Layout planning in manufacturing and service organizations deals with the physical arrangement of various resources that are available in the system with the objective to improve the performance of the operating system, thereby better customer service. Typically, in case of a manufacturing organization, there may be over 200 machine tools of various kinds to be located in a machine shop. Similarly, in the case of a service organization such as hospital or hotel, there are various resources to be physically located. We can identify the best possible locations for various resources in organizations through good layout planning exercise. Layout planning provides a set of tools and techniques that help an operation manager to decide where to locate the resources and also to assess the impact of the alternative choices that he/she may have for locating the resources.
A good layout design will ensure that a vast majority of jobs in a manufacturing system may have to travel shorter distances before completing their processing requirements. Similarly, in the case of service organizations, customers may need to walk shorter distances and spend less time in the systems of the processes come down. On the other hand, a bad layout design will result in longer distances to be covered before completing the process. This creates several problems in organizations and several key performance measures suffer. The most significant and visible effect is the time taken to complete the process. Longer distances would mean more time to complete the process and more material handling in the case of manufacturing organization, leading to higher material handling costs. Eventually, in both service and manufacturing systems, this leads to poor quality.
Implications of Layout Planning: Addressing the layout planning problems it begins with good understanding of the key factors that influence the layout design. The nature of issues to be tackled and the manner in which these issues could be addressed vary from one type of organization to another. Let us consider a high variety manufacturer such as Bharat Heavy Electrical Limited (BHEL) and that of high volume manufacturer such as Maruti Udyog Limited (MUL); it is reasonable to expect that the basis on which the resources are to be located will differ in these two cases. A high volume manufacturer like MUL will have dominant flow pattern and this information will be useful for the layout planner. On the other hand, in the case of low volume manufacturer like BHEL there will not be dominant flow of material in the shop. The demand placed on different resources will vary widely in this case from time to time.
In more general case, the relationship between ‘volume-variety-flow’ provides crucial inputs to a layout problem. Variety and volume are inversely related in any operating system. Thus, when variety is low, the volume of production is high. The typical examples are processing industry firms such as petrochemical manufactures and mass manufacturers such as automobiles components manufacturers. In these cases, the flow is highly streamlined. Raw materials move progressively through the system from one end of the process until to reach the final assembly, testing and packing, similar effect exists in service systems also. In case of fast food joint with just few offerings, the process could be highly streamlined. Customers may enter the eatery, place , order and pay at the cash counter, move to the delivery counter, pick up their order, and move to the dining area. Finally, they may move to disposal area to leave their used plates before exiting the system. At the other extreme is a project shop. In a project shop the volume is typically one. Examples include building of large scale power projects, nuclear facilities, and a multi-level flyover system for a large metropolitan city and so on. Resources requirements in these projects are vast and varied, uneven in demand and stretched over long periods. Therefore, layout planning is a very different problem’s
Between these two extremes we have operating systems that vary volume-variety dimension and therefore, have varying flow implications. As variety increases the volume drops, leading to batch manufacturing firms. Further increase in variety leads to reduction in volume as we find in case of job shops and customized product and service providers. In general, as the flow becomes more cumbersome, the type of layout may significantly influence the ability of operation manager to effectively plan and control operations on shop floor.
