23-Oct-19

INTRODUCTION
 Industrial growth in India is very fast
 Factories Act was passed in1948 then amended in1950, 1951, 1954
and1976
 Crucial decisions of business include:
 Location
 Layout (the arrangement of physical facilities)
 Designing the product
 Production planning and control
 Maintaining good quality

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TYPES OF INDUSTRIES
Small Scale Large Scale

 The local market for the  Huge amount of investment has

product is available already been done
 The selection of proper site is
 It can easily be shifted to other
very important
place, when there is any
change in the market

OBJECTIVES
 Describe the concepts of plant location and plant layout
 Identify the various factors to be considered for selection of plant
location
 Distinguish among the alternative patterns of plant layout

 Discuss the various factors influencing the choice of an initial

layout and its subsequent modification

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IDEAL LOCATION OF PHARMACEUTICAL FACTORY

 Selection of a particular site for setting up a business or factory is
important for the growth of the business
 An ideal location:
 Helps in keeping the cost of the product to minimum
 Provides maximum net advantage
 Enables lowest unit cost of distribution

LOCATION ANALYSIS
 Demographic Analysis
 Trade Area Analysis

 Competition Analysis

 Site Economics

 Traffic Analysis

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DEMOGRAPHIC ANALYSIS
 It involves study of population in the area such as -
 Total population
 Age composition
 Per capita income
 Educational level

TRADE AREA ANALYSIS

 It is the geographic area analysis
 Aim of this analysis is to provide continued clientele to the firm

 Gives idea of feasibility of accessing the trade area from

alternative sites

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COMPETITION ANALYSIS
 It provides an idea of quality of competition in a given trade area

TRAFFIC ANALYSIS
 To have a rough idea about the number of potential customers
passing by the proposed site during the working hours of the shop
 Not Applicable to Factories / Manufacturing Units

SITE ECONOMICS
 Alternative sites are evaluated in terms of establishment costs and
operational costs under this
 Establishment Cost: is basically cost incurred for permanent
physical facilities
 Operational Costs: are incurred for running business on day to
day basis
 Also called as running costs.

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SELECTION OF PLANT LOCATION

• Investment • Heating • Choice of

Cost

Govt Rules
cost
• Operational
Physical Factors • Ventilation
• Storage capacity
location
keeping
cost of raw material national
• Power needs benefits
• Cost of labors
• Taxes
• Land
• Construction
• Fuel
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FACTORS RESPONSIBLE FOR THE PLANT

LOCATION CHOICES
 Availability of Raw material
 Nearness to the potential market

 Location should be near to source of operating power

 Supply of labor: Labor is one of the most important inputs in any

industrial enterprise
 Transport and Communication Facilities: Connected with
rail, airport, road, water
 Suitability of Climate: Climatic conditions such as humidity,
temperature and other atmospheric conditions should be favorable
for the plant
 For the example, highly humid atmosphere is not suitable for the 12
pharmaceuticals

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 Availability of Housing and Services: Good housing facility,

adequate shopping centers, cinema halls, local transport facilities,
rail services and sufficient availability of gas, water supply,
disposal of waste, education facilities, can easily attract good staff
 Safety Requirements: Pollution causing processes, explosive
processes should be located in remote areas
 Miscellaneous Considerations: The consideration like low
interest on loans, special grants, attitude of residents, towards the
industry, living standards etc. help in locating the site of plant

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Connected with rail, road and river transports

Efficient sewage system for the disposal of water and

waste materials

Good, peaceful surroundings

Sub-soil capable of bearing the load of the building

plant and equipment

Sufficient land space requirements for the parking,

transport and residential accommodation for staff and 14
labor

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SELECTION OF SITE
Urban Areas Rural Areas

 It is near to city  It is near to village

 Better transport and
communication system
 Sufficient labor supply
 Social services like medical,
entertainment, restaurants,
educational etc
 Cheaper land and labor
 Scope for further expansion for
good shopping complexes,
entertainment facilities, school
and colleges
 In general, rural location is

 Cost of land and labor wages good for large plants

are likely to be on higher side 15

SPECIAL ECONOMIC ZONE (SEZ)

 Special Economic Zone (SEZ) is a geographical region that has economic
and other laws that are more free-market-oriented than a country's
typical or national laws.
 The category 'SEZ' covers a broad range of more specific zone types,
including:
 Free Trade Zones (FTZ)
 Export Processing Zones (EPZ)
 Free Zones (FZ)
 Industrial parks or Industrial Estates (IE)
 Free Ports, Urban Enterprise Zones and others
 Objectives of the SEZs are:
 Generation of additional economic activity
 Promotion of exports of goods and services
 Promotion of investment from domestic and foreign sources
 Development of infrastructure facilities 16

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SEZS IN INDIA
 India was one of the first in Asia to recognize the effectiveness of
the Export Processing Zone (EPZ) model in promoting exports,
with Asia's first EPZ set up in Kandla in 1965.
 Special Economic Zones (SEZs) Policy was announced in April 2000

 The Special Economic Zones Act, 2005, was passed by Parliament

in May, 2005 which received Presidential assent on the 23rd of
June, 2005.
 The draft SEZ Rules were widely discussed and put on the website
of the Department of Commerce offering suggestions/comments.
 Around 800 suggestions were received on the draft rules.

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 After extensive consultations, the SEZ Act, 2005, supported by SEZ

Rules, came into effect on 10 February 2006, providing for drastic
simplification of procedures and for single window clearance on matters
relating to central as well as state governments.
 The major incentives and facilities available to SEZ developers include:
 Exemption from customs/excise duties for development of SEZs for authorized
operations approved by the BOA
 Income Tax exemption on income derived from the business of development of the
SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax
Act
 Exemption from minimum alternate tax under Section 115 JB of the Income Tax
Act
 Exemption from dividend distribution under Section 115O of the Income Tax Act
 Exemption from Central Sales Tax (CST)
 Exemption from Service Tax (Section 7, 26 and S) 18

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PLANT LAYOUT
 Arrangement of physical facilities such as machinery, equipment,
furniture etc. within the factory building.
 Pilot Plant: It is the part of the pharmaceutical industry where a
lab scale formula is transformed into a viable product by
development of practical procedure of manufacture.
 Scale-up: The art for designing of prototype using the data
obtained from the pilot plant model

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PILOT PLANT LAYOUT

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Production

F&D

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IMPORTANCE
 Plant layout provides the optimum relationship between output,
floor area and manufacturing process
 Facilitates of production process

 Minimizes material handling, time and cost,

 Allows flexibility of operations, easy production flow,

 Makes economic use of the building, promotes effective utilization

of manpower, and provides for employee’s convenience, safety,
maximum exposure to natural light and ventilation
 It influences expansion possibilities

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ESSENTIALS
 Proper and efficient utilization of available floor space
 Reduce hazards to personnel, accidents and provide safety

 Work proceeds without any delay

 Enough production capacity

 Reduce material handling costs

 Volume and product flexibility

 Ease of maintenance

 Allows high machine or equipment utilization

 Improve productivity

 Increase employee morale

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Filling of hard
Semi solid preparation Oral liquid
gelatine cap.
25 M2 + 10
30 M2 + 10 M2 for 30 M2 basic installation+
M2ancillary
ancillary 10 M2 ancillary
Required Area as per Schedule-M

Solid dosage form Parenteral preparation

Powder
Total 150 M2 mfg. area+ 20 30 M2
Granulating section m2ancillary svp or 150 M2 for lvp
30 M2

Filling General Eye oint. And eye

and room lotion
compression section
Coating sealing 25 M2 + 10
30 M2 + 20
m2ancillary 30 M2 + m2ancillary
10
m2ancillary aseptic Filling and
sealing Suppositories 40
30 M2

TYPES OF LAYOUT

Manufacturing Units Traders Service Establishments

Product or line layout

Self service or modified self
service layout
Process or functional
layout
Full service layout
Fixed position or location
layout
Special layouts
Combined or group layout
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PRODUCT OR LINE LAYOUT

 Machines and equipment are arranged in one line
 The materials move form one workstation to another sequentially
without any backtracking or deviation
 Sequence arrangement of operations as per the product
requirement
 Materials are fed into the first machine and finished goods travel
automatically from machine to machine, the output of one machine
becoming input of the next

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PRINCIPLES
 All the machine tools or other items of equipment must be placed
at the point demanded by the sequence of operations
 There should no points where one line crosses another line

 Materials may be fed where they are required for assembly but not
necessarily at one point
 All the operations including assembly, testing packing must be
included in the Line

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ADVANTAGES
 Low cost of material handling, due to straight and short route and
absence of back tracking
 Continuous flow of work

 Lesser investment in inventory and work in progress

 Optimum use of floor space

 Shorter processing time or quicker output

 Less congestion of work in the process

 Lower cost of manufacturing per unit

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DISADVANTAGES
 High initial capital investment in special purpose machine
 Heavy overhead charges

 Breakdown of one machine leads to stoppage of the whole

production process
 Lesser flexibility as specially laid out for particular product

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SUITABILITY
 Mass production of standardized products
 Simple and repetitive manufacturing process

 Operation time for different process is equal

 Continuous supply of materials

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PROCESS LAYOUT
 Machines of a similar type are arranged together at one place
 Eg, Machines performing compression operations are arranged in the
compression department/ section
PRINCIPLE
 The distance between departments should be as short as possible
for avoiding long distance movement of materials
 The departments should be in sequence of operations

 The arrangement should be convenient for inspection and

supervision

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ADVANTAGES
 Lower initial capital investment in machines and equipment
 The overhead costs are relatively low

 Change in output design and volume can be more easily adapted to

the output of variety of products
 Breakdown of one machine does not result in complete work
stoppage
 Supervision can be more effective and specialized

 There is a greater flexibility of scope for expansion

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DISADVANTAGES
 Material handling costs are high due to backtracking
 More skilled labour is required resulting in higher cost

 Time gap or lag in production is higher

 Work in progress inventory is high needing greater storage space

 More frequent inspection is needed which results in costly

supervision

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SUITABILITY
 Products are not standardized
 Quantity produced is small

 There are frequent changes in design and style of product

 Machines are very expensive

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FIXED POSITION OR LOCATION LAYOUT

 In this type of layout, the major product being produced is fixed at
one location
 Equipment labour and components are not moved to that location
 All facilities are brought and arranged around one work center
 This type of layout is not relevant for small scale entrepreneur
ADVANTAGES
 It saves time and cost involved on the movement of work from one
workstation to another
 The layout is flexible as change in job design and operation
sequence can be easily incorporated
 Adjustments can be made to meet shortage of materials or absence
of workers by changing the sequence of operations 51

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DISADVANTAGE
 Production period being very long, capital investment is very heavy
 Very large space is required for storage of material and equipment
near the product
 As several operations are often carried out simultaneously, there is
possibility of confusion and conflicts among different workgroups

 Suitable for manufacture of bulky and heavy products

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COMBINED LAYOUT
 In most of industries, only a product layout or process layout or
fixed location layout does not exist
 Generally, a combination of the product and process layout or other
combinations are found, in practice
 E.g. for industries involving the fabrication of parts and assembly,
fabrication tends to employ the process layout, while the assembly
areas often employ the product layout
 In soap manufacturing plant, the machinery manufacturing soap is
arranged on the product line principle

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USEFULNESS OF GOOD LAYOUT

 To the worker:
 Decreasing number of operation and material handling
 Reduction in length of hauls and motions between operations, which
minimize production time as well as the activities of workers
 More labour productivity i.e. more output per man hour
 More safety and security to workers from accidents
 Better working conditions resulting in improved efficiency
 In manufacturing costs:
 Maintenance and replacement costs are reduced
 Loss due to waste and spoilage is minimized
 Improved quality of product with reduction in handling , time and cost
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 Better cost control

 In production control and supervision:

 provides more space for production operation
 Easy Availability of Raw material
 The cost of production are minimized
 Control and supervision operations are provided at appropriate points

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FEATURES OF GOOD LAYOUT

 There should be sufficient space for the workers as well as for the
equipment to perform their functions
 This will ensure smooth and continuous flow of production process
 It must provide adequate safety and security to workers against
accidents or injury
 For example, provision of firefighting equipment, first aid boxes, etc
 The arrangement of machines and equipment should be such that
minimum material handling is necessary for low cost processing
 The store for in-process material should be such that minimum material
handling is necessary for low cost processing
 The supervision, coordination and control of the activity should be
effectively and easily executed
 There should be sufficient scope for making adjustment and modifications whenever
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any need arises.

CGMP DESIGN FEATURES

 Clear layouts
 Appropriate detailing and finishes

 Adequate room sizes and staging areas

 Flexibility
 Able to adapt to different uses
 Able to bring new services to the rooms
 Ease off clean up
 Modulations

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FACTORS INFLUENCING LAYOUT

 Factory building:
 Determines the floor space available for layout and special requirements
such as air conditioning, dust control, humidity control etc
 Nature of product:
 Product layout is suitable for uniform products whereas process layout is
more appropriate for custom-made products
 Production process:
 In assembly line industries, product layout is better
 In job order or intermittent manufacturing on the other hand, process
layout is desirable
 Type of machinery:
 General purpose machines are arranged as per process layout while
special purpose machines are arranged according to product layout 60

 Repairs and maintenance:

 Machines should be arranged that adequate space is available between
equipment (easy to repairs the machines)
 Human needs:
 Adequate arrangement should be made for washroom, lockers, drinking
water, toilets and other employee facilities
 Proper provision should be made for disposal of effluents, if any
 Plant environment:
 Heat, light, noise, ventilation and other aspects should be duly considered
Eg, paint shops and plating section should be located in another hall so
that dangerous fumes can be removed through proper ventilation
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PLANNING

PLANNING
 Planning is the process of deciding in advance
 what to do
 how to do it
 when to do it
 and who is to do it
 It involves the selection of objectives, policies, procedures, and
programmed from among alternatives

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ADVANTAGES
 Planning makes goals clear and specific.
 Planning helps the organization to keep on the right path.

 Planning reduces the risks and uncertainly.

 It improves the efficiency of operation because planning involves

selection of the best possible course of action.
 It provides basis of control. Planning provides the standard against
which the actual performance can be measured and evaluated.
 It promotes creativity, because only sound planning encourages
creative thinking. This leads to growth and expansion of business.
 It facilitates decision making. involves forecasting of future
conditions and helps the management to take correct decision. 64

LIMITATIONS
 Planning is an expensive process. Money is involved in forecasting,
collection of information and evaluation of alternatives.
 Planning is a time consuming process. So it is not practicable
during emergencies and crises, when quick decisions are necessary.
 Planning creates a rigid frame work in the organization.

 Changes in business environment restrict freedom of planning for

the management.
 Planning creates a false sense of security because detailed
planning gives a feeling among employees that everything has
been taken care of.
 Planning creates a psychological barriers, because executive have 65
more regard for the present than future.

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 Planning is based on forecast which are estimates about the future.

When forecasts are inaccurate, plans became misleading. therefore
plans may be dangerous.

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SALIENT FEATURES
 Planning is goal oriented: Planning is done to certain objectives
and all plans are linked with the goals of the organization.
 Planning is future oriented: Scientific anticipation of future
events is called forecasting. It is the based on planning. For Eg,
manufacturer prepares the production plan of the next year after
forecasting the demand.
 Planning is intellectual process: Planning is a mental exercise
and it involves the creative thinking and imagination. Planning is
not mere guess work but involves logic and systemic thinking.
 Planning is a primary function of management: It precedes
organizing, staffing, directing and controlling. All these function
are preformed within frame work of plans. Thus planning is the
most basic function. there are primary function of management. 67

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 Planning is continuous: It is ongoing process. Plans are

prepared for a specified period say for one year. At the end of that
period, new plans have to be prepared. Similarly, existing plans
are required to be changed, if the conditions are changed. Thus
planning is never ending exercise.
 Planning involves choice: Planning is essentially the process of
choosing from among alternatives course of action. If there is only
one possible alternatives, there is no need for planning as there is
no choice. The planning is needed when there are various
alternatives to reach to a definite goal.

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 Planning is pervasive: It is required in all types of organization

and at all levels of management. Every department prepares plans.
However, the scope of planning may differ from one level to
another.
 For example, top management plans for the whole of the organization;
middle management prepares departmental plans, whereas the lower
management prepares day to day operational plans.

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STEPS INVOLVED IN PLANNING

Definition and Description Internal and External

of Objectives

Controllable and Uncontrollable

Determination of Planning Premises

Tangible and Intangible

Discovering Alternative Course of

Action and Evaluation
Constant and Variable

Formulation of Derivative
Plan and Communication

Reviewing the Planning

Process 70

DEFINITION AND DESCRIPTION OF OBJECTIVES

 Plans are prepared to achieve certain objectives or goals
 For example, if the objective of the company is to increase profits
by 25% during the next year, the production and sales targets are
decided on this basis

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DETERMINATION OF PLANNING PREMISES

 There are the assumptions
about the future
 Planning premises are
established with the help
of forecasting

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 Internal Premises come from the business itself. It includes

skills of the workers, capital investment policies, philosophy of
management, sales forecasts, etc.
 External Premises come from the external environment. That is,
economic, social, political, cultural and technological environment.
External premises cannot be controlled by the business.

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 Controllable Premises are those which are fully controlled by

the management. They include factors like materials, machines
and money.
 Semi-controllable Premises are partly controllable. They
include marketing strategy.
 Uncontrollable Premises are those over which the management
has absolutely no control. They include weather conditions,
consumers' behaviour, government policy, natural calamities, wars,
etc.

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 Tangible Premises can be measured in quantitative terms. They

include units of production and sale, money, time, hours of work,
etc.
 Intangible Premises cannot be measured in quantitative terms.
They include goodwill of the business, employee's morale,
employee's attitude and public relations.

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 Constant Premises do not change. They remain the same, even if

there is a change in the course of action. They include men, money
and machines.
 Variable Premises are subject to change. They change according
to the course of action. They include union-management relations.

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DISCOVERING ALTERNATIVES COURSES OF

ACTION AND EVALUATION
 Various courses of action are discovered in order to achieve the
established objectives
 Information may be collected from:
 Primary Sources: Eg., Information obtained from market
 Secondary Sources: Eg., Information obtained from pharmaceutical
company
 Various alternatives are evaluated and Best among the is
selected

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FORMULATION OF DERIVATIVE PLAN AND

COMMUNICATING THE PLAN
 Once the basic plan is decided, the next step is to develop detailed
plans for its implementation.
 The detailed plans refer to the policies, procedures, rules,
programmers, schedules, budgets etc.
 For example, when pharmaceutical company decides to develop a
new product, procurement of funds, purchase of raw materials,
training of personnel, advertising for the product have to be
prepared.
 Plan should be explained to the subordinates in order to
get their support in the execution of plans.
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REVIEWING THE PLANNING PROCESS

 All plans should be reviewed from time to time in the light of
current circumstances and necessary action should be taken to
keep them up-to-date.

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