CHAPTER 6

LAYOUT STRATEGY
 LAYOUT PLANNING

Layout Planning – concerns the physical arrangement of

economic activity centres within a facility.
Economic activity referring to anything that consumes a
space.
Examples of economic activity centres – an employee, a
group of employees, a machine, a workbench, an office, a
store room, a stairway and etc.
Objective of layout planning is to allow employees and
equipment to operate effectively and efficiently
 The key issues to address in the physical arrangements:
 What centres should be included in the layout?
 Economic activity centres should reflect process decisions and maximise
efficiency.
 How much space does each centre require?
 Space allocated to each centre should be appropriate.
 Inadequate space can reduce productivity and deprive employee privacy.

 How should each centre’s space be configured?

 The amount of space available, the shape of the facility and the elements
in a centre are interrelated
 Where should each centre located?
 The location of the centre can affect productivity greatly, as it
affects the movement and distance travelled between centres.
 Helpful information in Layout Decision Making

 The total amount of space available within an existing facility

 If it is a new facility, what the possible building configurations are
 The usage objective and specification criteria to be used to evaluate the
layout design (amount of space, distance between elements, economic
activity centres and etc)
 The space requirement for each element in layout
 The processing requirement of each element, in terms of the number of
operations and amount of flow between elements
 The estimated demand for product or services
 Flows of information; how the layout facilitates communication within
the facility
 The cost of moving materials between work areas
 The environmental and aesthetical aspect of the facility – all about
creation pleasant working environment with arts, beauty and taste
 The Strategic Importance of Layout Decisions

 Layout decisions can give implications as its helps greatly in

communicating a firm’s competitive priorities with regard to cost, quality,
speed and flexibility as well as corporate image and customer satisfaction.
 The objective of a layout strategy is to develop an effective layout that meets
a firm’s competitive needs.
 How layout decisions can affect the firm achieves its competitive priorities:
 Achieving higher utilisation of space, equipment and people
 Facilitating the flow of materials, people and information
 Reducing hazards to employees with safer working conditions
 Improving employee morale with a pleasant working environment \
 Improving communication within the organisation
 Providing customers with convenient shopping experience in a retail facility
 Increasing sales at a retail store
 Improving customer or client interaction
 Achieving flexibility to adapt to changing conditions
 Types of Layout

The choice of layout depends largely on process choice

such as job shop, line production, continuous process or
project.
FIVE basic types of layout are:
 Process Layout
 Also called a job-shop or functional layout
 Layout that groups machines, workstations or departments together
according to the process of function they perform.
 Best for low-volume, high variety type of production
 In this job shop environment, a product or service is moved from one
station to another in the process sequence required for that product or
service.
 The objective is to improve the functional r/ship of workstations so
that the time and cost of product flow and materials handling are
minimised.
 Product Layout
 Also called a flow-shop layout, is one in which equipment or
workstations are arranged according to the progressive steps by
which the product is made or the service is offered.
 Each product or service has it own ‘line’ specifically designed to
meet its requirements.
 The flow of work is orderly, moving from one workstation to
another until the finished product comes off the end of the line.
 Objective of product layout is to maximise the flow of products
and services by structuring the resources of the system in an
efficient sequence of production stages
 Hybrid Layout
 A combination of both process and product layouts to suit an
operating system with both a product and a process focus.
 A layout in which some parts of the facility are arranged in a
process layout and others are arranged in a product layout.
 This layout are used in manufacturing facilities having both
fabrication and assembly operations in the same building.
 Fabrication operations involve the making of components and
parts from raw materials and have jumbled flow like the case in a
job shop
 Fixed-Position Layout
 An arrangement in which the product is fixed at one location, and
manufacturing equipment and workers are moved to the product
to work on it.
 The product remains stationary due to its bulk or weight as in
shipbuilding, highway and bridge construction, housing
development and aircraft manufacturing.
 A fixed-position layout is often the only feasible solution when the
product is particularly massive or difficult to move.
 Primary objective of this layout is to complete the product on
schedule at the minimum cost.
 Retail Service Layout
 Most service organisations use process layouts because of the
variability in customer requests for service.
 In service facilities, it is use to maximise net profit per unit of store
space
 For example if sales are linked to customer exposure, then an
effective retail layout would expose the customers to as many
goods as possible.
 Commonly used in grocery stores when they locate milk on one
end of the store and bread on the other end in which forcing
customers to walk through aisles of merchandise that might
prompt additional purchases
 Retail Service Layout
 Concept of services cape – refers to the physical surroundings in
which a service takes place and these surroundings have an impact
on the employees and customers.
 THREE elements of service cape in designing a good service
layout:
 Ambient conditions – affect employees morale and how long a
customer is willing to stay inside the store
 Spatial layout and functionality- involves the planning of
customer circulation path, aisle characteristics (width, height,
length, angle and direction)
 Sign, symbols and artifacts – characters that design carry social
significance.
 Layout Performance Criteria

Layout performance evaluation may include the

following factors:
 Level of capital investment
 Material handling cost
 Ease of stock picking
 Servicescape
 Ease of equipment maintenance
 Employee morale
 Customer convenience
 Level of sales
 Labour productivity
 Organisational structure
 Communication flow
 Flexibility
END OF CHAPTER 6