Reference:

Operations Management
Jay Heizer & Barry Render

LESSON 09 : DEVELOPING LAYOUT STRATEGIES

Strategic Importance of Layout Decisions
The objective of layout strategy is to develop a cost-effective layout that will meet a firms competitive needs

Layout Design Considerations
Higher utilization of space, equipment, and people
Improved flow of information, materials, or people
Improved employee morale and safer working conditions
Improved customer/client interaction
Flexibility

Types of Layout
1. Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information
2. Retail layout: Allocates shelf space and responds to customer behavior
3. Warehouse layout: Addresses trade-offs between space and material handling
4. Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings
5. Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent
production)
6. Work cell layout: Arranges machinery and equipment to focus on production of a single product or group of
related products
7. Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous
production

Good Layouts Consider
1. Material handling equipment (decide on what equipment to be used in delivering/storing materials)
2. Capacity and space requirements
3. Environment and aesthetics
4. Flows of information
5. Cost of moving between various work areas

Office Layout
Grouping of workers, their equipment, and spaces to provide comfort, safety, and movement of information
Movement of information is main distinction
Typically in state of flux due to frequent technological changes

Supermarket Retail Layout
Objective is to maximize profitability per square foot of floor space
Sales and profitability vary directly with customer exposure

Five Helpful Ideas for Supermarket Layout
1. Locate high-draw items around the periphery of the store
2. Use prominent locations for high-impulse and high-margin items
3. Distribute power items to both sides of an aisle and disperse them to increase viewing of other items
4. Use end-aisle locations
5. Convey mission of store through careful positioning of lead-off department



Reference:
Operations Management
Jay Heizer & Barry Render
Retail Slotting
Manufacturers pay fees to retailers to get the retailers to display (slot) their product



Servicescapes
Ambient conditions - background characteristics such as lighting, sound, smell, and temperature
Spatial layout and functionality - which involve customer circulation path planning, aisle characteristics, and
product grouping
Signs, symbols, and artifacts - characteristics of building design that carry social significance

Warehousing and Storage Layouts
Objective is to optimize trade-offs between handling costs and costs associated with warehouse space
Maximize the total cube of the warehouse utilize its full volume while maintaining low material handling
costs

Material Handling Costs
All costs associated with the transaction
o Incoming transport
o Storage
o Finding and moving material
o Outgoing transport
o Equipment, people, material, supervision, insurance, depreciation
Minimize damage and spoilage
Warehouse density tends to vary inversely with the number of different items stored
Automated Storage and Retrieval Systems (ASRSs) can significantly improve warehouse productivity by
an estimated 500%
Dock location is a key design element

Cross-Docking
Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse
Requires tight scheduling and accurate shipments, bar code or RFID identification used for advanced shipment
notification as materials are unloaded

Random Stocking
Typically requires automatic identification systems (AISs) and effective information systems
Random assignment of stocking locations allows more efficient use of space
Key tasks
1. Maintain list of open locations
2. Maintain accurate records
3. Sequence items to minimize travel, pick time
4. Combine picking orders
5. Assign classes of items to particular areas

Customizing
Value-added activities performed at the warehouse
Enable low cost and rapid response strategies
o Assembly of components
o Loading software

Reference:
Operations Management
Jay Heizer & Barry Render
o Repairs
o Customized labeling and packaging




LEARNINGS:
Layout has numerous strategic implications because it establishes an organizations competitive priorities in regard to
capacity, processes, flexibility, snd cost, as well as quality of work life, customer contact and image. Layout can be in
different ways depending on what kind of business a company has. There are seven types of layout, (1) office, (2) retail,
(3) warehouse, (4) fixed position, (5) process oriented, (6) work cells, and (7) product oriented. Office layouts often seek
to maximize information flows, retail forms focus on product exposure, and warehouses attempt to optimize the trade-
off between storage space and material handling cost.
Good layout considers material handling equipment, capacity and space requirements, environment and aesthetics,
flows of information, and cost of moving between various work areas

Office layout is more about the design or arrangement of the elements that can be found in an office the workers,
their equipment and spaces.
Retail Layout is an approach that addresses flow, allocates space, and responds to customer behavior. Retail layouts are
based on the idea that sales and profitability vary directly with customer exposure to products. Slotting fees are fees
manufacturers pay to get shelf space for their products. Servicescape is the physical surroundings in which a service
takes place and how they affect customers and employees.
Warehouse layout is a design that attempts to minimize total cost by addressing trade-offs between space and material
handling. Cross-docking is the process of avoiding the placement of materials or supplies in storage by processing thme
as they are received for shipment. It requires both tight scheduling and accurate inbound product identification.
Random stocking is used in warehousing to locate stock wherever there is an open location. Customizing is using
warehousing to add value to product through component modification, repair, labeling, and packaging.