Facilities location selection in operations

Facilities location

1. FACILITIES LOCATION
REASONS FOR SELECTING PLANT LOCATION
•Setting up of new operations
•Expansion of existing plant
•Additional plants in different regions
•Change in social, economical,political condition
•New product / Process developments
•Market Conditions.
FACTORS GOVERNING PLANT SELECTION
•Regional factors -Region selection within world/country
•Community Factors -Plant location within Region
•Site factors -Site location within the community

2. PLANT LOCATION FACTORS
PROXIMITY TO MARKET
•Fragile product -(Glass) , Perishable product -(Food)
Faster deliveries required & Low cost products -(Paper)
Pure Materials ( Material where wt. Is added during conversion )
•Benefits -low transport cost, faster deliveries, Less
administrative market, Better liasoning with Dealers, avoidance of
Commissions to middlemen, Better control on A/C receivables
PROXIMITY TO RAW MATERIAL SOURCES
•Useful for Gross materials (Material which looses wt. During
transformation )
•Benefits -Low transport cost for R. M., Less lead time hence
low inventory cost and hence space cost, better follow up, easy
replacement of rejects and defectives.

3. PLANT LOCATION FACTORS
INFRASTRUCTURAL FACILITIES
•Availability of Power( Aluminium, Steel), water(Paper, Cement,
Steel, Sugar) disposal of waste (Chemical, Paper, Textiles).
TRANSPORT FACILITIES
•Proper transport facilities ( Rail, Road, Sea, Air), Transport cost,
Distance of shipment are important to be considered for site
selection.
LABOUR & WAGES
•Availability of labour
•Wage cost of labours and cost of living.
•Viscinity to the Training and Educational Institutes.
•Productivity & skills of labours
•Industrial relations in the region.

4. PLANT LOCATION FACTORS
LEGISLATION AND TAXATION
•Policies relating to issue of license,construction regulations,
labour laws etc. are important to consider.
•Tax benefits as to Incentives, loans, subsidies, trade agreements
become important for site selection.
CLIMATIC CONDITIONS
•Certain industries require specific conditions to be maintained
( Textile -High Humidity)
SAFETY REQUIREMENTS
•Nuclear Power Plants
•Explosive Factories

5. PLANT LOCATION FACTORS
COMMUNITY FACILITIES
•This includes Accommodation, educational,entertainment,
communication, medical, entertainment and transport facilities.
COMMUNITY ATTITUDE
•Towards work, incoming entrepreneurs.
SUPPORTING INDUSTRIES & SERVICES
•Maintenance Services, Utility Services, sub-contractors,
suppliers of essential parts/materials etc. form backbone of the
Industry.
AVAILABILITY OF THE LAND
•Plot size ( for production, parking, movement, office,expansion )
•Plot cost
•soil quality for load bearing.

6. ECONOMIC SURVEY
•Prepare list of all relevant factors
•Estimate expenses on materials, transport, wages,
power etc. for each location
•Collect data on intangibles such as community
facilities and attitude.
•Calculate ROI.
•Select provisionally a location based on this.
•Compare the intangible data and select the location
considering tangible and intangible data.

7. SITE SELECTION
ITEM ( ANNUAL ) SITE
A B C
Total Investment ( Rs. Mn.) 250 315 250
Total sales ( Rs. Mn.) 340 390 350
Expenses on Material ( Rs. Mn.) 85 100 120
Expenses on Distribution ( Rs. Mn.) 50 50 80
Expenses on Utilities ( Rs. Mn.) 50 40 25
Salaries and Wages ( Rs. Mn.) 25 30 25
community facilities POOR GOOD BAD
Community Attitudes INDIFFERENT GOODINDIFFERENT

8. SITE SELECTION
ITEM ( ANNUAL ) SITE
A B C
Total Investment ( Rs. Mn.) 250 315 250
Total sales ( Rs. Mn.) 340 390 350
Expenses on Material ( Rs. Mn.) 85 100 120
Expenses on Distribution ( Rs. Mn.) 50 50 80
Expenses on Utilities ( Rs. Mn.) 50 40 25
Salaries and Wages ( Rs. Mn.) 25 30 25
Total Expenses 210 220 250
Rate of Return 52% 54% 40%

9. URBAN VS. RURAL SITES
URBAN
•Proximity to market reducing
cost of distribution.
•Adequate availability of
skilled labour
•Good transport facilities
•Good social, educational,
recreational & medical
facilities
•High cost of land and scarcity
of land.
•Restrictions on construction
•Good communication
facilities
•Good public transport
available for employees
RURAL
•Away from market hence
high distribution cost
•Difficult to get skilled labour
•Non-availability of adequate
transport facilities
•Availability of fewer social,
educational, medical &
recreational facilities.
•Sufficient land at reasonable
cost.
•Few restrictions
•Inadequate communication
facilities.
•Inadequate Public transport

10. URBAN VS. RURAL SITES
URBAN
•Adequate fire fighting
facility
•High salaries & wages
•High cost of living
•Strong trade union
•High efforts required for
pollution control
•More health problems due to
environment
•availability of Training
schools reduces internal
training needs.
•Higher employee turnover
due to higher demand
•Proximity to supporting
industries and services.
•Lot of Govt. Restrictions
RURAL
•Inadequate fire fighting
arrangements.
•Low wage cost
•Lower cost of living
•Better labour relations.
•Lesser efforts for anti-
pollution
•Good for worker’s health
•Necessary to provide internal
training
•Stability of employees
•Absence of supporting
industries and services
•Lot of Govt. Incentives

11. PLANT LAYOUT
“Act of planning an optimum arrangement of facilities including
personal, operating equipment, material handling equipment and
all other supporting services along with the design of the best
structure to contain these facilities.”
“Placing of right equipment with right method in the right place to
permit the processing of a product in the most effective manner
through the shortest possible distance and through the shortest
possible time.”
Reasons for layout problem
•Decision to build new plant or re layout due to new machines.
•Introduction of new product or new process.
•Withdrawal of obsolete facilities.
•Adoption of new safety standards
•Overcoming the deficiencies of the existing layout.

12. OBJECTIVE OF GOOD LAYOUT
•Economy in handling of materials
•Minimisation of production delays
•Minimum manufacturing cycle time.
•Efficient utilisation of space
•Easy supervision & better production control.
•Greater flexibility for product , design & process changes.
•Better working condition by eliminating causes of excessive
noise, objectionable odour, smoke.
•Better comfort and convenience for handling and operating.
•Ensure safe working conditions.
•Minimum wastages and scrap.

13. PRINCIPLES OF GOOD LAYOUT
•Overall integration of factors
–men, material, machines, and supporting activities in a way
that best compromise is obtained.
•Minimum movement & handling
–Plant & machinery should be arranged as per sequence of
operations in case of product layout.
–Departments should be arranged as per sequence of operations
in case of process layout.
–As far as possible men and material should be made to move
in straight line.
–A door may be made in a wall or a hole may be drilled in a
ceiling if that eliminates or reduces matl. Handling in place of
stairs or a distant door.
–Material to be kept at working height.

14. PRINCIPLES OF GOOD LAYOUT
•Uni-directional flow -
–Materials must flow in straight line or if that is not possible,
U-shaped flow, circular flow or zig-zag flow may be adopted
for flow in forward direction only.
•Effective use of available space
–R.M., WIP, F.G., should be piled vertically.
–Back tracking and duplicated movements should be avoided.
–Pallets & racks etc. should be used for piling layers one above
another.
–Area below the work tables and in walls should be used
effectively.

15. 1 2 3 4 5 6
2
3
4
5
6
71
STRAIGHT LINE ARRANGEMENT
CIRCULAR ARRANGEMENT

16. 31 2
56 4
1 2
3 4
5
6
ZIG-ZAG ARRANGEMENT
U-SHAPED ARRANGEMENT

17. PRINCIPLES OF GOOD LAYOUT
•Maximum visibility
–All the men, machines and material should be readily
observable at all times.
–All the departments should be easy to supervise.
–Every piece of positioning or partitioning should be properly
planned.
–Special cupboards,enclosures, offices, partitions should be
avoided.
•Maximum Accessibility
–All servicing, operating & maintenance points should be
readily accessible.
–Sufficient gap betn. Machines & clearance from walls, pillars
for maintenance.

18. PRINCIPLES OF GOOD LAYOUT
•Inherent Safety
Aisles should be clearly marked and kept free from obstruction.
Aisles should be located such that workers do not have to walk
near the chemical, heat or moving machines.
Picking up and putting down of materials must be reduced.
Material handling equipments should have location where they
do not endanger machines or workmen.
Fire protection points should be located at strategic locations.
All the areas should be well lit.
One way traffic rule may be followed for areas of greater traffic.
The work place should be free from disagreeable elements like
smoke,dust,fumes,heat etc.
Height ( of work place & ceiling ) should be appropriate for
working.

19. PRINCIPLES OF GOOD LAYOUT
•Maximum Flexibility
–Future requirements should be taken into consideration while
designing for future.
–Each machine must be self contained in terms of lubrication,
cooling,lighting and air system.
–Multipurpose machines give more flexibility than SPM’s
–Process layout is more flexible than product layout.
–Standardisation of tools & equipments give better flexibility.
•Maximum security
–A good layout is one that safeguards the plant and machinery
against fire,theft etc. without employing too many
cages,doors, barriers.

20. PROCESS LAYOUT
PRODUCT A PRODUCT B PRODUCT C
WELDING DRILLING MACHINES LATHES
GRINDING MACHINES GEAR SHAPER MILLING
PRESSES HEAT TREATMENT PAINT
ASSEMBLY

21. PROCESS LAYOUT
•Generally associated with batch production.
•The factory is divided into process units/departments with all
similar facilities are grouped together.
•This layout is suitable when products are non-standard or there is
wide variation in the processing time of individual operations.
►ADVANTAGES
▪Lower investment due to less number general purpose machines.
▪Higher utilisation of machines.
▪Greater flexibility in regards to allocation of job and workers.
▪Manufacturing is not disturbed to a large extent due to
absenteeism, breakdown or non availability of certain material.
▪Workers skill increases due to repetition of work.

22. PROCESS LAYOUT
▪Disruption in one section doesn’t disturb working in other
section
▪Sequence can be flexible.
►DISADVANTAGES
▪Higher space requirement due to more sections.
▪Material handling is higher and cannot be mechanised due to
higher variety.
▪Higher WIP due to queuing due to imbalances.
▪Routing and scheduling is difficult due to different operating
sequence.
▪Inspection is required at each stage resulting in delays.
▪Higher set up time and cost.

23. PRODUCT LAYOUT
•The layout is such that material flows sequentially at a steady
rate uni directionally.
•SPM’s with built in controls and measuring equipments are
employed.
•The equipments may be duplicated to avoid back tracking.
•Suitable for standard products required to be produced in large
quantities.
•Demand pattern is fairly stable.
•Processing times of individual operations are balanced.
•Uninterrupted supply of material is maintained.
►ADVANTAGES
▪Smaller manufacturing cycle hence less WIP
▪Minimum material handling.
▪Less space required due to less and mechanised material
handling.

24. PRODUCT LAYOUT
•Lower labour cost due to higher mechanisation.
•SQC practices used to control process quality.
•Better production control due to lesser product variety.
•Better control on delivery schedules.
•Easier material planning.
►DISADVANTAGES
▪Product changes result in layout changes.
▪All machines may not be used to their full capacity.
▪Manufacturing cost heavily depends on the volumes. Due to
high fixed cost.
▪Breakdown of one machine renders other machines idle.
▪Expansion becomes difficult.
▪Specialised jobs makes it difficult for the workers to find job in
other industries.

25. PRODUCT LAYOUT
LATHES DRILLING MILLING
GEAR SHAPER GRINDING DRILLING
DEBURRING LATHES DEBURRING
HEAT TREATMENT MILLING PRESSING
GRINDING DEBURRING WELDING
ASSEMBLY

26. PRODUCT Vs PROCESS LAYOUT
•Plant Investment:Higher for product layout as SPM’s are used
and balancing of production line is required.
•Space Requirement :Process layout requires more space to
keep the jobs which queue up before each machine and to
accumulate jobs until they are moved to the next work station.
•Manufacturing Time :Lower cycle time in product layout as
the line is balanced.
•Material Handling :Higher material handling in process layout
due to discontinuous process and higher distances from one
operation to other and less mechanisation.
•Flexibility :Higher flexibility for new products in process
layout.
•Adaptability to absenteeism/breakdown/shortage :More
flexibility in scheduling in process layout.

27. PRODUCT Vs PROCESS LAYOUT
•Production Control :In product type layout , materials control
is crucial, process planning and tools control is mostly absent.
Scheduling, progressing and expediting is highly simplified.
In process control ,tool control function is elaborate. Loading
and scheduling charts need to be prepared for each machine.
Progress cards for each item needs to be updated every day.
•Inspection :In process layout, required to be done at each stage.
The rejections require re-routing. Product layout requires only at
some critical points.
•Skill of Labour :Usually higher in process type of layout.
•Supervision :More critical in process layout.
•Cost :Higher variable cost for process layout but lower fixed
cost.