5[1]. Stores Location & Layout

8/14/2019 5[1]. Stores Location & Layout

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Stores location and layout

For arriving at rightstores location andlocation followingfactors are to bediscussed.

How is the storesorganized? Is the storeorganized as centralizedat one location? Or is itlocated at different

locations closer to thepoints of consumption?This decision is primaryfor location.

Is there a common receiving

station and thendecentralized?


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What product is stored?Nature of the product,

whether inflammable,poisonous, hazardous,physical state.

Store as a suppliershould be close to the

customer, the consumptionpoint.

Minimum movement of Acategory items fromunloading bay up to theuser should be ensured.

Maximum Safety of employeesand also general publicshould be ensured,

especially with respectto hazardous goods.


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For ease in materialhandling, adequate space

for movement should beensured.

As a measure of goodhousekeeping, place foreverything and everything

in its place should beensured.

Optimum utilization ofstorage space must beensured by following govertical principle forspace utilization.

Preservation of contentsstored from weathering

agents.


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Compliance to all rules andregulations must be

ensured.Principle of ergonomicsmust be born in mindwhile planning thelayout.

Provision for adequatelighting should be made.

Adequate fire fightingfacilities must be

provided.

Location of items as mustbe planned as per FSNanalysis.

Provision for futureexpansion must be kept inmind.


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Value Analysis, Value

Engineering

Value Analysis is a processof improving the value ofa product already sold inthe market. And valueengineering is the same

process done at thedesign stage of the

product.


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Value is a the concept inthe minds of customers

that makes them chooseone product incompetition. Every

manufacture likes toimprove the value of his

product so that hiscustomers remain loyal tohim and more customersare attracted.

Mathematically, value is

equal to function/cost.Value of a product can be

improved by any of the

three ways listed below.

Reduce the cost withoutcompromising thefunction.


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Improve the functionwithout increasing the

cost.For a small increase incost make a largeimprovement in function.

Genesis, history of valueanalysis

Value analysis like so manyOperation Researchconcepts came from

military. L D Miles,popularly known as fatherof Value Analysis,developed this concept,for American Navy. After

the war this concept cameto business.


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Selection of products forValue Analysis

Products in the maturitystage in product lifecycle will yield extendedlife if value improvementis made.

To select items for valueanalysis, ABC analysis interms of usage/consumption is done onall the items. Productwith maximum weightage ischosen for Value

Analysis.


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Contribution analysis, interms of contribution

[sales price-variableexpenses] is conductedand product with minimumcontribution is chosenfor Value Analysis.

Why poor value exists?

Why do products becomeunattractive tocustomers? What adds poorvalue to a product?

1. Lack of review ofproduct design

2. Product was designedunder urgency. And

subsequently it is notreviewed.


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3. While launching theproduct factor of safety

was fixed based on thelevel of technicalknowledge available atthat time. Subsequentreview did not take

place.

Lack of awareness aboutalternate materials,cheaper in price butquite adequate in

function, changes intechnology are alsoresponsible for customerseeing value in productsof competitors.


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Reluctance to change withtime. Attitudes, beliefs

and such behavioralproblems add costs toproducts.

Value tests to identify

poor value areas

Some simple tests toidentify poor value areasare as below.

Can the design be changed

to eliminate a part? -Door handle is eliminatedin modern refrigerator.

Can you purchase it at alower cost? Can this

part be outsourced at acheaper cost?


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Does it need all itsfeatures? - Lock as a

feature on refrigeratorwas found to be not needand hence eliminated.

Is there anything betterfor intended use? - Less

expensive, more effectiveand low volume

polyurethane, asinsulator, in arefrigerator replaces

Glass wool.Can a usable part be madeby a lower cost method?Change of process


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Can a standard part beused? Bolts and nuts are

standard parts. It ischeaper to buy themrather than make them.

Is it made on propertooling considering the

quantities involved? Arethe tools chosen takinginto account tool lifeand impact on quality?Ceramic tools in place of

carbide tools.Are there any newly

developed materials thatcan be used? E.g. specialalloys, plastics


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Can two or more parts becombined into one? - ball

pen top, AM/PM mouthwash.

9. Can any specificationsbe changed to effect costreduction? Change in

materials specifications

Value Engineering Process

Seven steps in Job plan due

to Mudge


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General phase: convertresistance to assistance.

This is Human ResourceDevelopment phase whereone has to win over

people. In this phasepotential resistance toanything new must beconverted into interestin something new.

Awareness sessions andtraining programmes lead

by senior management arefeatures of this phase.

Information phase:

Gather authenticinformation about the

product. Technicalspecifications,dimensions, grades.


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Environmental conditions inwhich product should

perform. Whether in outerspace, underwater, insidethe human body, etc.

Engineering drawings.

Production data eg.operations, speed, feed,outputs and stock levels

Cost data eg. material,labour, overhead costs.

Work specifications eg.workplace layout,standard times etc.

Features preferred by

customer. What does thecustomer like most in ourproduct?


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Development and servicerecords

Quantities involved

Scrap generation and rates

Fix costs onspecifications and

requirements

function phase


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Every product has a primaryfunction and secondary

functions. Customer buysthe product mainly forits primary function.Product cost should notdisproportionately leanon secondary functions.If this happens products

become expensive for thepurpose they are bought.

The technique to identify

primary function is todefine the function

product is expected toperform. The definitionof function should always

be in one word like asbelow.


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Productfunction

mirrorreflect light

brakearrest motion

clutchtransfer power

electron tube covershield tube

cigarette lighterprovide ignition

light bulbemit light

screw drivertransfer torque


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coffee cuphold liquid

4. Creation Phase:

creation of ideas on whatelse we can do?tosatisfy basic function.

How value can be added? Howcost can be reduced?Generally brain stormingis done to generateideas.

5. Evaluation phase:

Select most promising ideafrom brain storming forfurther analysis

6. Investigation phase:


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use company or industrialstandards that closest to

the selected idea. Use ofstandards reduces thecost. Consult vendors orspecialists for findingsuitable standards.

7. Recommendation phase:

present facts collected andanalyzed withrecommendations and

motivate action.

Scope for Value Analysis inmaterials management

material substitution

supply size standardizationto reduce scrap


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standardization and varietyreduction

Vendor Development

New tools and technology

Outsourcing

Learning CurveLearning curve is amathematical expressionthat indicates fall inlabour cost for every

doubling of productionoutput.

Learning &skillsimprovement:

As learning takes placeskill improves anddefects reduce raisingthe quality of product.


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Reduction in labour cost isanother manifestation of

improved skill.Learning curve shows scopefor improvement inproductivity.

Expected level of output ata later date can beassessed by usinglearning.

Significance of learning

curve is that humanelement in work is thescope for learning andimprovement.

Concepts and principals of

learning


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Only humans learn. Largerthe human element in work

greater is the scope forlearning.

Learning and familiarity

familiarity results intoinstant learning

Learning and skills Whenthe production quantityis doubled, the labourcost falls by learning%age

Learning and quality - aslearning improves skillsthe defects in workreduce improving the

quality of the out put.


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Learning and cost

learning results in

reduction of costs. Allthe improvements statedabove cause reduction inthe cost

Phases of learning

Phase I familiarity,learning is very fast.Instant benifits

Phase II skills

development, learning isslower. Benefits continueat a slower rate


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Phase III reverselearning, as learning

continues the reductionin man hrs result intoexcess inventory andabuse of the machinecausing breakdown

Managerial utility oflearning curve

1. Cost projection forfuture projects.

When to start workmeasurement in a company?If measurement is made inPhase I of learning curvework standards become

very loose.


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Transfers and promotions. Aperson in phase II of

learning a skill he isready for a for apromotion or transfer foranother area of job.

Material requirement

planning. Materialrequirement for a personin his I phase oflearning is quite large.This drops down with

improvement in skills.If skill improvementfollows learning curve,we can say learning isgood and training is

effective.


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Raising productivity. Allthe features studied

above lead toproductivity improvement.

Price negotiations

- vendors learn at the cost

of customer- with learning his/hercost drops

- prices can be fixed ontime scale based onlearning cure projection

- scientific base forpricing and negotiations

Limitations of learning

curve

Benefits run out withobsoletion of product.


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Only human beings learn.

Attitudes come in the way

of benefits of learning.In the absence of

positive attitude humanbeings refuse to learnand improve themselves.

Inventory constraintslimit the benefit oflearning

As the speed of the

workmans machine becomesincompatible with thespeed of learningemployee, employee slowsdown his work due to

equipment constraints.


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As a result of learningcost per unit goes down

and organization tends tobecome mass productionoriented and vulnerableto the competition.

5[1]. Stores Location & Layout

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