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Q-1 "An ideally laid out plant goes a long way in reducing manufacturing costs through reduced materials handling, reduced personnel and equipment requirements and reduced in-process inventory". Elaborate.
Facility layout and design is an important component of a business's overall operations, both in terms of maximizing the effectiveness of the production process and meeting the needs of employees.
The basic objective of layout is to ensure a smooth flow of work, material, and information through a system. The basic meaning of facility is the space in which a business's activities take place. The layout and design of that space impact greatly how the work is done-the flow of work, materials, and information through the system. The key to good facility layout and design is the integration of the needs of people (personnel and customers), materials (raw, finishes, and in process), and machinery in such a way that they create a single, well-functioning system.
FACTORS IN DETERMINING LAYOUT AND DESIGN
Small business owners need to consider many operational factors when building or renovating a facility for maximum layout effectiveness. These criteria include the following:
1. Ease of future expansion or change-Facilities should be designed so that they can be easily expanded or adjusted to meet changing production needs. "Although redesigning a facility is a major, expensive undertaking not to be done lightly, there is always the possibility that a redesign will be necessary,"
"Therefore, any design should be flexible'. Flexible manufacturing systems most often are highly automated facilities having intermediate-volume production of a variety of products. Their goal is to minimize changeover or setup times for producing the different products while still achieving close to assembly line (single-product) production rates."
2. Flow of movement-The facility design should reflect a recognition of the importance of smooth process flow. In the case of factory facilities, the editors of How to Run a Small Business state that "ideally, the plan will show the raw materials entering your plant at one end and the finished product emerging at the other. The flow need not be a straight line. Parallel flows, U-shaped patterns, or even a zig-zag that ends up with the finished product back at the shipping and receiving bays can be functional. However, backtracking is to be avoided in whatever pattern is chosen. When parts and materials move against or across the overall flow, personnel and paperwork become confused, parts become lost, and the attainment of coordination becomes complicated."
3. Materials handling-Small business owners should make certain that the facility layout makes it possible to handle materials (products, equipment, containers, etc.) in an orderly, efficient-and preferably simple-manner.
4. Output needs-The facility should be laid out in a way that is conducive to helping the business meet its production needs.
a. Space utilization-This aspect of facility design includes everything from making sure that traffic lanes are wide enough to making certain that inventory storage warehouses or rooms utilize as much vertical space as possible.
b. Shipping and receiving-counseled small business owners to leave ample room for this aspect of operations. "While space does tend to fill itself up, receiving and shipping rarely get enough space for the work to be done effectively,"
c. Ease of communication and support-Facilities should be laid out so that communication within various areas of the business and interactions with vendors and customers can be done in an easy and effective manner. Similarly, support areas should be stationed in areas that help them to serve operating areas.
d. Impact on employee morale and job satisfaction-Since countless studies have indicated that employee morale has a major impact on productivity, -- owners and managers to heed this factor when pondering facility design alternatives: "Some ways layout design can increase morale are obvious, such as providing for light-colored walls, windows, space. Other ways are less obvious and not directly related to the production process. Some examples are including a cafeteria or even a gymnasium in the facility design. Again, though, there are costs to be traded off. That is, does the increase in morale due to a cafeteria increase productivity to the extent that the increased productivity covers the cost of building and staffing the cafeteria."
5. Promotional value-If the business commonly receives visitors in the form of customers, vendors, investors, etc., the small business owner may want to make sure that the facility layout is an attractive one that further burnishes the company's reputation. Design factors that can influence the degree of attractiveness of a facility include not only the design of the production area itself, but the impact that it has on, for instance, ease of fulfilling maintenance/cleaning tasks.
6. Safety-The facility layout should enable the business to effectively operate in accordance with Occupational Safety and Health Administration guidelines and other legal restrictions.
"Facility layout must be considered very carefully because we do not want to constantly redesign the facility," . "Some of the goals in designing the facility are to ensure a minimum amount of materials handling, to avoid bottlenecks, to minimize machine interference, to ensure high employee morale and safety, and to ensure flexibility. Essentially, there are two distinct types of layout. Product layout is synonymous with assembly line and is oriented toward the products that are being made. Process layout is oriented around the processes that are used to make the products. Generally, product layout is applicable for high-volume repetitive operations, while process layout is applicable for low-volume custom-made goods."
AN IDEAL LAYOUT CAN HELP WITH THE
1. Transport: Movement of materials is a waste. Minimise the amount of movement by arranging processes in close proximity to each other. Factory layouts can often be the fundamental cause of excess transportation. When appropriate, re-laying out the machines within a factory from a functional to a cellular layout has been found by many companies to help not just reduce transportation waste but also reduce WIP and waiting. Items being moved unnecessarily incur a cost
2. Inventory: Many companies produce above what is required to fulfil the order, this may be due to quality problems along the production process or the often mistaken belief that is saves money by manufacturing larger quantities.. Too little inventory can lose sales, too much inventory can hide problems.
3. Motion:. Generally, this waste applies to production personnel having to move out of their work area to locate tools, materials, etc. Remove unnecessary motion of the operations and improve the ergonomics of the workplace. People moving unnecessarily also incur a cost.
4. Waiting: Minimize waiting time (operators waiting for machines or products waiting around in factories either as finished goods or work in progress) Aim for a smooth flow.
5. Overproduction: Always aim to make exactly what the customer orders, just in time, to the correct quality standard. On the shop floor, this generally occurs because changeover times are high, equipment is unreliable, the process is unreliable (causes defects), and standard cost accounting metrics are used. However, probably the biggest reason for overproduction is poor information flow (communication) between facilities.
6. Over Processing: Use machines which are of an appropriate capacity and capable of achieving the required quality standard. This usually refers to using larger scale equipment than necessary; it also refers to building in rework to a process. It can also refer to using the wrong suppliers and/or the wrong process
7. Defects: Reducing the number of defects directly reduces the amount of waste. Aim for zero defects.
Yes the statement is correct as "An Ideally laid out plant goes a long way in reducing manufacturing costs through reduced material handling, reduced personnel's and equipment requirements and reduced in process inventory"
Take for example a cement plant... or any plant in general. A proper plant layout of any plant during the initial stages of commissioning and erection can greatly reduce cost related to Manpower, Material transportation, Production etc. It reduces the cost related to extra machinery to be installed like conveyor belts for Material transportation and Labour costs.
A proper and well organised Plant setup and layout helps organization to reduce Production losses, Process Inventory cost, Labour related costs, Material Transportation (Both Raw material as well as Finished materials) along with the Cost related moving goods from centralised stores to various departments and places with in plants.
The 7 Wastes
Waste is anything which does not add value to a product or service, in any office or manufacturing activity, eg : sitting in storage, being moved around, queuing awaiting processing, being inspected, etc.
Taiichi Ohno, the former Chief Engineer at Toyota who popularized the Toyota Production System, is responsible for identifying the seven wastes in manufacturing. As he observed activity on the shop floor, he identified the following wastes:
Transport: Movement of materials is a waste. Minimise the amount of movement by arranging processes in close proximity to each other. Factory layouts can often be the fundamental cause of excess transportation. When appropriate, re-laying out the machines within a factory from a functional to a cellular layout has been found by many companies to help not just reduce transportation waste but also reduce WIP and waiting. Items being moved unnecessarily incur a cost
Inventory: Many companies produce above what is required to fulfill the order, this may be due to quality problems along the production process or the often mistaken belief that is saves money by manufacturing larger quantities.. Too little inventory can lose sales; too much inventory can hide problems.
Motion: Generally, this waste applies to production personnel having to move out of their work area to locate tools, materials, etc. Remove unnecessary motion of the operations and improve the ergonomics of the workplace. People moving unnecessarily also incur a cost.
Waiting: Minimize waiting time (operators waiting for machines or products waiting around in factories either as finished goods or work in progress) Aim for a smooth flow.
Overproduction: Always aim to make exactly what the customer orders, just in time, to the correct quality standard. On the shop floor, this generally occurs because changeover times are high, equipment is unreliable, the process is unreliable (causes defects), and standard cost accounting metrics are used. However, probably the biggest reason for overproduction is poor information flow (communication) between facilities.
Over Processing: Use machines which are of an appropriate capacity and capable of achieving the required quality standard. This usually refers to using larger scale equipment than necessary; it also refers to building in rework to a process. It can also refer to using the wrong suppliers and/or the wrong process
Defects: Reducing the number of defects directly reduces the amount of waste. Aim for zero defects.
The efficiency of production depends on how well the various machines; production facilities and employee's amenities are located in a plant. Only the properly laid out plant can ensure the smooth and rapid movement of material, from the raw material stage to the end product stage. Plant layout encompasses new layout as well as improvement in the existing layout.
It may be defined as a technique of locating machines, processes and plant services within the factory so as to achieve the right quantity and quality of output at the lowest possible cost of manufacturing. It involves a judicious arrangement of production facilities so that workflow is direct.
Plant layout refers to the arrangement of physical facilities such as machinery, equipment, furniture etc. within the factory building in such a manner so as to have quickest flow of material at the lowest cost and with the least amount of handling in processing the product from the receipt of material to the shipment of the finished product.
"the overall objective of plant layout is to design a physical arrangement that most economically meets the required output - quantity and quality."
"Plant layout ideally involves allocation of space and arrangement of equipment in such a manner that overall operating costs are minimized.
Plant layout is an important decision as it represents long-term commitment. An ideal plant layout should provide the optimum relationship among output, floor area and manufacturing process. It facilitates the production process, minimizes material handling, time and cost, and allows flexibility of operations, easy production flow, makes economic use of the building, promotes effective utilization of manpower, and provides for employee's convenience, safety,
comfort at work, maximum exposure to natural light and ventilation. It is also important because it affects the flow of material and processes, labour efficiency, supervision and control, use of space and expansion possibilities etc.
An efficient plant layout is one that can be instrumental in achieving the following objectives:
a) Proper and efficient utilization of available floor space
b) To ensure that work proceeds from one point to another point without any delay
c) Provide enough production capacity.
d) Reduce material handling costs
e) Reduce hazards to personnel
f) Utilise labour efficiently
g) Increase employee morale
h) Reduce accidents
i) Provide for volume and product flexibility
j) Provide ease of supervision and control
k) Provide for employee safety and health
l) Allow ease of maintenance
m) Allow high machine or equipment utilization
n) Improve productivity
FACTORS INFLUENCING LAYOUT
While deciding his factory or unit or establishment or store, a small-scale businessman should keep the following factors in mind:
a) Factory building: The nature and size of the building determines the floor space available for layout. While designing the special requirements, e.g. air conditioning, dust control, humidity control etc. must be kept in mind.
b) Nature of product: product layout is suitable for uniform products whereas process layout is more appropriate for custom-made products.
c) Production process: In assembly line industries, product layout is better. In job order or intermittent manufacturing on the other hand, process layout is desirable.
d) Type of machinery: General purpose machines are often arranged as per process layout while special purpose machines are arranged according to product layout
e) Repairs and maintenance: machines should be so arranged that adequate space is available between them for movement of equipment and people required for repairing the machines.
f) Human needs: Adequate arrangement should be made for cloakroom, washroom, lockers, drinking water, toilets and other employee facilities, proper provision should be made for disposal of effluents, if any.
g) Plant environment: Heat, light, noise, ventilation and other aspects should be duly considered, e.g. paint shops and plating section should be located in another hall so that dangerous fumes can be removed through proper ventilation etc. Adequate safety arrangement should also be made. Thus, the layout should be conducive to health and safety of employees. It should ensure free and efficient flow of men and materials. Future expansion and diversification may also be considered while planning factory layout.