Operations Management – by William J. Stevenson Page No: 227 - 237

Comparison of Processes

Rapid changeover on flexible equipment

Special purpose equipment

Special equipment aids in use of assembly line

General purpose equipment

Large quantity, large variety of products

Large quantity, small variety of products

Long runs, standardized product made from modules

Small quantity, large variety of products

Mass Customization

(High-volume, high-variety)

Product Focus

(High-volume, low-variety)

Repetitive Focus(Modular)

(Low-volume, high-variety)

Process Focus

(Low-volume, low-variety)

Parts, work processes fall into one standard class. Handful of assembly types

Parts, work processes and assembly fall into one standard way

Parts, work processes and assembly fall into few similar modules/groups

Product parts, work processes and assembly are unique

Product Life Cycle Vs. Process Life Cycle

Process Life Cycle Stages

1. Low Volume and Low

Standardization

2. Rapid Growth, Low Volume,

Multiple products

3. Maturity, Few Major Products,

High Volume

4. Commodity, High Volume,

High Standardization or products

1. JOB SHOP (PROCESS)

2. BATCH PRODUCTION

(PRODUCT)

3. ASSEMBLY LINE

PRODUCTION (REPETITIVE)

4. CONTINUOUS FLOW

PRODUCTION

A

B

C

D

Product A – Commercial Printer Product B – Heavy Machinery

Product C – Automobile Assembly Product D – Sugar Mill

Product Life Cycle Stages

Types of Production Systems

Types of Production Systems

Types of Production Systems

PROCESS ANALYSIS AND DESIGN

Is the process designed to achieve competitive advantage? – Differentiation, Response, Cost

Non-Value added steps are eliminated? Is customer value maximized as per the requirement of customer? Will the process be an Order Winner?

Factors considered while Analyzing and Designing a Process

Tools for Process Analysis and Design

Process Flow Diagrams – Schematic or drawing of the movement of material, product or people.

Time – Function Mapping: Process flow diagram with the addition of time. Also called as “Process Mapping”

Process Charts

Accounting

PRINTING DEPT

COLLATING DEPT

GLUING, BINDING, STAPLING, LABELING

POLYWRAP DEPT

SHIPPING

Vendors

Receiving

Warehouse

Purchasing

PREPRESS DEPT

Process Flow Diagram

Customer

Customer sales representative

Information flowInformation flowMaterial flowMaterial flow

PROCESS ANALYSIS AND DESIGN

PROCESS ANALYSIS AND DESIGN

PROCESS ANALYSIS AND DESIGN

Time-Function MappingTime-Function Mapping

CustomerCustomer

SalesSales

Production Production controlcontrol

Plant APlant A

WarehouseWarehouse

Plant BPlant B

TransportTransport MoveMove

Receive Receive productproduct

ExtrudeExtrude

WaitWait

MoveMove

WaitWait

PrintPrint

WaitWait

Order Order productproduct

Process Process orderorder

WaitWait

12 days12 days 13 days13 days 1 day1 day 4 days4 days 1 day1 day 10 days10 days 1 day1 day 0 day0 day 1 day1 day

52 days52 daysFigure 7.7Figure 7.7

Process ChartProcess Chart

Process ChartProcess Chart

PRODUCTION TECHNOLOGY

Machine Technology Automatic Identification Systems (AISs) and RFID Process Control Vision Systems Robots Automated Storage and Retrieval Systems (ASRSs) Automated Guided Vehicles (AGVs) Flexible Manufacturing Systems (FMSs) Computer – Integrated Manufacturing (CIM)

Nine areas of Production Technology

Facilities Location Strategies

Importance of Location

Location greatly affects , Fixed and Variable Costs of the company and its operations Overall Risk and Profitability of the company Opportunities for the companies – Tax benefits, Wages minimization,

Reduction in raw material costs and rentals etc.

Location decisions are infrequent and they are Strategic Decisions

Strategies related to location Continuation of operations in the existing facility Expansion of the existing facility (Expansion) Maintaining current sites while adding another facility elsewhere

(Geographical Expansion) Closing the existing facilities and moving down to another location

(Relocation) Sell of the facilities to other companies (Divestment)

Importance of Location

Type of Business Primary Strategy Secondary Strategy

Industrial Location Minimization of costs Innovation and Creativity

Retail and Professional Service Maximizing Revenue Increasing Brand Value and

Reach

Warehouse Location Cost and Speed of delivery Availability of good transportation network

All the other businesses Combination of several factors

Location decision often depends on type of business

Importance of Location

Location decision often depends on type of business

Facility Location Planning

Environment and

Community

Govt. Policies

Basic Amenities

Proximity to Sub-

contractors

Proximity to

Markets

Good Transpor

tationAvailabil

ity of Power

Proximity to Raw

Material

Easy Availability of Land and

Labor

Low constructio

n costs

Importance of Location

Critical Success Factors (CSFs) for Global Location

Country Decision Region / Community Decision Site Decision

Political risks, government rules, attitude, incentives Corporate desires Site size and cost

Cultural and economic issues Attractiveness of region (Culture, Taxes, Climate etc)

Air, Rail, Highway, Waterway Systems

Location of markets Labor Availability, Costs, Attitude toward unions Zoning Restrictions

Labor Talent, attitude, productivity, costs Cost and availability of utilities Proximity of services / supplies

needed

Availability of supplies, communication, energy

Environmental regulations and state and town Environmental impact issues

Exchange rates and currency risk Government incentives and fiscal policies

Proximity to raw materials and customers

Land / Construction Costs

Methods of Evaluating Location Alternatives

Method

Factor – Rating Method √

Location Break – Even Analysis √

Center of Gravity Method X

Transportation Model √

Geographic Information Systems √

Facilities / Plant Layout

Strategic Importance of Layout Decisions

Layout is concerned with the arrangement of all facilities inside the plant

Objective of layout strategy: Develop an effective and efficient layout that will meet the firm’s

competitive requirements.

What to achieve from Layout design? 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

2. Retail layout

3. Warehouse layout

4. Fixed-position layout

5. Process-oriented layout

6. Work-cell layout

7. Product-oriented layout

Retail LayoutRetail Layout

• Objective is to maximize profitability per square foot of floor space

• Sales and profitability vary directly with customer exposure

1. Locate high-draw items around the periphery of the store

2. Use prominent locations for high-impulse and high-margin items3. 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

Ideas for Supermarket Layout

• 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

Retail Slotting

Warehousing and Storage LayoutsWarehousing 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

• All costs associated with the transaction

• Incoming transport

• Storage

• Finding and moving material

• Outgoing transport

• Equipment, people, material, supervision, insurance, depreciation

• Minimize damage and spoilage

Material Handling Costs

• Use of Automated Storage and Retrieval Systems (ASRS)

• 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

Typical layouts in Warehouse

Warehousing and Storage LayoutsWarehousing and Storage Layouts

• Random Stockings: 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 and Repairs

• Customized labeling and packaging

Typical Layouts in Warehouses

Shipping and receiving docks

Office

Cu

sto

miz

atio

n

Conveyor

Storage racks

Staging

Warehouse LayoutWarehouse Layout

Traditional Layout

Warehouse LayoutWarehouse Layout

Cross-Docking LayoutCross-Docking Layout

Shipping and receiving docks

Offi

ce

Shipping and receiving docks

FIXED POSITION LAYOUTFIXED POSITION LAYOUT

• Project remains in one place and workers and equipment come to that one work area.

• Examples: Aircraft manufacturing, Thermal Plants, Refineries, Ship building, Flyovers etc.

• Limited space at site

• Different materials required at different stages of the project

• Volume of materials needed is dynamic

Critical Factors to be considered

• Completion of major work offsite and assemble later at the actual site.

• Examples: Ship building, Construction of Flyovers, Some model houses etc.

Recent trends in Fixed Layout Strategies

PROCESS ORIENTED LAYOUT – JOB SHOPPROCESS ORIENTED LAYOUT – JOB SHOP

• Handles wide variety of products or services and is of Low-Volume typically.

• Most efficient when handling different requirements or when handling customers, patients, or clients with different needs.

• Departments and Work Centers are arranged so as to minimize costs of material handling.

• What like machines to be combined together

• How to decide the sequence and schedule the activities?

• How much flexibility can be added to the system?

• Cost Minimization and Arrangement of departments / work centers

Critical Factors to be considered

• Usage of CRAFT (Computerized Relative Allocation of Facilities Technique)

• Usage of ALDEP (Automated Layout Design Program )

• Usage of CORELAP (Computerized Relationship Layout Planning)

• Usage of FF (Factory Flow)

Recent trends in Process Oriented Layouts

Surgery

Radiology

ER Room

ER Beds Pharmacy

Emergency room admissions

Billing/exit

Laboratories

Process-Oriented Layout

Patient A - broken leg

Patient B - Erratic heart pacemaker

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

Repetitive and Product – Oriented Layout

Some 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

McDonald’s Assembly Line

Assembly-Line Balancing

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

Starts with the precedence relationships1. Determine cycle time

2. Calculate theoretical minimum number of workstations

3. Balance the line by assigning specific tasks to workstations