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Chapter 7
Facility Layout Design and Location Analysis
Facility location analysis and facility layout design is critical to the success of operations. The layout may dictate the profitability of the company and should be carefully considered during the product design and process selection/design decisions. The layout should not dictate the processes. However, in older facilities this may be the case. Ideally, the processes should dictate the layout. Customer locations may drive the decisions on the location of the facility and the site selection decisions dictate part of the layout plan. The major goal of facility planning is to minimize material handling within the facility, regardless of the type of facility being planned. If material handling can be reduced, the opportunity to mishandle, mislead, or damage the product is minimized. If the material handling can be reduced, costs can be reduced and if costs can be reduced one of two things can happen: either the profits for the company can be improved or the price for the products can be reduced. Figure 7.1 shows a facility that was located near major interstate highways, major rail yards and near several major airports and seaports. There are advantages to locating facilities such as warehouses, distribution centers and cross docking facilities close to major supply chain nodes.
Figure 7.1: Cross Docking and Trans-loading Facility—Located near Major East- West and North-South Roads and Major Rail Yard
The next goal of the layout design process should be to layout the facility to improve the efficiency of the space and workers. In a distribution facility, the majority of the worker’s time is spent moving from one location to the next picking location. If the layout can be designed to better utilize the space and use the employees’ time more effectively, the amount of time spent walking from one location to the next can be reduced. This can be accomplished by storing fast moving items closer to the shipping and receiving areas or through the use of robotics such as the Kiva System used by Amazon. One of the biggest complaints in the distribution and warehousing world is that is a shortage of space – “We don’t have enough storage space!” Primarily because most facility managers measure their space on the square footage of the facility vice cube footage utilization. Almost everyone in the industry falls into this trap. Look at a Modern Materials Handling Magazine 39 and you will see articles about distribution centers—almost each one of them lists the square footage of the facility. Efficiently utilizing the space of the facility may mean utilizing the cube footage of the facility. Very few distribution centers or warehouses only stack supplies and materials one pallet high, therefore cube footage may provide more space. And, placing like
(^3939) Go to http://www.mmh.com/ for more information on Materials Handling and facility layout models.
Western/Horror/Comedy where the eyes are cut out of the painting and you feel like someone is always watching you. This also impeded the ability to communicate face to face. Conversely, FedEx 41 has a World Wide Operations Center in Memphis, Tennessee that is similarly set up on the operations floor—large screens with tracking for every plane and the FedEx Weather Station. The difference is that the offices are on the operations floor to facilitate communications. The final goal of the facility design process is to facilitate reduction of cycle time. In a distribution facility the goal of the layout design the goal is to reduce the processing times in the facility to reduce the customer wait times for the products the customers have ordered. If the facility is laid out for efficiency, it should also improve responsiveness to the customer. In a service operation the goal should be to maximize the exposure of products to the customers depending on the type of operations. In some operations it may be better to design the process to minimize the travel and movement of the customer through the facility. Figure 7. shows the entrance to Ron Jon Surf Shop in Cocoa Beach, Florida. There are three ways to enter the store and at every entrance is the display of the newest shirt designs to encourage the impulse buy.
(^41) For more on the operations of FedEx go to fedex.com
Figure 7.2: The South Entrance to Ron Jon Surf Shop – T-Shirt display to expose products to the customers Grocery stores have the concept of maximizing exposure of the products to the customer. Almost every grocery store has the same layout. You go into the store and the fresh fruits and vegetables are on one end of the store, the meats and seafood are along the back, the frozen foods and breads are in the middle, and the dairy products are at the other side of the store. Even the Wal-Mart Supercenter grocery layout concept has the same basic layout only from front to rear rather than left-right or right-left orientation. Starbucks stores are laid out to maximize the exposure of the products such as cups, accessories, coffees, and teas to the customer before reaching the counter to order a drink or pastry. Another coffee chain needed assistance with their layouts in 2005. This West Coast chain was looking for suggestions from consultants to improve the sale of the complementary items to their coffees and teas. Figure 7.3 shows their typical layout and analysis of the layout.
Figure 7.4: Starbuck’s layout to expose products to the buyer
Other Considerations for Layout Planning
Safety and Security Safety always must be a consideration in the design of the facility or the layout of the facility. A company can design the most efficient production layout but if it places the employees at risk or places the product at risk from the layout, it cannot be implemented. Granted providing a quality product with the least amount of movement and material handling is important, but the most important asset that any company has is its employees. If the safety of those employees is put at risk, the design is a no-go. In California, the Occupational Safety and Health Administration (Cal OSHA) has certain rules and regulation that may or may not be applicable in other areas of the country. But these rules to protect the workers may be applicable in other states and to other countries that have Earthquake threats. Cal OSHA requires distribution centers that stack materials more than two pallet positions high to be bolted to the ground for Earthquake protection. This is important when designing a distribution center or warehouse layout. Why? Once the pallet racks are bolted down it is not only not practical but possibly not cost effective to move the racks—so, it is important to get the racks in the right place the first time. It is also important to consider security of the facility and controlled access for visitors and employees as part of this design process. Most facilities have a controlled entrance and may have security guards at the entrance to ensure that employees are coming and going from the
controlled access point. The other reason for this controlled entry point besides the safety and security of the employees is to ensure that a dishonest employee is discouraged from taking stuff out of the facility. Product Quality Obviously, as the process design is for producing a quality product, the layout of the facility has to support that goal. If the layout design’s primary goal is to minimize material handling, the corollary benefit of this goal is that the chances of producing a quality product are improved if the product is handled as little as possible. The fewer times a product is moved the smaller the probability that it will be damaged or misrouted, thereby reducing the impacts on the quality of the product. If a product needs a certain environment for production such as a painting facility or the manufacture of computer chips, there may be impacts to the layout and/or the location of the facility. For example, when the Harley-Davidson Plant was in Kansas City, Missouri, the painting of the gas tanks was accomplished in a controlled environment that contained an air dam to blow particles off the workers to prevent defects in the paint. This process also has restrictions on the foods that the workers can eat to prevent defects in the painting of the tanks as a result of oils from the foods.
Flexibility for Future Operations Every plan should include a consideration for the future of the operations. Whether it is a manufacturing facility that needs to consider future products or variations of the same product or a distribution center that needs to consider future storage requirements and product configurations, as well as the ability to expand capacity in the future, the company has to consider posturing for the future. This is an example of facility planning linked to capacity planning. In the mid-1990s, Grainger designed and built a new distribution center in Ontario, California. By 2001, this facility had outgrown its capacity and needed to expand the operations. However, in the 5+ years that the facility was open, the facility had become blocked in—there was no place to expand the facility. Grainger decided to design and build a new facility a few miles down the road in Mira Loma, California. This time the facility was built larger than the current capacity by about 1.5 times. This allowed the company to slowly expand into the facility
could be and may be requiring more material handling and movement as is necessary or should be necessary. This layout has work in process moving across other process sectors. This is not an efficient layout. The goal of the process layout analysis is to find the optimal layout that will meet the goals of layout design.
Painting
Final
Assembly
Sanding
Shipping
and
Weldin g
Punch
press
Receiving
Figure 7.6: Process Layout with flow analysis Product Layout The product layout is the traditional linear manufacturing layout. Raw materials or subassemblies enter at one end of the manufacturing line and a finished product comes out the other end of the product layout. The first thing that has to be considered in designing the product layout is to know or determine the assembly order or precedent of activities. This is important to make sure the layout is in a logical format based on what needs to be done first. (We will see this same methodology when we look at the Critical Path Method and Project Evaluation and Review Technique for Project Management.) The next step in the product line design is to consider if work stations or work cells will be used for the product line. Either way the design has to consider how much work will be
assigned to the workstation or work cell to ensure a smooth flow through the line without delays or a buildup of work in process. In order to do this, it is important to measure the cycle time for the entire line (For example: Harley-Davidson knows it takes 54 minutes for one bike to be made on one of their product lines). Then the cycle time for each work station or cell must be calculated.
Cellular Layout What is a cellular layout? A cellular layout is an attempt to balance the line and reduce material handling through a facility. This can only be accomplished by measuring the cycle times for each cell to ensure that the cells are balanced internally and externally. A cellular layout groups like machines into a cell. This sounds a lot like the definition of a process layout and may very well be a process layout within a product layout. Parts families may be grouped together within the product line and passed from one process cell to the next process. This produces a hybrid layout or a line within a line production. The advantages of a cell are all based on proper planning and analysis. To achieve the benefits of cells requires balancing within and between cells. When properly designed the cell will minimize the need to constantly change set ups along the product line by grouping the like activities together much like the process concept. Cellular layouts, although perceived by some advocates of Just-in-Time as the best way to produce goods and services, may not be appropriate for all products or services. If there are not enough processes or enough parts families in the operation, it may not be feasible to move to a cellular layout. Computer models are great for analyzing the available data to determine whether cells are right for the product or service. Cellular layouts are not just for manufacturing. Cells can be seen in services and retail operations. When I lived in Hawaii there was a family-owned store in Waipahu, Arakawa’s, that was broken into cells based on the “family member” that ran that particular department. The family saw this as efficient, but from the customer perspective the need to pay for items at every cell was seen as a bit inefficient. In the fast food industry cells play a big part. In hamburger fast food restaurants there are cells that focus on the making of French fries, a cell that focuses on “grilling” the burgers, another cell that focuses on putting the burger together and another cell that is focused on taking
Process Design
Now that we have the basic layouts defined, it is time to look at the methods for determining the optimal layout. Block Diagramming Look back at Figure 7.7. A block diagram could be applied to the layout. The goal of the block diagram is to establish with quantifiable data the number of items moving from one process or machine to the next process or machine and what if any is moving backward to be redone. Figure 7.7a shows a facility looked at recently that could have used a block diagram to determine the optimal layout based on flow analysis and quantifiable data to determine which processes should have been placed adjacent. This particular facility was “focused on Lean initiatives.” However, the primary goal of Lean as we will see later is to reduce waste. One of the wastes that Lean seeks to reduce or eliminate is the waste of movement. This particular facility could have improved operations by using the data that they had available and the use of a block diagram. In this particular aircraft parts repair and rebuild facility items came in through each of the three doors and went to Area A, Area B, or Area C for initial analysis and repair. Then items moved from the initial area to one of the other two areas for additional work and then to one of
Process Area
B
Process
Area A
Process
Area C
the other areas for more work before being shipped out to the customers.
Figure 7.7a: Flow Analysis Using Block Diagramming Using the quantifiable data of the movements from one area to the next and analyzing the data to determine the movements between adjacent areas a more optimal layout is possible. Look at Figure 7.7b and the redesign based on adjacent sector movements. This new layout not only allows for movement from each area to the other areas without passing through Area B in the middle which slowed operations. Also the new design provides an area strictly for Quality Assurance and Shipping Area which was handled throughout the facility in the previous design.
Figure 7.9 shows another method from the US Navy to establish activity between departments. This chart shows the affinity between departments: The activities with three lines have strong movements between the departments meaning they have to be in close proximity, the activities with two line have substantial movement and therefore should be in close proximity to each other, the activities with one line have some movement and those activities not connected at all have no movement and therefore have no need to be closely located in the facility.
Figure 7.9: Activity Diagram
Relationship Diagrams
One of the most common relationship grids is the Muther’s Grid. This technique was originally developed by Richard Muther. The relationship grid is designed to be used if when
quantifiable data are not available. Therefore, this technique is not used if the data shown for the block diagram or the affinity diagram are available. A relationship diagram is based on someone’s opinion of what should be located close to other activities. In 1980 the warehouse that I was responsible for was destroyed by a large tropical storm in Hawaii. Although this warehouse was a showplace warehouse that was included on every distinguished visitor tour in Hawaii, there were some areas that could be improved. The data was not available to show what moved from where to where. So my smart guys developed a rough draft relationship diagram. We were not aware of Muther’s work but used the same ideas of what we thought should be close to which when designing the new facility. The problem with a relationship diagram is that it is subjective. It is someone’s opinion or best guess. A Muther’s Grid when blank looks like Figure 7.10. Notice that it looks a little like the old mileage charts on a paper map shown in Figure 7.11—and is read the same way. The intersection of the lines is the relationship and shows what should and should not be placed close to other activities.
Figure 7.10: Blank Muther’s Grid
Figure 7.12: Vowel Methodology Muther’s Grid In Figure 7.12 the Vowel Methodology is applied to the Muther’s Grid. Using this Grid it is easy to see that the subjective analysis deems the relationship between the shipping department and the offices is Undesirable (X)—the rationale for this decision is because the need to have privacy in the offices to talk to potential employees and talk with current employees is critical to operating a business. At the same time it is important to have privacy in the locker room to talk among the employees. Bulk storage and Receiving is deemed to be Absolutely Important (A) because of the desire to reduce material handling costs and the waste of unnecessary movement. The same is true in this example for bin storage (small items) and shipping. The rationale for determining that shipping and locker rooms should not be close (Undesirable—X) is to prevent the temptation to move nice to have items to the locker room vice the shipping dock. Figure 7.13 shows the same rationale using the “Numbering Methodology.” This methodology is very similar except that instead of using letters or vowels, numbers are used. The importance with using this method is to make sure the decision maker and the recommender understand the numbering system. This is why it is important to have the scale close by when looking at the grid. This is important because the decision maker needs to know the scale—is a 1
good or bad? The rating scheme of one system may have 1 as good and 6 as bad (the lower the better, like a golf score) or may have 6 as good and 1 as bad (the more points the better, like a good basketball game). The intersection between bulk storage and receiving is a 1—Absolutely Important to reduce movement.
Figure 7.13: Muther’s Grid Using Numbering Methodology Hybrid Methodology
The Hybrid Methodology comes from the US Navy’s Manual for Warehousing Layout. 42 This methodology combines the two previous methods to provide a much better relationship diagram. The hybrid method not only shows what the recommendation is but the rationale of the recommender and the thought process for the recommendation. Figure 7.14 shows this
(^42) Navy Supply Publication 529, Warehousing Modernization and Layout Planning Guide, 1985. Although
this publication is almost 40 years old, it is still considered by many to be the best publication available to guide a
planner to design the most optimal warehouse or distribution center layout.
