Types of Layout – Operations Management (2024)

16.1OBJECTIVES

This chapter would help students to understand:

• Importance of designing proper layout.
• Various characteristics of process and product layout
• Basic techniques of designing of process and product layout
• Other types of layout

16.2 INTRODUCTION

Layout planning involves decisions about the physical arrangement of economic activity centre within a production or service facility. An economic activity centre could be a machine, a worker or group of employees, a workstation etc. It is anything which occupies space and is used in production of an output. Layout planning is an important decision for management as a proper layout has a direct effect on the efficiency of production. The proper and effective arrangement of economic centers ensures the smooth and rapid movement of material, from the raw material stage to the end product stage. Layout planning involves decisions regarding following aspects:

• Determining type of centers: depends on type of jobs involved in production of a good or service. For instance, a motorcycle service station should include specific service center for each motorcycle, tool station for each unit and a common tool center used by all the units. It should not include sitting space either for workers or for customers as it would hinder working and decrease productivity. Similarly, a barber shop includes economic centers i.e. centers which occupy space like sitting chair for customer, space for movement of workers, common and special storage space for tools and a waiting area.
• Determining space and capacity for each center: is very important for uninterrupted and unhindered movement of man and material. For instance, in motorcycle service station and barber shop example, there should be sufficient space in between each service center as every one of them is an independent economic center so workers or employees engaged in activities at these centers should have enough space to carry their activity unhindered. On other hand, in some service centers such as banks and retail stores where movement of customers is part of production process the layout design should involve space for movement of customers as well.
• Placement of different service centers: An educational institution has various economic centers in the form of teaching and non-teaching departments, library centre, canteens and hostels. The placement of each service centre in relation to each other is an important aspect of layout planning. Library should be placed near to teaching departments but away from canteen and similar decisions have to be considered. In this context, placement of centers has two aspects: relative location i.e. a particular space that a centre occupies relative to other centers and absolute location i.e. particular space that a center occupies within a facility. This concept has been illustrated in educational institution example. Such institution might have numerous departments. For instance departments related to social sciences are grouped in one center whereas departments relating to sciences to some other centre. Relative location of canteen w.r.t. teaching departments should be such that it does not disturb teaching function.

Following is another illustration which clarifies importance of layout planning in above discussed aspects:

A retail store is a service centre which has various departments such as apparels, electronics, vegetables, groceries and non-vegetarian products. It has been documented that grocery store attracts maximum number of customers so it should have larger space than other stores. Fig. 16.1.1 (a,b) indicates one type of arrangement of theses economic centers.

Now fig.16.1.1 (a) indicates following aspects:

• Centers to be included: vegetables, meat products, electronic items, grocery, kids, apparels and books are the departments or economic centers that have been included in a retail store.
• Space allocated to each store: as can be seen grocery store has been allocated maximum space as its demand was estimated to be maximum.
• Absolute and relative placement: Absolute location of grocery is central to the retail store whereas it is relatively placed at almost equal distance to all other stores so that it can be easily accessed by maximum customers. It was found in this design that vegetarian customers have objections to the layout design as vegetable store was placed adjacent to the meat product store. So, relative placement of vegetable store was not appropriate. One alternative has been shown in Fig. 16.1.1 (b) where relative location of vegetable and meat products has been changed. This can be one alternative out of numerous available but a firm must select only that which has highest economic value.

Thus, to consider above mentioned aspects layout planning becomes very important for reasons discussed in next section.

16.3 IMPLICATIONS OF LAYOUT PLANNING

Plant layout is an important decision as it represents long-term commitment. Selection and designing of a proper layout can help immensely in communicating company’s strategies. An effective layout can help a company to achieve its competitive priorities as it would:

• Facilitate the flow of materials and information: for instance, a service station is designed in such a manner that tools and material are placed at each service station to reduce movement of workers. In a University a Dean’s office is located close to Vice Chancellors’ office to facilitate easy flow of information.
• Efficient utilization of labor and equipment: As seen in retail example maximum customers are attracted to grocery store so its utilization would be maximum. But, an electronic store might not attract customers all the time thereby reducing utilization of its labor. So, to increase its utilization either space allocated to electronic store can be decrease or a new store can be placed in against it. This can be done as electronic store has no linkage with any other store. But, in car wash example as shown below situation is different.

Fig. 16.2.1 shows a simple process of washing a car. It involves three sequential processes i.e. washing, rinsing and then drying of a car. Now, each machine involved in particular process can only do one kind of job. If one machine goes out of order then entire operation is stopped making utilization of all the machines to nil. The layout of car wash operation is different from store operation as in store operation if one economic center becomes dysfunctional it can be replaced by some other process or function. But, incase of layout of car wash operation such replacement is not possible. Thus, depending on the process a layout can have a significance impact on utilization of labor and equipment.

• Increasing customer convenience at various service centers: A bank is involved in providing different kind of services. Lot of customer access a branch of bank increasing its demand. To reduce inconvenience in terms of waiting time and smooth flow of customers a bank has to select a proper layout.
• Providing safety to workers: Safety is a prime issue in manufacturing facilities as such facilities involves movement of heavy material and working on sometimes dangerous machines. Such operations require uninterrupted flow of material and enough space for all workers to move freely and smoothly. Proper layout can provide enough space to each economic center and provision of enough space for smooth flow of material. Sometimes even retail stores store more material than required to attract more customers creating less space for movement of customers. In such scenario customers might feel crowded and sometimes avoid such stores to reduce risk of collision with fellow customers or with haphazardly placed material.
• Improving employee morale and communication: It has been seen that proper selection of layout plays a significant role in enhancing employee morale and productivity in organizations which require free flow of communication and team work. Organizations such as IT, banks and teaching departments have used layout design as a tool in improving employee productivity.

16.4 TYPES OF LAYOUT

Layout planning has numerous implications in both manufacturing and service firms. Proper layout designing has significant impact on making an organization competitive and improving its productivity. Layout planning is a strategic decision as type of layout selection depends on company’s objective of its type of operation selected for production of products or services. A company selects mass production system if its objective is to beat its competition by producing low cost products whereas batch production system is predominantly chosen if objective is to provide customized and high quality products or services. The characteristics of both types of operation system influence designing of layout. It should be noted here that selection of type of layout depends on strategic objectives of a company whereas design of layout is governed by type of production system that is associated with such objectives. For instance, a profit oriented company providing customized products would provide high variety of products but would produce each variety at low volume. So most appropriate system of production in such case would be batch production system. This in turn would decide type of layout that company would select which fulfills criteria of batch production system. Similarly, cost oriented company providing low variety of products at high volume would opt for mass production system. Layout design for such system would be entirely different than in case of batch production system. More practically, majority of company’s whether inservice or manufacturing sphere asks for a hybrid of both kind of operating systems. For instance, in a car assembly plant all cars of similar kind are being assembled in mass production systems and they are painted in batches involving batch operation system. In such cases hybrid layout is adopted which involves characteristics of both operating systems.

Following are the type of layouts discussed depending on type of production systems:

16.3.1 PROCESS LAYOUT

A company would adopt a process layout for its operations if it is involved in manufacturing of low- volume, high variety category of products. A process layout groups workstations or departments according to function. For example, in a retail store all grocery functions are arranged at one place and not segregated. Most of service organizations such as banking, retail stores, apparel stores, wedding dinner etc. adopt process layout. These organizations provide variety of services and volume of each kind of service is small. Demand levels for one particular kind of product or service is too low. Thus management does not have inclination to allocate dedicated human or capital resources.

Specifically, following are the characteristics of a process layout:

• Volume of product or service produced is low.
• Variety of product or service produced is high.
• General purpose equipment which can perform variety of operations is generally used.
• Layout is flexible as it is less vulnerable to change in product mix. In a process layout same resources can be used to produce different products or services. For example, in retail store grocery department can be replaced by any other department without hindering activities of other departments.
• Equipment utilization is higher as same resource is utilized for production of different products. As demand for one type of product is low so when one machine gets free from producing that product it can be used to manufacture other products.
• Employee skill set is varied and high. For example, in a bank an employee can be used to provide different services. Same employee can be used for cash deposit and also for creating fixed deposits depending on the demand of each kind of service. Thus, skill set of employees’ increases as they become proficient in carrying out different services.

A process layout comes with following disadvantages:

• Productive time is lost in changing resources for production of different products or services. For example, suppose a general purpose machine has a capacity of producing 1000 units in an 8 hr. shift. Company gets an order of manufacturing 400 units of product A and 600 units of product B. Now the machine might not be able to produce all 1000 units in specified time of 8 hr. shift. Some productive time might be lost in changing or setting the machine for production of product B after manufacturing product A.
• The flow of resources is jumbled making movement of material handling equipment costly and time consuming. For example, a customer ‘A’ visiting a retail store whose layout is shown in 16.3.1.1 might follow a path of kids ——- grocery —– books (as shown in red color arrows) and then exit whereas another customer ‘B’ might follow apparels —– vegetables ——– books —— (as shown in green color arrows) and then exit. The point is every customer might follow different paths thus making movement of man and handling material (in this case carts) jumbled. This can also lead to obstruction as customers might find movement hindered making movement as time consuming process.

• More skilled labor is required resulting in higher cost as employees are engaged in different activities. For example, Indian IT industry works on projects. IT companies get projects from all type of sectors like banking, automobile, finance etc. so employees of such companies need to have varied skill set to work on different projects.
• Time gap or lag in production is higher. Because of loss of productive time in changeover of machines and labor processing rate tends to be slower leading in loss of production.
• Work in progress inventory is high needing greater storage space. Process layout is based on features of batch shop production system which asks for general purpose machines i.e. same machine is used to produce variety of products. So, if a machine is processing raw material into finished good of one kind of product then raw material of other product has to wait for processing. This causes increase in work in process inventory occupying essential storage space.

Designing of Process Layout

Thus, to meet the challenges of process layout following are few aspects that need to consider in designing of work centers based on process layout:

• 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.

These aspects have been discussed in following illustration.

Illustration: Suppose there are three departments 1, 2 and 3 which have to located at given three locations A, B and C. Now, by using proper layout design techniques it has to be found that which department should be assigned to which location and how these departments need to be arranged. Following information is given:

Step 1: A and B locations are closest to each other and workflow between departments 1 and 3 is maximum so 1 and 3 departments should be assigned to locations A and B or B and A.

Step 2: 2 and 3 have higher work flow than 1 and 2 so these two departments should be closer than 1 and 2. Also B and C are located closer to each other than A and C. So, 1 should be assigned to A, 2 should be assigned to C and 3 should be assigned to B as shown in Fig. 16.3.1.2

16.3.2 PRODUCT LAYOUT

A firm would adopt a product layout for its operations if manufacturing of its products is based on mass production system. Such a system is characterized by high volume and very low variety of products. As high volume of products is required so operations are continuous and repetitive. Car assembly, car washing, computer manufacturing and other manufacturing operations predominantly use product layout. It is important to emphasize that services predominantly use batch production system and thus inclined to adopt process layout forits operations whereas manufacturing firms use mass production system and so adopt product layout for its operations.

Specifically, following are the characteristics of a product layout:

• Product layout involves production of high volume and low-variety of goods.
• Equipment required to manufacture such high quantities are specialized in nature. Such machinery is equipped to perform only one kind of operation at a very fast rate. For instance in car washing example as shown in Fig. 16.3.2.1 one machine is equipped to perform only one kind of job i.e. machine 1 can perform washing, machine 2 is for rinsing and machine 3 is for drying operation. No machine can replicate the job of other machine.

• Productive time is not lost in changing operations. As only one kind of product is produced so machines or other resources are dedicated for only one kind of job. There is no need to stop operations of a particular machine for changeover resulting in high production and almost nil wastage of production time.
• Flow of products is streamline and not jumbled as was in process layout. As machines are arranged in a sequence depending on the process of production so all the raw material would flow according to a set flow. This results in a very streamlined flow of material. For instance, in car washing example all cars would move according to the process i.e. washing—–rinsing—–drying. No car can skip or change the flow of operation.
• Work in progress inventory is low so there is no wastage of storage space. Dedication of resources in a particular flow determines which machine, material and labor is required for which operation. So, material keeps on moving on a conveyor belt from one operation to other without stopping in between the machines.
• Employee skill set is most of the time low and entails lower costs as compared to employees involved in batch shop production system. An employee is required to operate only one kind of machine or he/she indulges in very few types of operations thus, limiting his/her skill set. But as he/she is involved in doing one kind of job repetitively so he/she becomes proficient in that job. Also time taken to carry out that job would be less as worker has become efficient in performing such a job. This is required in product layout as high volume of units needs to be produced which asks for efficient operations at less time.
• Material handling cost is also low in product layout.

A product layout comes with following disadvantages:

• Layout is fixed. Product layout is also called as assembly line layout as machines are arranged in a sequential format. The format is dictated by the process of production. In car washing example, rinsing cannot be carried out before washing so resources for rinsing would only be placed and used after washing operation. Thus a product layout is not flexible to changes.
• Equipment utilization is low as compared to process layout. In a product layout which is based on mass production system special purpose machines are installed to manufacture very few types of products. So, if demand for such products falls then these resources cannot be utilized to manufacture or produce other products. Also, if one machine goes out of order then it would affect entire assembly line. For example, if machine operating rinsing function breaks down then drying machine cannot operate its operation as no car would reach its work centre.
• Equipment used is capital intensive i.e. cost of special purpose equipment is very high. To fulfill high demand production rate has to be very high so special purpose machines are used in mass production system. To incur such huge costs machines and other resources need to run continuously resulting in lower per unit cost of product. Whereas in process layout which is governed by batch production system general purpose machines produce at low volumes thus, increasing cost of services being delivered.

Designing of Product Layout

A product layout is also termed as assembly line layout because of arrangement of workstations in a sequence. The product moves from one station to other in a dedicated fashion until its completion. Little inventory gets build up between workstations. No workstation should sit idle. A workstation should receive the product for processing after it has processed previous product. Now, it is quite possible that each operation might not use same time. For example in car washing example, washing and drying might require only 2 minutes per car whereas rinsing might require 4 minutes per car as shown in figure 16.3.2.1

Now for instance a car ‘A’ enters the assembly line and gets washed in 2 minutes. Machine 2 will get a product for processing after 2 minutes and machine 3 will get ‘A’ for drying after 6 minutes. By the time car ‘A’ gets rinsedwhich takes 4 minutes in the same time two more cars gets washed. So, in this case there would be pile up of inventory after machine 1 making such a line an unbalanced line. Thus, in a product layout activities cannot be grouped together as they are not similar i.e. washing and drying are not similar. Also, drying can be carried out only after rinsing. To remove such bottlenecks and for proper designing of product layout where there is efficient usage of resources line balancing technique is applied. The mathematical illustration of this technique is not discussed in this module.

16.3.3 HYBRID LAYOUT

Some processes calls for combination of both product and process layouts. Some activities are processed b y using characteristics of product layout and some are carried out by using features of process layout. Assembly lines are good example of hybrid layout. In car assembly products are assembled using product layout. Machines are arranged in a sequence wherein each car moves along a designated process flow. At the end of assembly line final product manufactured in similar or sometimes almost identical. But painting of cars is done in batches. Different cars might be of different colors. So, painting operations involve process layout whereas assembly operations require product layout.

Another illustration is comparison of food arrangements in a dine-in restaurant and that of fast food restaurant. In a dine-in restaurant each family or group of individuals might ask for different meals. Thus, such a restaurant provides high variety of goods at low volumes. Whereas a fast food restaurant has to provide high volume of goods at low variety as majority of customers asks for similar kind of products. With increasing competition some restaurant are providing both kind of services. In such cases these restaurants adopt hybrid layout. High variety and low demand products can be produced by using process layout whereas high demand, low variety goods can be produced by using product layout.

16.3.4 FIXED POSITION LAYOUT

In process and product layout product used to move from one machine to another. All resources such as labor, tools and machinery used to be fixed. But in cases of production of heavy products such as aircraft, ships etc. it is the product which is fixed and all resources such as labor, tools and machinery moves towards the product. Fixed position layout is the only possible option in cases of manufacturing of such heavy products.

16.4 SUMMARY

This chapter discusses importance of layout design and different types of layout. Layout planning is an important strategic decision as it involves long term financial commitment. Selection of a particular kind of layout depends on various criteria such as level of capital investment, requirements for material handling, demand andvariety of product or service, amount of flexibility needed and providing a safe and productive atmosphere for workers. Four types of layouts have been discussed: process layout, product layout, hybrid and fixed position layout. Service firms because of its intermittent and non-repetitive nature mostly adopts process layout. Manufacturing firms because of high demand of their products and repetitive operations mostly adopts product layout.

16.5 REFERENCES/ SUGGESTED READINGS

• Chase, B.R., Shankar, R., Jacobs, F.R. and Aquilano, N.J., Operations & Supply Chain Management, 12th Edition, McGraw Hill.
• Stevenson, W.J., Operations Management, 9th Edition, Tata McGraw Hill.
• Lee J. Krajewski, Operations Management, Prentice-Hall of India, New Delhi, 8th Edition.

16.6 SHORT ANSWER QUESTIONS

1. A product focused process is commonly used to produc

a. high-volume, high-variety products b. low-volume, high-variety products

c. high-volume, low-variety products d. low-variety products at either high- or low-volume

Answer: c

2. An assembly line is an example of a

a. product layout b. process layout c. fixed position layout

Answer: a

3. Which of the following transformations generally has the highest equipment utilization?

a. process focused process b. product focused process

Answer: b

4. Which of the following is false regarding repetitive processes?

a. They allow easy switching from one product to the other.

b. They are the classic assembly lines.

c. They have more structure and less flexibility than a job shop layout.

Answer: a

5. Which of the following characteristics best describes process focus?

a. equipment utilization is low

b. high volume, low variety

c. low volume, high variety

Answer: c