This was a presentation done team-wise in Manipal as part of our MBA assignments. The subject name was Operations Management and the presentation topics were different types of layouts. Our team got the topic Process Layout.
2. PRODUCT-PROCESS MATRIX
Jumbled flow
(Job shop)
Disconnected
line flow (Batch)
Connected line
flow (Assembly
Line)
Continuous flow
Low volume,
Low
standardization
Low volume,
Multiple
products
Higher volume,
Few major
products
High volume,
High
standardization
Oil refinery
Automobile
assembly
Heavy
equipment
Parts of a
machine
Rarely any
company
Rarely any
company
PROCESS
LAYOUT
3. PROCESS LAYOUT
• Process – Transforming input to output
• Layout – Configuration of departments, work
centers and equipment.
4. FEATURES
• Wide variety
• Highly customizable
• Less automation
• More manual labor
• Low volume
• Make to Order
• Demand is low and can fluctuate a lot
5. FEATURES
• More of general equipment
• Fixed costs are low, variable costs are high
• Labor skills required are varied – expertise
• Estimation of cost & time of a custom order
takes time.
• Less finished goods stock
6. WHAT DOES A PROCESS LAYOUT LOOK
LIKE
Process Layout - work travels
to dedicated process centers
Milling
Assembly
& Test
Grinding
Drilling Plating
8. WHAT DOES A PROCESS LAYOUT LOOK
LIKE
Process Layout - work travels
to dedicated process centers
Milling
Assembly
& Test
Grinding
Drilling Plating
9. ADVANTAGES OF PROCESS LAYOUT
• Flexibility
• Variety
• Creativity
• More visual control of activities
• More communication and interaction
between peers and supervisors
• High production volume elasticity
• Low obsolescence
10. ISSUES WITH PROCESS LAYOUT
• Managing ergonomics
• Performance evaluation of staff can be difficult
• Measuring efficiency is difficult
• Low capacity utilization
• Can’t enjoy economies of scale
• Can have high WIP
• Managing the supply chain can be a difficult task
12. DESIGNING A PROCESS LAYOUT
STEP 2
Relationship Chart/ Muther’s Grid
A – Absolutely
necessary
E – Especially
important
I – Important
O – Okay
U – Unimportant
X -Undesirable
13. • CRAFT
- Computerized
- Relative
- Allocation of
- Facilities
- Technique
DESIGNING A PROCESS LAYOUT
STEP 3
Notes de l'éditeur
In order to understand the different layouts, firstly, it’s necessary to understand the Product-Process matrix. Basically, it shows the relationship between different product structures and process structures. Let’s look at them 1 by 1. 1.Jumbled flow, Low volume. This is the kind of processes which are not heavily mechanized and they require a lot of skilled labor. The products here have low volume and high variety. Example: Tailors and Emergency rooms in a hospital. 2. This refers to a process system where goods are produced in batches. The products here are of low volume and lesser variety than the 1st stage and there can be multiple products in this stage. Example : A paint manufacturing company. 3. This is the kind of process which uses an assembly line. Here the volume is very high and there are less specializations. In this process structure, human intervention is possible. Example: Car manufacturing assembly line. 4. This refers to the highly automated production centers where there is a continuous flow process system. The production here is done in high volumes and there is perfect homogeneity between products. Examples are Oil refineries, Sugar refineries, Steel mills and Water purification companies. These 2 areas here are not viable for any company. For a company which manufactures in high volumes, the job shop design will not be useful. Also, a company which has production in low volume and high variety, a continuous flow which is highly automated is not viable. So there are different layouts for different structures, the one we have been assigned is the Process Layout which has the Low volume high variety products and a Jumbled flow design.
What do these words mean, Process Layout? Let’s break this down into 2 and understand what it is. As we learned in module 3, Process is the set of activities performed by an organization that takes inputs and transforms them into outputs, ideally of greater value to the organization than the original inputs. Layout is the configuration of departments, work centers and equipment. So combining these 2, we understand that Process Layout is the Layout of departments, work centers, equipments, etc. according to the different processes of a firm, mainly used by production units which produce highly customizable products, and by service industries that provide unique services. Process Layout is also known as Functional Layout.
Wide variety – As the process layout is made with a focus on different processes and high manual labor, there’s a wide variety of products and services made possible with the process layout.
Highly customizable – Since the process layout doesn’t require heavy machinery, nor a sequential arrangement of the facility, it’s highly customizable.
Less automation – Automation can be done only for repetitive tasks which is quite uncommon and mainly unpredictable in process layouts.
More manual labor – Going in line with the previous point, more variety and a high level of customization calls for more manual labor.
Low volume – Firms which have the process layout do not focus primarily on high volumes nor are their products capable of being produced in an assembly line.
Make to order – As mentioned before, process layout focuses on customizable products. Hence, its process type is Make-to-Order.
Demand is low and can fluctuate a lot – The demand forecasting for a process layout can prove difficult because of the nature of its products. These are not everyday products or everyday services. Seasons, tastes and preferences etc. can heavily affect demand for these products.
More of general equipment – There is less requirement of specific machines for specific tasks. Even if there are, generally they are human-assisted and can be programmed for different product requirements.
Fixed costs are low, variable costs are high – The fixed costs are low as the initial investment is low, the investment in heavy machinery is low etc. But a process layout concentrates more on unique products and processes. Hence, the per unit cost can increase, which will cause the variable costs to go up.
Labor skills required are high and varied – The process layout requires staff who have varied skills and who have expertise in different processes.
Estimation of cost & time of a custom order takes time – This happens because of the nature of its products. Even if the cost can be predicted, the time widely varies between products.
Less finished goods stock – As the process layout is more of Make-to-Order than Make-to-Stock, there is less finished goods stock for the process layout.
This is what a process layout can look like. There are 5 processes here. If the same thing was an assembly line or a product layout, it would look like this.
First milling, then grinding, then plating, drilling and finally Assembly & Testing. There’s a sequence followed in the production and there’s very less variety possible.
One daily example with which we can understand the difference between process layout and product layout is this. When we go to any restaurant and we are given a menu, it means that we have choices. We can order anything, but not everything might be ready in the kitchen. They make to order. But at the same time, we can find Afghani or Pakistani bakeries here which only serve rotis and chapathis. They don’t Make-To-Order, they Make-To-Stock. There is a sequence that they follow in production. This is not there in Process Layout. In this diagram here, we can see 5 processes. In a process layout, any step can happen after any step. One order might require the product to go through Grinding, then Drilling and it might be complete. Another product might require going through Milling, then Plating and then Grinding. Yet another product might require going through Grinding, Plating and then again Grinding.
Flexibility - A process layout is very flexible both with its products and its in-house logistics. It can handle varied processing requirements.
Variety – A process layout doesn’t have a standard/ sequential product line and hence it can have more variety.
Creativity – In a process layout setup, the customers can talk directly to the manufacturer or the service provider and can tell them that they would like a certain product with certain specifications. If the firm has not processed such a request so far, this gives the opportunity for them to be creative.
More visual control of activities – Generally speaking, in a process layout, the processing does not require a huge area nor huge machinery. It’s more labor oriented. This helps to gain more visual control of activities.
More communication and interaction between peers and supervisors – A process layout encourages more communication as the activities are interlinked and actually good communication between peers and supervisors are an integral part.
High production volume elasticity – In a process layout, the production is neither done in batches or assembly lines or in a continuous manner. Hence production volume is generally not fixed beforehand. So this layout will be able to handle sudden surges in demand.
Low obsolescence – As discussed before, in process layout, the process type followed is Make-to-Order. This results in low obsolescence of stock as in most cases, the customer picks up the product as soon as it’s made.
Managing ergonomics – Where to place what machine. Machines or workstations which come under the same process head have to be placed together. Manpower also has to be placed accordingly. This is the main issue or the concern with Process Layout.
(A) Minimizing the time and cost of material handling &
(B)minimizing the in-house logistics time.
Performance evaluation of staff – Since the products are not standardized, nor the production process is standardized, it’ll be difficult to evaluate the performance of staff.
Measuring efficiency is difficult – Efficiency, as we have learnt, is the comparison of the actual performance to the standard performance. In a process layout, the products, or the services provided can’t be compared with one another. For example, it’s not possible to set the first quarter’s total machine time as a standard and set is as the efficient time of the machine for the next quarter.
Low capacity utilization – Utilization, as we learnt in module 3, is the ratio of the time that a resource is actually being used or activated relative to the time that it is available for use. It’ll be difficult to utilize the capacity of a human or machine to its maximum potential everyday in a process layout.
Can’t enjoy economies of scale – Economies of scale are enjoyed with increasing volumes of production. Since in a process layout, the production occurs on a small scale, it’s not possible to enjoy economies of scale.
Can have high WIP – The arrangement of machines and the variety of the products make it difficult for production to happen in a streamlined manner. Hence, there can be high Work In Progress.
Managing the supply chain can be a difficult task – This is because in Process Layout, the demand can’t be accurately estimated and the complexity of orders cannot be predicted. Also the machine hours and labor hours can’t be accurately forecasted.
Now we’re going to look at how to design a process layout or a job shop. There are 2 tools that we use. Firstly we use the From-To Chart. In its basic structure, it shows how many units are transferred from one department to another. It can be number of units, or number of trips, or time taken to move units etc. For example, here we can see that from Milling to Sawing, there’s 72 tons a day, from Drilling to Inspection there’s 40 tons a day and so on.
The next step is to develop a Relationship Chart, or Muther’s Grid. What this does is that it shows the proximity between 2 departments. Here, you can see that there are different departments listed and some letters. These letters are expanded in the legend on the right. For example, it’s absolutely necessary for the Stockroom and the Shipping&Receiving departments to be next to each other, but at the same time, it’s unimportant for the Stock room to be next to the locker room. Similarly, it’s Absolutely necessary for the Production department to be next to the Stockroom and also the Tool room, however it’s not very important that the Tool room sits next to the Offices.
Once this is done, both the inputs are fed into a computer layout program like CRAFT, which stands for Computerized Relative Allocation of Facilities Technique. This program will take these inputs and provide a layout solution.
