BM1902

LAYOUT DECISION

The Strategic Importance of Layout

According to Atkin and Brooks (2015), layout is one of the key decisions that determine the long-run
efficiency of operations. Layout has numerous strategic implications because it establishes an
organization’s competitive priorities concerning capacity, processes, flexibility, cost, quality of work,
customer contact, and company image (Atkin & Brooks, 2015). The following are the objectives of layout
design:
• Higher utilization of space, equipment, and people;
• Improved flow of information, materials, or people;
• Enhanced employee morale and safer working conditions;
• Improved customer/client interaction; and
• Flexibility in operations.

Atkin and Brooks (2015) summarized the considerations involved in layout design:

• Material handling equipment. Managers must decide on equipment to be used, including

conveyors, cranes, automated storage, retrieval systems, and automatic carts to deliver and store
material.
• Capacity and space requirements. Managers must determine the personnel, machinery, and
equipment requirements prior to designing the layout for each component.
• Environment and aesthetics. Managers must consider layout decisions such as windows,
planters, and height of partitions to facilitate air flow, reduce noise, and provide adequate privacy
among others.
• Flows of information. Managers must consider the importance of communication in layout
decisions that involve proximity of office spaces.

Types of Layout
Atkin and Brooks (2015) stated the different approaches in layout design as follows:

• Office layout. This positions workers, equipment, and spaces to encourage efficient movement
of information.
• Retail layout. This allocates shelf space and responds to consumer behavior.
• Warehouse layout. This addresses tradeoffs between space and material handling.
• Fixed-position layout. This addresses the layout requirements of large, bulky projects such as
ships and buildings.
• Process-oriented layout. This deals with low volume but high variety of production.
• Work cell layout. This arranges machinery and equipment to focus on the production of a single
product or group of related products.
• Product-oriented layout. This seeks the best personnel and machine utilization in repetitive or
continuous production.

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Office Layout
Office layout may be classified into two (2) categories as follows:

• Process layout. In process layout, the equipment and employees are arranged according to the
sequence of operations. For example, the filing section may be located to a room next to the
dispatch section and so on.
• Group Layout. In group layout, employees are placed in a separate partition where similar
activities are carried on, and office machinery are fitted with another section. For example, all
computers are fitted in a separate room, like a provisioned computer room.

The following are the main objectives of office layout:

1. Effective utilization of available floor space and smooth flow of work;

2. Both power and telephone services are made available whenever necessary;
3. Office supervision is made easier and more convenient;
4. Good working condition is provided to each employee; and
5. Free flow of communication among employees.

Figure 1. Office Layout

Source: http://reneefan.net

Retail Layout
The following are the basic considerations in retail layout strategies:

• Walking space. The layout must provision a sufficient walking space for the customers. The aisles
must be wide enough to accommodate traffic flowing in both directions. If the store provides
shopping carts, then there must also be space for customers to stop near a product display and
park a cart without disrupting the flow of traffic.

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• Flow. The layout must allow customers to enter from the front and be encouraged to walk to the
back of the store. This increases the amount of time that the customers spend in the store and
boosts the chances that they will buy more product.
• Eye level. The layout must place products at the proper eye level, which will help improve sales.
Different products must be placed on the eye level of their target customers. For instance, an
adult tennis racket must be placed at the adult’s eye level while a children’s toy must be placed
at a child's eye level.
• Display cases. The layout must strategically place display cases in the retail store since they act as
a countertop customer interaction area. For instance, if a customer sees a watch he likes in a
lighted display case, then the sales associate can quickly pull the watch out to show the customer.
Another function of a display case is that they can be placed near the cash register area and act
as another impulse buy area for customers.

Figure 2. Retail Layout

Source: https://thenewdaily.com

Warehouse Layout
The objective of warehouse layout is to find the optimum trade-off between handling cost and costs
associated with warehouse space. The following are the principles associated with warehouse layout:

• Movement. The layout must provide an uninterrupted movement of materials, people, and traffic
within the building. Facility design managers must cut down on any areas of high traffic or
potential for cross-flow crashes. The layout must position activities that an employee performs to
the area of the activity that precedes it and proceeds after it. This also means materials used to
perform those activities should be situated as close as possible to each workstation. Ultimately,
managers must eliminate as much movement and disruption as possible.

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• Accessibility. The layout must position all products on pallets or transport structures accessible
by everyone without the need to move one product to get to another. This means structuring the
pallet racks in rows that are wide enough to accommodate jacks, trucks, and other related items.
• Space. The layout must take into consideration sufficient provisions for storage, stock, offices,
working areas, and empty pallet storage among others.

Figure 3. Warehouse Layout

Source: https://www.interlakemecalux.com

Fixed-Position Layout
In a fixed-position layout, personnel, supplies, and equipment are brought to the site where the product
will be assembled, rather than the product being moved through an assembly line or set of assembly
stations. Examples of projects that involve fixed-position layout are construction of ships, bridges,
highways, and houses among others. The following are the different versions of a fixed-position layout:

• Product version. A house built through the traditional practices of fixed-position layout would be
constructed on site with equipment, materials, and workers brought to the site.
• Service version. An operating room is the service example of fixed-position layout wherein the
patient remains stationary on the table or bed, and medical personnel along with the equipment
are brought to the site.

Process-Oriented Layout
A process-oriented layout can simultaneously handle a wide variety of products or services. The following
are the advantages of process-oriented layouts:

• Flexibility. Process-oriented layout can handle a variety of processing requirements, which

facilitate efficient operation.

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• Lower cost. Process-oriented machines are less costly to purchase and easier to maintain than
specialized equipment.
• System protection. Process-oriented machines are not particularly vulnerable to equipment
failures because a wide variety of machines are available in this type of layout.

The following are the disadvantages of process-oriented layouts:

• Utilization. The machines used in process-oriented layout are dependent upon a variety of output
requirements, which is the reason why equipment utilization rates in process layout are
frequently very low.
• Confusion. The machines used in process-oriented layout requires complex scheduling, which
makes juggling process requirements more difficult.

Work Cell Layout

Cellular work arrangement warrants a special arrangement of machinery and equipment. These work cells
are reconfigured as designs of the products change and volume of production fluctuates. The following
are the advantages of work cells:

• Reduced work-in-process inventory since it provides a single flow from one machine to another;
• Less floor space required since fewer provisions are needed between machines to accommodate
work-in-process inventory;
• Reduced raw materials and finished goods inventories since less work-in-process allows rapid
movement of materials through work cells;
• Reduced direct labor cost since work cells encourages improvement in communication among
employees, better material flow, and improved scheduling; and
• Reduced investment in machinery and equipment since efficient utilization reduces the required
number of machines in the production.

Product-Oriented Layout
Product-oriented layouts are organized around products or families with similar high-volume and low-
variety of production. Repetitive or continuous production normally uses a product-oriented layout. The
following are the underlying assumptions of product-oriented layout:
• Volume is adequate for high equipment utilization.
• Product demand is stable enough to justify high investment in specialized equipment.
• Product is standardized or approaching a phase of its life cycle that justifies investment in
specialized equipment.
• Supplies of raw materials and components are adequate and of uniform quality to ensure that
they will work with the specialized equipment.

The following are the types of product-oriented layout:

• Fabrication line. This builds components such as automobile tires or metal parts on a series of
machine.
• Assembly line. This places the fabricated parts or built components on a series of workstations.

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Designing Layouts
The following are the ways to effectively and efficiently decide the best layout for flow of product or
process:
• Line Balancing. This is the process of assigning tasks to workstations in such a way that the
workstations have approximately equal time requirements. It involves determining the minimum
and maximum cycle time.
ILLUSTRATION: Suppose that the work required to fabricate a certain product can be divided into
five (5) elemental tasks, with the task times and precedence relationships as shown in the
following diagram:

Figure 4. Line balancing

Source: Operations Management, 2012, p. 260

KEY POINTS: The task times govern the range of possible cycle times. The minimum cycle time is
equal to the longest task time (1.0 minute), and the maximum cycle time is equal to the sum of
the task times (0.1 + 0.7 +1.0 + 0.5 + 0.2 = 2.5 minutes).

• Parallel Workstations. This is a way in designing product layout wherein processes needed to
create a product are introduced thru boxes that include the duration process. The objective of
this technique is to identify the process that creates traffic or bottleneck in order to create a
parallel process that minimizes the effect of the identified bottleneck.
ILLUSTRATION: A job has four (4) tasks with duration of one (1) minute, one (1) minute, two (2)
minutes, and one (1) minute, consecutively. The cycle time or the time needed to finish a single
product for the line is two (2) minutes, and the output rate would be 30 units per hour. The
following diagram illustrates the process layout using duration boxes:

Figure 5. Workstations with bottleneck

Source: Operations Management, 2012, p. 266

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Figure 6. Parallel workstations with minimized bottleneck

Source: Operations Management, 2012, p. 266

KEY POINTS: Figure 5 illustrates the workstation with identified bottleneck, whereas, Figure 6
illustrates a parallel workstation that minimizes the bottleneck of operation and produces a
greater number of outputs.

• Systematic Layout Planning (SLP). This qualitatively assesses the desired closeness between
departments or workstations to ideally set up the facility or the layout according to the proximity
preferences for all stations involved. SLP codes denote the desired closeness according to the
relative strength of the closeness each station to one another in a grid.
ILLUSTRATION: The following are the ratings of closeness employed by XYZ, Inc.:

Figure 7. Closeness ratings

Source: Operations Management, 2012, p. 270

KEY POINTS: The illustration simply reflects the required degree of departmental proximity to
efficiently facilitate the operations of XYZ, Inc.

References
AccountLearning. (n.d.). Introduction to office layout. Retrieved on February 7, 2019, from https://fmlink.com/articles/the-
facility-managers-role-in-real-estate-management/
Atkin, B. & Brooks, A. (2015). Total facilities management (4th ed.). United Kingdom: John Wiley & Sons, Ltd.
DearSystems. (2018). 4 tips on how to effectively plan a warehouse layout design. Retrieved on February 7, 2019, from
https://dearsystems.com/warehouse-layout-design/
Heizer, J. (2011). Operations management: Global edition (10th ed.). United States: Pearson.
Root, G. (n.d.). Retail layout strategies. Retrieved on February 7, 2019, from https://smallbusiness.chron.com/retail-layout-
strategies-11464.html

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