ESCM

Ques 2 Steps in Layout Design Methodology and Muther’s Factors

Introduction
Factory layout improvements typically occur more than one time during the factory’s
life. Therefore the study of plant layouts seeks the optimal location for all of the
production resources. It tries to ensure that the economic impact of the project on the
enterprise will be as positive as possible. Also, the new plant layout must be as safe
as possible and satisfactory for the employees.
There are various steps applicable to most of the possible layout problems in the
Layout design methodology which are oriented mainly for a general layout analysis.
• Step 1. Formulate the problem. – Define what is the main objective of the study
including a new machine, modifying the existing building etc etc.
• Step 2. Analysis of the problem. – It can be carried out in a systematic way.
Richard Muther in his now classic book " Practical Plant Layout " presented 8 factors
to consider for facilities layout.
• Step 3. Search for alternatives. – The analysis of the 8 Muther’s factors enables
engineers to define the problem and properly align the solution to the problem. It is
important to take into account three practical principles. –
First the whole and then the details. Giving priority to the general area
or total space shared and then to each one of the specific areas. Layered
planes are developed to characterize the situation.
First the ideal solution and then the practical one. The ideal solution is
difficult to reach. The good solutions can be more easily developed. A
more particle approach is more worthwhile so as not to waste time and
effort analyzing this problem in depth
Brainstorming. The “creation of ideas” with not a single solution being
rejected. Consider all the ideas without criticizing them as being critical at
this point can hinder the creativity process. It would not be the first time
that, from a seemingly crazy idea, brilliant solutions are obtained. It is also
important to remember that factories have a third poorly used dimension. -
The height or overhead space.
*Step 4. Choose the right solution. – Choose the solution that fits best among the
solutions that have been proposed in the previous step. Each one of the solutions
should be evaluated according to a specific set of criteria. Carry out ranking of each
alternative from 0 to 10 according to the established criteria. Evaluate each
alternative from an economical standpoint. The simplest solution (between those
which have received good ranking) will always be the best choice.
• Step 5. Specification of the solution. – The accepted solution will need to be fully
developed. Take care of safety measures in order to avoid possible future industrial
accidents. Occupational Health and Safety Administration (OHSA) regulations and
the Labour Risks Prevention Law. Itemize all details for the plan, budgets and
schedule for the implementation of the solution. Demonstrate quantitatively that the
outlined solution will provide benefits when compared to the current situation.
*Step 6. Design cycle. – It includes planning for modifications that arise due to
problems that appear while adopting a solution. like budget deviations, problems in
the plant installationsetc. At the end of the design process, the plant should work
more efficiently. It is always worthwhile to check to see if the adopted solution works
as expected.

Tools for layout study-. Muther’s 8 factors

• By analyzing the following 8 factors, it is possible to determine the main layout
restrictions and requirements. – Choose the best layout from a set of proposed
solutions.
• Muther’s 8 factors are as under: –
Material factor.
Machinery factor.
Labor factor.
Movement factor.
Wait factor.
Service factor.
Building factor.
Change factor.
Material factor. This factor does not cover the study of the materials that are
utilized to manufacture the product. The purpose of this factor is to become familiar
with the different production steps that are needed to manufacture the article.
Analyze how the material is transformed from raw material to a final product and it
should be studied without considering the relative location of each process in the
factory. This factor helps to understand the company technology and to know the
company range of products.
Machine Factor. The machine types and the existing number of machines on the
factory floor should be considered in detail. Their principal dimensions be taken, in
case this becomes a critical constraint. Analyze the operating conditions so as to
avoid putting incompatible machines together like machines producing vibrations or
having high temperature, etc. A heavy sheet metal press and a precision coordinate
measurement machines are not very compatible.
 Labour factor . The staff related with the production department should be counted
from machine operators to division heads. Material handling and maintenance
operator input is important. It is recommended to use worker-machine diagrams (a
tool that will be explained in a subsequent chapter). Evaluate the operations that the
worker carries out on the machine and the relative disposition of the elements in the
working area to simplify the worker tasks.
Movement factor . Analyze the materials flow between working centers. This flow
does not add value to the product. As much handling as possible should be
eliminated. Completely eliminating movement is an Utopian. One of the tool to
analyze the movement between machines is the flow process chart. Flow process
chart represents in a graphic way, the path and the actions carried out on the
product. Five standard symbols are used in it. It is possible to combine two or more
of these actions. – Circle -> Operation. – Arrow -> Transport. – Reversed triangle ->
storage. – Letter D -> a wait or delay. – Square -> Inspection. Using these symbols
as tools, movement improvements can be envisaged and advantages quantified.
Wait factor. This factor covers the study of the three main warehouses – Raw
materials, work-in-process and final product. The objective is to determine the
required space by each one of the warehouses. Due to the magnitude of the
warehouse study, a specific layout project must be outlined.
Service factor. It analyses two different characteristics. – The study of
environmental factors and workspace conditions . Brightness, noises, smells,
minimum working spaceetc are seen and it is decided what the acceptable
parameters are with respect the OHSA regulations and the Labour Risks Prevention
Law. The working conditions are also analysed, but concerning the plant service
staff. These services are mainly, quality, logistics and maintenance. Minimum
manoeuvre space for the forklift trucks or other special equipment used.
Building and change factors. Building factor analyses the actual useful surface of
the building. The plant shape, the columns, the window situation for ventilation, and
areas of possible extension. The surface area covered by gantry cranes limits the
number of layout alternatives. Change factor means that the proposed layout will not
be valid forever, so it intends to observe, from a critical point of view, the adopted
solution. The application of this factor is without a doubt the most difficult part of the
study. Company’s future plans also need to be catered for.
Short Notes

Ques 2.

Vertical Integeration
Vertical integration refers to the degree a firm chooses to do processes itself- raw
material to sales. Vertical integration occurs when a company takes control over
several of the production steps involved in the creation of a product or service. In
other words, vertical integration involves purchasing and bringing in-house a part of
the production or sales process that was previously outsourced. Typically, a
company's supply chain or sales process begins with the purchase of raw materials
from a supplier and ends with the sale of the final product to the customer.
Companies can integrate by purchasing their suppliers to reduce manufacturing
costs. They can also invest in the retail or sales end of the process by opening
physical stores and locations to provide after-sales service. Controlling the
distribution process is another common vertical integration strategy, meaning
companies control the warehousing and delivery of their products.

Key features

 Vertical integration is when a company owns or controls its suppliers,

distributors or retail locations to control its value or supply chain.
 Vertical integration benefits companies by allowing them to control the
process, reduce costs and improve efficiencies.
 Backward integration is when a company expands backward on the
production path into manufacturing.
 Forward integration is when companies control the direct distribution or supply
of their products. 

Types of Vertical Integration

There are various strategies companies use to control multiple segments of the
supply chain. Two of the most common include backward and forward integration.

Backward Integration
Backward integration is when a company expands backward on the production path
into manufacturing, meaning a retailer buys the manufacturer of their product. An
example might be Amazon (AMZN), which expanded from an online retailer of books
to become a publisher with its Kindle platform. 2 Amazon also owns warehouses and
parts of its distribution channel.3

Forward Integration
Forward integration is when a company expands by purchasing and controlling the
direct distribution or supply of its products. A clothing manufacturer that opens its
own retail locations to sell product is an example of forward integration. Forward
integration helps companies cut out the middleman. By removing distributors that
would typically be paid to sell a company’s products, overall profitability is improved.

Example

An example of vertical integration is a mortgage company that originates and

services mortgages. The company lends money to homebuyers and collects their
monthly payments, rather than specializing in one of the services.

Advantages

 Decreased transportation costs and reduced delivery turnaround times

 Reduced supply disruptions from suppliers that might fall into financial
hardship
 Increased competitiveness by getting products to consumers directly and
quickly
 Lower costs through economies of scale. By buying large quantities of raw
materials or streamlining the manufacturing process, per-unit costs are
lowered
 Improved sales and profitability by creating and selling a company-owned
brand

Disadvantages

 Companies might get too big and mismanage the overall process
 Outsourcing to suppliers and vendors might be more efficient if their expertise
is superior
 Costs of vertical integration such as purchasing a supplier can be significant
 Increased amounts of debt if borrowing is needed for capital expenditures

Ques 4
Operation Mgt Strategies
Operational strategies refers to the methods companies use to reach their
objectives. By developing operational strategies, a company can examine and
implement effective and efficient systems for using resources, personnel and the
work process. Service-oriented companies also use basic operational strategies to
link long- and short-term corporate decisions and create an effective management
team.
Operation Strategy is a process by which key operations decisions are made that are
consistent to company’s overall strategic objectives. Type of operation is directly
related to product and service strategy.
Three basic strategies include
1. Make-to-stock; in anticipation of demand
Make to stock (MTS) is a traditional production strategy that is used by businesses to
match the inventory with anticipated consumer demand. Instead of setting a
production level and then attempting to sell goods, a company using MTS would
estimate how many orders its products could generate, and then supply enough
stock to meet those orders.

The MTS method requires an accurate forecast of this demand to determine how

much stock it produces. If demand for the product can be estimated accurately, the
MTS strategy is an efficient choice for production.

Key takeaways

 Make to stock (MTS) is a traditional production strategy that is used by

businesses to match the inventory with anticipated consumer demand.
 The MTS method requires an accurate forecast of this demand to determine
how much stock it produces.
 An MTS approach requires a business to redesign operations at specific
times, instead of keeping a steady level of production year-round.

2. Assemble-to-order; built from standard components on order

Assemble-to-order (ATO) is a business production strategy where products that are
ordered by customers are produced quickly and are customizable to a certain extent.
It typically requires that the basic parts of the product are already manufactured but
not yet assembled. Once an order is received, the parts are assembled quickly and
the final product is sent to the customer.
Key takeaways

 Assemble-to-order (ATO) is a business strategy where products are quickly

produced from component parts once the order is confirmed.
 Assemble-to-order is a combination of make-to-order and make-to-stock.
 In a typical ATO approach, the costs of assembling the product from its
components are negligible, but the costs of making the different components
can be substantial.
 A PC-maker that receives orders and then assembles customizable
computers using components like keyboards, monitors, and motherboards is
using an assemble-to-order strategy.

2. Make-to-order; produce to customer specification at time of order

Make to order (MTO), or made to order, is a business production strategy that
typically allows consumers to purchase products that are customized to their
specifications. It is a manufacturing process in which the production of an item
begins only after a confirmed customer order is received. It is also known as mass
customization.

Key takeaways

 Make to order (MTO), or made to order, is a business production strategy that

typically allows consumers to purchase products that are customized to their
specifications.
 The manufacturing process of an MTO item begins only after a confirmed
customer order is received.
 Advantages to MTO include customization for customers, reduction in stock
obsolescence and finished goods inventory, and overall waste.
 Disadvantages to MTO include increased costs and increased wait times for a
finished product.
 MTO can be contrasted with make to stock (MTS) manufacturing, whereby
inventories are produced in advance of consumers buying them off the shelf.

Ques 7

Product Layout.
There are numerous classifications of industry according to their layout. In Product
Layout ,the grouping is primarily the result of the material flow in the production plant
. The machines are grouped into departments or stations according to the operation
that they perform. For eg:-
– Presses -> pressing department
– Lathes -> lathes department
It is used in companies that manufacture by orders, like specialty parts or
components or a small job shop that makes unique dies or fixtures. Here the
products that are made in very small batches.
The layout change carried out by Henry Ford drastically reduced the car production
lead time. Some companies are able to manufacture an automobile every 40
seconds.
Advantages
• Large batches can be produced inexpensively
• Material handling is minimal
• In-process materials are minimized
• It is easy to control these systems
• Automation is more achievable and justifiable
Disadvantages
• They are inflexible, in that only one or very few products can be produced on
them.
• Set-up time for these systems is very large.
• Duplicate tooling is required to replace worn tooling so that maintenance can
be minimized.