Process And Layout Strategies
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Transcript of Process And Layout Strategies
7 – 1
Departament d’Economia de l’Empresa / Department of Business Economics & Administration
Operations ManagementOperations Management
Session 3 – Session 3 – Process and Layout Process and Layout StrategiesStrategies
7 – 2Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
OutlineOutline
Global Company Profile: Dell Global Company Profile: Dell Computer Corp.Computer Corp.
Four Process StrategiesFour Process Strategies
Process FocusProcess Focus
Repetitive FocusRepetitive Focus
Product FocusProduct Focus
Mass Customization FocusMass Customization Focus
Comparison of Process ChoicesComparison of Process Choices
7 – 3Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Process Analysis and DesignProcess Analysis and Design Flow DiagramsFlow Diagrams
Time-Function MappingTime-Function Mapping
Value-Stream MappingValue-Stream Mapping
Process ChartsProcess Charts
Service BlueprintingService Blueprinting
7 – 4Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Service Process DesignService Process Design Customer Interaction and Process Customer Interaction and Process
DesignDesign
More Opportunities to Improve More Opportunities to Improve Service ProcessesService Processes
Selection of Equipment and Selection of Equipment and TechnologyTechnology
7 – 5Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Production TechnologyProduction Technology Machine TechnologyMachine Technology
Automatic Identification Systems Automatic Identification Systems (AISs) and RFID(AISs) and RFID
Process ControlProcess Control
Vision SystemsVision Systems
RobotsRobots
7 – 6Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Production Technology (cont.)Production Technology (cont.) Automated Storage and Retrieval Automated Storage and Retrieval
Systems (ASRSs)Systems (ASRSs)
Automated Guided Vehicles (AGVs)Automated Guided Vehicles (AGVs)
Flexible Manufacturing Systems Flexible Manufacturing Systems (FMSs)(FMSs)
Computer-Integrated Manufacturing Computer-Integrated Manufacturing (CIM)(CIM)
7 – 7Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Technology in ServicesTechnology in Services
Process Redesign Process Redesign
Ethics and Environmentally Ethics and Environmentally Friendly ProcessesFriendly Processes
7 – 8Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Learning ObjectivesLearning Objectives
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
1.1. Describe four production processesDescribe four production processes
2.2. Compute crossover points for Compute crossover points for different processesdifferent processes
3.3. Use the tools of process analysisUse the tools of process analysis
4.4. Describe customer interaction in Describe customer interaction in process designprocess design
5.5. Identify recent advances in Identify recent advances in production technologyproduction technology
7 – 9Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Dell Computer CompanyDell Computer CompanyMass customization provides a Mass customization provides a
competitive advantagecompetitive advantage
Sell custom-built PCs directly to consumerSell custom-built PCs directly to consumer
Lean production processes and good Lean production processes and good product design allow responsivenessproduct design allow responsiveness
Integrate the Web into every aspect of its Integrate the Web into every aspect of its businessbusiness
Focus research on software designed to Focus research on software designed to make installation and configuration of its make installation and configuration of its PCs fast and simplePCs fast and simple
7 – 10Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process, Volume, and VarietyProcess, Volume, and Variety
Process Focusprojects, job shops
(machine, print, carpentry)
Standard Register
Repetitive(autos, motorcycles)
Harley-Davidson
Product Focus(commercial
baked goods, steel, glass)Nucor Steel
High VarietyHigh Varietyone or few one or few units per run, units per run, high varietyhigh variety(allows (allows customization)customization)
Changes in Changes in ModulesModulesmodest runs, modest runs, standardized standardized modulesmodules
Changes in Changes in Attributes Attributes (such as grade, (such as grade, quality, size, quality, size, thickness, etc.) thickness, etc.) long runs onlylong runs only
Mass Customization(difficult to achieve, but huge rewards)
Dell Computer
Poor Strategy Poor Strategy (Both fixed and (Both fixed and variable costs variable costs
are high)are high)
Low Low VolumeVolume
Repetitive Repetitive ProcessProcess
High High VolumeVolume
VolumeVolumeFigure 7.1Figure 7.1
7 – 11Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process StrategiesProcess Strategies
How to produce a product or provide How to produce a product or provide a service thata service that Meets or exceeds customer Meets or exceeds customer
requirementsrequirements
Meets cost and managerial goalsMeets cost and managerial goals
Has long term effects onHas long term effects on Efficiency and production flexibilityEfficiency and production flexibility
Costs and qualityCosts and quality
7 – 12Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process StrategiesProcess Strategies
Four basic strategiesFour basic strategies
Process focusProcess focus
Repetitive focusRepetitive focus
Product focusProduct focus
Mass customizationMass customization
Within these basic strategies there are Within these basic strategies there are many ways they may be implementedmany ways they may be implemented
7 – 13Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process FocusProcess Focus
Facilities are organized around specific Facilities are organized around specific activities or processesactivities or processes
General purpose equipment and skilled General purpose equipment and skilled personnelpersonnel
High degree of product flexibilityHigh degree of product flexibility
Typically high costs and low equipment Typically high costs and low equipment utilizationutilization
Product flows may vary considerably Product flows may vary considerably making planning and scheduling a making planning and scheduling a challengechallenge
7 – 14Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process FocusProcess Focus
Many Many inputsinputs
Many Many variety variety
of of outputsoutputs
Job ShopJob Shop
Ma
ny
de
par
tme
nts
an
d
man
y r
ou
tin
gs
7 – 15Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Accounting
Process Flow DiagramProcess Flow Diagram
Information flowInformation flowMaterial flowMaterial flow
Figure 7.2Figure 7.2
COLLATING DEPT
GLUING, BINDING, STAPLING, LABELING
POLYWRAP DEPT
SHIPPING
Customer
PRINTING DEPT
PREPRESS DEPTVendors
Receiving
Warehouse
Purchasing
Customer
Customer sales representative
7 – 16Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Repetitive FocusRepetitive Focus
Facilities often organized as Facilities often organized as assembly linesassembly lines
Characterized by modules with parts Characterized by modules with parts and assemblies made previouslyand assemblies made previously
Modules may be combined for many Modules may be combined for many output optionsoutput options
Less flexibility than process-Less flexibility than process-focused facilities but more efficientfocused facilities but more efficient
7 – 17Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Repetitive FocusRepetitive Focus
Raw Raw materials materials
and and module module inputsinputs
Modules Modules combined combined for many for many
output output optionsoptions
Few Few modulesmodules
Automobile Assembly LineAutomobile Assembly Line
7 – 18Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process Flow DiagramProcess Flow Diagram
THE ASSEMBLY LINETHE ASSEMBLY LINETESTING28 tests
Oil tank work cell
Shocks and forks
Handlebars
Fender work cell
Air cleaners
Fluids and mufflers
Fuel tank work cell
Wheel work cell
Roller testing
Incoming parts
From Milwaukee From Milwaukee on a JIT arrival on a JIT arrival scheduleschedule
Engines and transmissions
Frame tube bending
Frame-building work cells
Frame machining
Hot-paint frame painting
Crating
Figure 7.3Figure 7.3
7 – 19Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Product FocusProduct Focus
Facilities are organized by productFacilities are organized by product
High volume but low variety of High volume but low variety of productsproducts
Long, continuous production runs Long, continuous production runs enable efficient processesenable efficient processes
Typically high fixed cost but low Typically high fixed cost but low variable costvariable cost
Generally less skilled laborGenerally less skilled labor
7 – 20Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Product FocusProduct Focus
Few Few inputsinputs
Output Output variations variations
in size, in size, shape, shape,
and and packagingpackaging
Continuous Work FlowContinuous Work Flow
7 – 21Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Product FocusProduct FocusNucor Steel PlantNucor Steel Plant
Co
nti
nu
ou
s ca
ster
Co
nti
nu
ou
s ca
ster
Continuous cast steel Continuous cast steel sheared into 24-ton slabssheared into 24-ton slabs
Hot tunnel furnace - 300 ftHot tunnel furnace - 300 ft
Hot mill for finishing, cooling, and coilingHot mill for finishing, cooling, and coiling
DD
EE FF
GGHHII
Scrap Scrap steelsteel
Ladle of molten steelLadle of molten steelElectric Electric furnacefurnace
AA
BBCC
7 – 22Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Mass CustomizationMass Customization
The rapid, low-cost production of The rapid, low-cost production of goods and service to satisfy goods and service to satisfy increasingly unique customer increasingly unique customer desiresdesires
Combines the Combines the flexibility of a flexibility of a process focus process focus with the efficiency with the efficiency of a product focusof a product focus
7 – 23Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Mass CustomizationMass Customization
Vehicle modelsVehicle models 140140 286286Vehicle typesVehicle types 1818 1,2121,212Bicycle typesBicycle types 88 1919Software titlesSoftware titles 00 400,000400,000Web sitesWeb sites 00 98,116,99398,116,993Movie releasesMovie releases 267267 458458New book titlesNew book titles 40,53040,530 77,44677,446Houston TV channelsHouston TV channels 55 185185Breakfast cerealsBreakfast cereals 160160 340340Items (SKUs) in Items (SKUs) in 14,00014,000 150,000150,000 supermarketssupermarketsLCD TVsLCD TVs 00 102102
Number of ChoicesNumber of Choices
ItemItem 1970s1970s 2121stst Century Century Table 7.1Table 7.1
7 – 24Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Mass CustomizationMass Customization
Mass Customization
Effective Effective scheduling scheduling techniquestechniques
Rapid Rapid throughput throughput techniquestechniques
Repetitive FocusRepetitive FocusFlexible peopleFlexible peopleand equipmentand equipment
Process-FocusedProcess-FocusedHigh variety, low volumeHigh variety, low volume
Low utilization Low utilization (5% to 25%)(5% to 25%)General-purpose equipmentGeneral-purpose equipment
Product-FocusedProduct-FocusedLow variety, high volumeLow variety, high volume
High utilization High utilization (70% to 90%)(70% to 90%)Specialized equipmentSpecialized equipment
Figure 7.5Figure 7.5
Modular techniquesModular techniquesSupportive Supportive
supply supply chainschains
7 – 25Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Comparison of ProcessesComparison of Processes
Process Process FocusFocus
(Low volume, (Low volume, high variety)high variety)
Repetitive Repetitive FocusFocus
(Modular)(Modular)
Product FocusProduct Focus
(High-volume, (High-volume, low-variety)low-variety)
Mass Mass CustomizationCustomization
(High-volume, (High-volume, high-variety)high-variety)
Small Small quantity, quantity, large variety large variety of productsof products
Long runs, Long runs, standardized standardized product made product made from modulesfrom modules
Large Large quantity, small quantity, small variety of variety of productsproducts
Large Large quantity, large quantity, large variety of variety of productsproducts
General General purpose purpose equipmentequipment
Special Special equipment equipment aids in use of aids in use of assembly lineassembly line
Special Special purpose purpose equipmentequipment
Rapid Rapid changeover changeover on flexible on flexible equipmentequipment
Table 7.2Table 7.2
7 – 26Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Comparison of ProcessesComparison of Processes
Process Process FocusFocus
(Low volume, (Low volume, high variety)high variety)
Repetitive Repetitive FocusFocus
(Modular)(Modular)
Product FocusProduct Focus
(High-volume, (High-volume, low-variety)low-variety)
Mass Mass CustomizationCustomization
(High-volume, (High-volume, high-variety)high-variety)
Operators are Operators are broadly broadly skilledskilled
Employees Employees are modestly are modestly trainedtrained
Operators are Operators are less broadly less broadly skilledskilled
Flexible Flexible operators are operators are trained for the trained for the necessary necessary customizationcustomization
Many job Many job instructions instructions as each job as each job changeschanges
Repetition Repetition reduces reduces training and training and changes in job changes in job instructionsinstructions
Few work Few work orders and job orders and job instructions instructions because jobs because jobs standardizedstandardized
Custom Custom orders require orders require many job many job instructionsinstructions
Table 7.2Table 7.2
7 – 27Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Comparison of ProcessesComparison of Processes
Process Process FocusFocus
(Low volume, (Low volume, high variety)high variety)
Repetitive Repetitive FocusFocus
(Modular)(Modular)
Product FocusProduct Focus
(High-volume, (High-volume, low-variety)low-variety)
Mass Mass CustomizationCustomization
(High-volume, (High-volume, high-variety)high-variety)
Raw material Raw material inventories inventories highhigh
JIT JIT procurement procurement techniques techniques usedused
Raw material Raw material inventories inventories are loware low
Raw material Raw material inventories inventories are loware low
Work-in-Work-in-process is process is highhigh
JIT inventory JIT inventory techniques techniques usedused
Work-in-Work-in-process process inventory is inventory is lowlow
Work-in-Work-in-process process inventory inventory driven down driven down by JIT, lean by JIT, lean productionproduction
Table 7.2Table 7.2
7 – 28Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Comparison of ProcessesComparison of Processes
Process Process FocusFocus
(Low volume, (Low volume, high variety)high variety)
Repetitive Repetitive FocusFocus
(Modular)(Modular)
Product FocusProduct Focus
(High-volume, (High-volume, low-variety)low-variety)
Mass Mass CustomizationCustomization
(High-volume, (High-volume, high-variety)high-variety)
Units move Units move slowly slowly through the through the plantplant
Movement is Movement is measured in measured in hours and hours and daysdays
Swift Swift movement of movement of unit through unit through the facility is the facility is typicaltypical
Goods move Goods move swiftly swiftly through the through the facilityfacility
Finished Finished goods made goods made to orderto order
Finished Finished goods made goods made to frequent to frequent forecastforecast
Finished Finished goods made goods made to forecast to forecast and storedand stored
Finished Finished goods often goods often build-to-order build-to-order (BTO)(BTO)
Table 7.2Table 7.2
7 – 29Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Comparison of ProcessesComparison of Processes
Process Process FocusFocus
(Low volume, (Low volume, high variety)high variety)
Repetitive Repetitive FocusFocus
(Modular)(Modular)
Product FocusProduct Focus
(High-volume, (High-volume, low-variety)low-variety)
Mass Mass CustomizationCustomization
(High-volume, (High-volume, high-variety)high-variety)
Scheduling is Scheduling is complex, complex, trade-offs trade-offs between between inventory, inventory, availability, availability, customer customer serviceservice
Scheduling Scheduling based on based on building building various various models from models from a variety of a variety of modules to modules to forecastsforecasts
Relatively Relatively simple simple scheduling, scheduling, establishing establishing output rate to output rate to meet forecastsmeet forecasts
Sophisticated Sophisticated scheduling scheduling required to required to accommodate accommodate custom orderscustom orders
Table 7.2Table 7.2
7 – 30Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Comparison of ProcessesComparison of Processes
Process Process FocusFocus
(Low volume, (Low volume, high variety)high variety)
Repetitive Repetitive FocusFocus
(Modular)(Modular)
Product FocusProduct Focus
(High-volume, (High-volume, low-variety)low-variety)
Mass Mass CustomizationCustomization
(High-volume, (High-volume, high-variety)high-variety)
Fixed costs Fixed costs low, variable low, variable costs highcosts high
Fixed costs Fixed costs dependent on dependent on flexibility of flexibility of the facilitythe facility
Fixed costs Fixed costs high, variable high, variable costs lowcosts low
Fixed costs Fixed costs high, variable high, variable costs must be costs must be lowlow
Costing Costing estimated estimated before job, before job, known only known only after the jobafter the job
Costs usually Costs usually known due to known due to extensive extensive experienceexperience
High fixed High fixed costs mean costs mean costs costs dependent on dependent on utilization of utilization of capacitycapacity
High fixed High fixed costs and costs and dynamic dynamic variable costs variable costs make costing make costing a challengea challenge
Table 7.2Table 7.2
7 – 31Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process Analysis ToolsProcess Analysis Tools
Flowcharts provide a view of the Flowcharts provide a view of the big picturebig picture
Time-function mapping adds rigor Time-function mapping adds rigor and a time elementand a time element
Value-stream analysis extends to Value-stream analysis extends to customers and supplierscustomers and suppliers
Process charts show detailProcess charts show detail
Service blueprint focuses on Service blueprint focuses on customer interactioncustomer interaction
7 – 32Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Improving Service Improving Service ProductivityProductivity
StrategyStrategy TechniqueTechnique ExampleExample
SeparationSeparation Structure service so Structure service so customers must go customers must go where service is where service is offeredoffered
Bank customers go to Bank customers go to a manager to open a a manager to open a new account, to loan new account, to loan officers for loans, and officers for loans, and to tellers for depositsto tellers for deposits
Self-serviceSelf-service Self-service so Self-service so customers examine, customers examine, compare, and compare, and evaluate at their own evaluate at their own pacepace
Supermarkets and Supermarkets and department stores, department stores, Internet orderingInternet ordering
Table 7.3Table 7.3
7 – 33Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
StrategyStrategy TechniqueTechnique ExampleExample
PostponementPostponement Customizing at Customizing at deliverydelivery
Customizing vans at Customizing vans at delivery rather than at delivery rather than at productionproduction
FocusFocus Restricting the Restricting the offeringsofferings
Limited-menu Limited-menu restaurantrestaurant
ModulesModules Modular selection of Modular selection of service, modular service, modular productionproduction
Investment and Investment and insurance selection, insurance selection, prepackaged food prepackaged food modules in modules in restaurantsrestaurants
Improving Service Improving Service ProductivityProductivity
Table 7.3Table 7.3
7 – 34Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
StrategyStrategy TechniqueTechnique ExampleExample
AutomationAutomation Separating services Separating services that may lend that may lend themselves to themselves to automationautomation
Automatic teller Automatic teller machinesmachines
SchedulingScheduling Precise personnel Precise personnel schedulingscheduling
Scheduling ticket Scheduling ticket counter personnel at counter personnel at 15-minute intervals at 15-minute intervals at airlinesairlines
TrainingTraining Clarifying the service Clarifying the service options, explaining options, explaining how to avoid how to avoid problemsproblems
Investment counselor, Investment counselor, funeral directors, after-funeral directors, after-sale maintenance sale maintenance personnelpersonnel
Improving Service Improving Service ProductivityProductivity
Table 7.3Table 7.3
7 – 35Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Improving Service Improving Service ProcessesProcesses
LayoutLayout Product exposure, customer Product exposure, customer
education, product enhancementeducation, product enhancement
Human ResourcesHuman Resources Recruiting and trainingRecruiting and training
Impact of flexibilityImpact of flexibility
7 – 36Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Production TechnologyProduction Technology
Machine technologyMachine technology Automatic identification Automatic identification
systems (AISs)systems (AISs) Process controlProcess control Vision systemVision system RobotRobot Automated storage and retrieval systems Automated storage and retrieval systems
(ASRSs)(ASRSs) Automated guided vehicles (AGVs)Automated guided vehicles (AGVs) Flexible manufacturing systems (FMSs)Flexible manufacturing systems (FMSs) Computer-integrated manufacturing (CIM)Computer-integrated manufacturing (CIM)
7 – 37Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Technology in ServicesTechnology in Services
Service IndustryService Industry ExampleExample
Financial Financial ServicesServices
Debit cards, electronic funds transfer, Debit cards, electronic funds transfer, ATMs, Internet stock tradingATMs, Internet stock trading
EducationEducation Electronic bulletin boards, on-line journals, Electronic bulletin boards, on-line journals, WebCT and BlackboardWebCT and Blackboard
Utilities and Utilities and governmentgovernment
Automated one-man garbage trucks, optical Automated one-man garbage trucks, optical mail and bomb scanners, flood warning mail and bomb scanners, flood warning systemssystems
Restaurants and Restaurants and foodsfoods
Wireless orders from waiters to kitchen, Wireless orders from waiters to kitchen, robot butchering, transponders on cars that robot butchering, transponders on cars that track sales at drive-throughstrack sales at drive-throughs
CommunicationsCommunications Electronic publishing, interactive TVElectronic publishing, interactive TV
Table 7.4Table 7.4
7 – 38Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Technology in ServicesTechnology in Services
Service IndustryService Industry ExampleExample
HotelsHotels Electronic check-in/check-out, electronic Electronic check-in/check-out, electronic key/lock systemkey/lock system
Wholesale/retail Wholesale/retail tradetrade
ATM-like kiosks, point-of-sale (POS) ATM-like kiosks, point-of-sale (POS) terminals, e-commerce, electronic terminals, e-commerce, electronic communication between store and supplier, communication between store and supplier, bar coded databar coded data
TransportationTransportation Automatic toll booths, satellite-directed Automatic toll booths, satellite-directed navigation systemsnavigation systems
Health careHealth care Online patient-monitoring, online medical Online patient-monitoring, online medical information systems, robotic surgeryinformation systems, robotic surgery
AirlinesAirlines Ticketless travel, scheduling, Internet Ticketless travel, scheduling, Internet purchasespurchases
Table 7.4Table 7.4
7 – 39Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Process RedesignProcess Redesign
The fundamental rethinking of business The fundamental rethinking of business processes to bring about dramatic processes to bring about dramatic improvements in performanceimprovements in performance
Relies on reevaluating the purpose of the Relies on reevaluating the purpose of the process and questioning both the process and questioning both the purpose and the underlying assumptionspurpose and the underlying assumptions
Requires reexamination of the basic Requires reexamination of the basic process and its objectivesprocess and its objectives
Focuses on activities that cross Focuses on activities that cross functional linesfunctional lines
Any process is a candidate for redesignAny process is a candidate for redesign
7 – 40Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Ethics and Environmentally Ethics and Environmentally Friendly ProcessesFriendly Processes
Encourage recyclingEncourage recycling
Efficient use of resourcesEfficient use of resources
Reduction of waste by-productsReduction of waste by-products
Use less harmful ingredientsUse less harmful ingredients
Use less energyUse less energy
Reduce the negative impact on the Reduce the negative impact on the environmentenvironment
7 – 41
Departament d’Economia de l’Empresa / Department of Business Economics & Administration
Operations ManagementOperations Management
Layout StrategiesLayout Strategies
7 – 42Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
OutlineOutline
Global Company Profile: Global Company Profile: McDonald’sMcDonald’s
The Strategic Importance of The Strategic Importance of Layout DecisionsLayout Decisions
Types of LayoutTypes of Layout
Office LayoutOffice Layout
7 – 43Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Retail LayoutRetail Layout ServicescapesServicescapes
Warehousing and Storage LayoutsWarehousing and Storage Layouts Cross-DockingCross-Docking
Random DockingRandom Docking
CustomizingCustomizing
Fixed-Position LayoutFixed-Position Layout
7 – 44Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Process-Oriented LayoutProcess-Oriented Layout Computer Software for Process-Computer Software for Process-
Oriented LayoutsOriented Layouts Work CellsWork Cells
Requirements of Work CellsRequirements of Work Cells Staffing and Balancing Work CellsStaffing and Balancing Work Cells The Focused Work Center and the The Focused Work Center and the
Focused FactoryFocused Factory
7 – 45Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Outline – ContinuedOutline – Continued
Repetitive and Product-Oriented Repetitive and Product-Oriented LayoutLayout Assembly-Line BalancingAssembly-Line Balancing
7 – 46Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Learning ObjectivesLearning Objectives
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
1.1. Identify the different types of layout and Identify the different types of layout and its usesits uses
2.2. Understand layout relevance for strategyUnderstand layout relevance for strategy
7 – 47Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Innovations at McDonald’sInnovations at McDonald’s
Indoor seating (1950s)Indoor seating (1950s) Drive-through window (1970s)Drive-through window (1970s) Adding breakfast to the menu Adding breakfast to the menu
(1980s)(1980s) Adding play areas (late 1980s)Adding play areas (late 1980s) Redesign of the kitchens (1990s)Redesign of the kitchens (1990s) Self-service kiosk (2004)Self-service kiosk (2004) Now three separate dining sectionsNow three separate dining sections
7 – 48Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Innovations at McDonald’sInnovations at McDonald’s
Indoor seating (1950s)Indoor seating (1950s) Drive-through window (1970s)Drive-through window (1970s) Adding breakfast to the menu Adding breakfast to the menu
(1980s)(1980s) Adding play areas (late 1980s)Adding play areas (late 1980s) Redesign of the kitchens (1990s)Redesign of the kitchens (1990s) Self-service kiosk (2004)Self-service kiosk (2004) Now three separate dining sectionsNow three separate dining sections
Six out of the Six out of the seven are seven are
layout layout decisions!decisions!
7 – 49Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
McDonald’s New LayoutMcDonald’s New Layout
Seventh major innovation Seventh major innovation Redesigning all 30,000 outlets around Redesigning all 30,000 outlets around
the worldthe world Three separate dining areasThree separate dining areas
Linger zone with comfortable chairs and Linger zone with comfortable chairs and Wi-Fi connectionsWi-Fi connections
Grab and go zone with tall countersGrab and go zone with tall counters Flexible zone for kids and familiesFlexible zone for kids and families
Facility layout is a source of Facility layout is a source of competitive advantagecompetitive advantage
7 – 50Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Strategic Importance of Strategic Importance of Layout DecisionsLayout Decisions
The objective of layout strategy The objective of layout strategy is to develop a cost-effective is to develop a cost-effective layout that will meet a firm’s layout that will meet a firm’s
competitive needscompetitive needs
7 – 51Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Layout Design Layout Design ConsiderationsConsiderations
Higher utilization of space, equipment, Higher utilization of space, equipment, and peopleand people
Improved flow of information, materials, Improved flow of information, materials, or peopleor people
Improved employee morale and safer Improved employee morale and safer working conditionsworking conditions
Improved customer/client interactionImproved customer/client interaction
FlexibilityFlexibility
7 – 52Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Types of LayoutTypes of Layout
1.1. Office layout Office layout
2.2. Retail layout Retail layout
3.3. Warehouse layoutWarehouse layout
4.4. Fixed-position layoutFixed-position layout
5.5. Process-oriented layoutProcess-oriented layout
6.6. Work-cell layout Work-cell layout
7.7. Product-oriented layoutProduct-oriented layout
7 – 53Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Types of LayoutTypes of Layout
1.1. Office layout: Positions workers, Office layout: Positions workers, their equipment, and spaces/offices their equipment, and spaces/offices to provide for movement of to provide for movement of informationinformation
2.2. Retail layout: Allocates shelf space Retail layout: Allocates shelf space and responds to customer behavior and responds to customer behavior
3.3. Warehouse layout: Addresses trade-Warehouse layout: Addresses trade-offs between space and material offs between space and material handlinghandling
7 – 54Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Types of LayoutTypes of Layout
4.4. Fixed-position layout: Addresses Fixed-position layout: Addresses the layout requirements of large, the layout requirements of large, bulky projects such as ships and bulky projects such as ships and buildingsbuildings
5.5. Process-oriented layout: Deals with Process-oriented layout: Deals with low-volume, high-variety production low-volume, high-variety production (also called job shop or intermittent (also called job shop or intermittent production)production)
7 – 55Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Types of LayoutTypes of Layout
6.6. Work cell layout: Arranges Work cell layout: Arranges machinery and equipment to focus machinery and equipment to focus on production of a single product or on production of a single product or group of related productsgroup of related products
7.7. Product-oriented layout: Seeks the Product-oriented layout: Seeks the best personnel and machine best personnel and machine utilizations in repetitive or utilizations in repetitive or continuous productioncontinuous production
7 – 56Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Good Layouts ConsiderGood Layouts Consider
1.1. Material handling equipmentMaterial handling equipment
2.2. Capacity and space requirementsCapacity and space requirements
3.3. Environment and aestheticsEnvironment and aesthetics
4.4. Flows of informationFlows of information
5.5. Cost of moving between various Cost of moving between various work areaswork areas
7 – 57Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Layout StrategiesLayout Strategies
Table 9.1Table 9.1
OfficeOffice RetailRetailWarehouse Warehouse
(storage)(storage)
ExamplesExamples
Allstate InsuranceAllstate Insurance
Microsoft Corp.Microsoft Corp.
Kroger’sKroger’s Supermarket Supermarket
Walgreen’sWalgreen’s
Bloomingdale’sBloomingdale’s
Federal-Mogul’sFederal-Mogul’s warehouse warehouse
The Gap’sThe Gap’s distribution center distribution center
Problems/IssuesProblems/Issues
Locate workers Locate workers requiring frequent requiring frequent contact close to contact close to one anotherone another
Expose customer Expose customer to high-margin to high-margin itemsitems
Balance low-cost Balance low-cost storage with low-storage with low-cost material cost material handlinghandling
7 – 58Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Layout StrategiesLayout Strategies
Table 9.1Table 9.1
Project Project (fixed position)(fixed position)
Job Shop Job Shop (process oriented)(process oriented)
ExamplesExamples
Ingall Ship BuildingIngall Ship Building Corp. Corp.
Trump PlazaTrump Plaza
Pittsburgh AirportPittsburgh Airport
Arnold Palmer HospitalArnold Palmer Hospital
Hard Rock CaféHard Rock Café
Olive GardenOlive Garden
Problems/IssuesProblems/Issues
Move material to the Move material to the limited storage areas limited storage areas around the sitearound the site
Manage varied material Manage varied material flow for each productflow for each product
7 – 59Departament d’Economia de l’Empresa /
Department of Business Economics & Administration
Layout StrategiesLayout Strategies
Table 9.1Table 9.1
Work Cells Work Cells (product families)(product families)
Repetitive/ Continuous Repetitive/ Continuous (product oriented)(product oriented)
ExamplesExamples
Hallmark CardsHallmark Cards
Wheeled CoachWheeled Coach
Standard AeroStandard Aero
Sony’s TV assemblySony’s TV assembly line line
Toyota ScionToyota Scion
Problems/IssuesProblems/Issues
Identify a product Identify a product family, build teams, family, build teams, cross train team cross train team membersmembers
Equalize the task time Equalize the task time at each workstationat each workstation