Plant location and Layout

Plant Location and Layout

1. Plant Location Anurag Verma

2. Meaning of P lant Location Plant location is to the choice of region and the arrangement of a particular site for setting up a business or factory. But the selection is made only after deciding the cost and the benefits of various alternative locations. It is a automatic decision that cannot be changed once accepted. If at all changed only at decided loss, the location should be choice as per its own needs and circumstances. Each separated plant is a case in itself. Businessman should decide to make an attempt for original or ideal location.

3. Importance of Plant Location Location of plant partially determines operating and capital cost. Each prospective location implies a new allocation of capacity to respective market area. Location fixes some of the physical factors of the overall plant design. Govt., some times plays an important role in the choice of the location keeping in view the national benefits.

4. Localisation Clusterization or concentration of similar type of industries at some particular place is know as localisation.

5. Delocalisation Delocalisation and Decentralisation is an indication that there are many good location for many industries. It take place due to: 1) Development of large national market. 2) Various incentives and concession in tax, building, land etc. Given by urban and rural communities to encourage establishment of industries in their areas. 3) Many times decentralization leads to better co-ordination, improvement supply of labour and raw material and better distribution of products. 4) Balanced regional development.

6. Factor Responsible for Plant Location Natural or climatic conditions. Availability and nearness to the sources of raw material. Transport costs-in obtaining raw material and also distribution or marketing finished products to the ultimate users. Access to market: small businesses in retail or wholesale or services should be located within the vicinity of densely populated areas Availability of Infrastructural facilities such as developed industrial sheds or sites, link roads, nearness to railway stations, airports or sea ports, availability of electricity, water, public utilities, and means of communication are important, especially for small scale businesses.

7. Cont.... Availability of skilled and non-skilled labor and technically qualified and trained managers. Banking and financial institutions are located nearby. Locations with links: to develop industrial areas or business centers result in savings and cost reductions in transport overheads, miscellaneous expenses. Strategic considerations of safety and security should be given due importance. Government influences: Both positive and negative incentives to motivate an entrepreneur to choose a particular location are made available. Positive includes cheap overhead facilities like electricity, banking transport, tax relief, subsidies and liberalization. Negative incentives are in form of restrictions for setting up industries in urban areas for reasons of pollution control and decentralization of industries. Residence of small business entrepreneurs want to set up nearby their homelands

8. LOCATIONAL ANALYSIS Location analysis is a dynamic process where entrepreneur analyses and compares the appropriateness or otherwise of alternative sites with the aim of selecting the best site for a given enterprise. It consists the following: 1)Demographic Analysis: It involves study of population in the area in terms of total population (in no.), age composition, per capita income, educational level, occupational structure etc. 2)Trade Area Analysis: It is an analysis of the geographic area that provides continued clientele to the firm. He would also see the feasibility of accessing the trade area from alternative sites.

9. 3) Competitive Analysis: It helps to judge the nature, location, size and quality of competition in a given trade area. 4) T raffic analysis: To have a rough idea about the number of potential customers passing by the proposed site during the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of pedestrian and vehicular traffic passing a site. 5) Site economics: Alternative sites are evaluated in terms of establishment costs and operational costs under this. Costs of establishment is basically cost incurred for permanent physical facilities but operational costs are incurred for running business on day to day basis, they are also called as running costs .

10. Two sites A and B are evaluated in terms of above mentioned two costs as follows: Comparative costs of Alternative Location

11. The above cost statement indicates that site B is preferable to site A keeping in mind economic considerations only although in some respects site A has lower costs. By applying the definition of ideal location which is the place of maximum net advantage or which gives lowest unit cost of production and distribution, site B would be preferred.

12. PLANT LAYOUT

13. MEANING OF PLANT LAYOUT Plant layout is the arrangement of machines, work areas and service areas within a factory.

14. Definition of Plant Layout George R. Terry. Plant layout involves the development of physical relationship among building, equipment and production operations, which will enable the manufacturing process to be carried on efficiently.

15. Stages of Plant Layout Analysis of product and process operations. First conducted research on what products are produced., and how the process of operation. Determination of the number of machines and the area required to implement operations. Determination of the desired type of layout is appropriate to your product produced. Determination of work flow and the flow of materials, both raw materials and ingredients in process that is waiting for the next operation. Determination of the factory area and executive departments of the operation. The plan details the selected layout

16. Objectives of Plant Layout To achieve economies in handling of raw materials, work in- progress and finished goods. To reduce the quantum of work-in-progress. To have most effective and optimum utilization of available floor space. To minimize bottlenecks and obstacles in various production processes thereby avoiding the accumulation of work at important points. To introduce system of production control. To ensure means of safety and provision of amenities to the workers.

17. Cont... To provide better quality products at lesser costs to the consumers. To ensure loyalty of workers and improving their morale. To minimize the possibility of accidents. To provide for adequate storage and packing facilities. workout possibilities of future expansion of the plant. To provide such a layout which permits meeting of competitive costs?

18. ADVANTAGES OF A GOOD LAYOUT ADVANTAGES OF LAYOUT TO WORKER 1. Reduction in the effort of the worker. 2. Fewer material handling operations. 3. Extension of the process of specialization. 4. Ensuring maximum efficiency. 5. Better working condition and reduction in the number of accidents.

19. B.ADVANTAGES OF LAYOUT IN LABOUR COSTS 1. Reduction in the number of workers. 2. Increase in production per-man-hour. 3. Reduction in the length of haul. 4. Minimum lost motions between operations.

20. C. ADVANTAGES OF LAYOUT IN OTHER MANUFACTURING COSTS 1. Maintenance and tool replacement costs are reduced. 2. Spoilage and scrap is minimized. 3. Greater saving in the waste of raw material consumption. 4. Improved quality of product due to reduction in the number of handling. 5. Saving motive power. 6. Effective cost control.

21. D. ADVANTAGES OF LAYOUT IN PRODUCTION CONTROL 1. Provision of adequate and convenient storage facilities. 2. Better conditions for receipts, shipment and delivery. 3. Increased pace for production. 4. Achievement of production targets unfailingly. 5. Reduction in the number of stock-chasers who are employed to get the work done on time.

22. Types of Plant Layout There are three main types of plant layout: 1) Functional or Process layout 2) Product or line layout 3) Stationary layout

23. Functional or Process layout It is also known as the functional layout and is characterized by keeping similar machines or similar operations at one location (place). In other words, separate departments are establishing for each specializes operation of production and machines relating to that functions are assembled there. For example,  all lathe machines will be in one place, all milling machines at another and so on. This type of layout generally employs for industries engage in job order production and non-standardized products.

24. Advantage of Process Layout Ensures smooth and regular flow of material and finished goods. Provides economy in materials and labour by minimising waste. Short processing time. Reduces material handling. Low cost labour procurement and lesser training. Lesser inspection. Easy production control.

25. Disadvantages Product layout is of inflexible nature. Vulnerability to production line shut down. Supervision is more difficult. Require heavy capital investment.

26. Product Or Line Layout It is also known as line (type) layout. It implies that various operations on a product are performed in a sequence and the machines are placed along the product flow line i.e. machines are arranged in the sequence in which a given product will operate upon. This type of layout prefers for continuous production i.e. involving a continuous flow of in-process material towards the finished product stage.

27. Advantages of Product Layout: Product completes in lesser time. Since materials are fed at one end of the layout and the finished product collects at the other end, there is no transportation of raw materials backward and forward. It shortens the manufacturing time because it does not require any time-consuming interval transportation until the completion of the process of production. Line balancing may eliminate idle capacity. The smooth and continuous flow of work. This plan ensures a steady flow of production with the economy because bottlenecks or stoppage of work at different points of production is got to eliminate or avoid due to the proper arrangement of machines in sequence. Less in-process Inventory. The semi-finished product or work-in-progress is the minimum and negligible under this type of layout because the process of production is direct and uninterrupted. Effective quality control with reduced inspection points. It does not require frequent changes in machine set-up. Since the production process integrates and continuous, Defective practice can easily discover and segregate. This makes inspection easy and economical. Maximum use of space due to straight production flow and reduced need for interim storing.

28. Disadvantages of Product Layout: Since the specific product determines the layout, a change in product involves major changes in layout and thus the layout flexibility considerably reduces. The pace or rate of working depends upon the output rate of the slowest machine. This involves excessive idle time for other machines if the production line does not adequately balance. Machines being scattered along the line, more machines of each type have to purchase for helping a few as stand by, because if one machine in the line fails, it may lead to shut down of the complete production line. It is difficult to increase production beyond the capacities of the production lines. As the entire production is the result of the joint efforts of all operations in the line, it is difficult to implement individual incentive schemes. Since there are no separate departments for various types of work, supervision is also difficult. Under this system, labor cost is high.

29. Stationary Layout The manufacturing operations require the movements of men, machines, and materials, in the product layout and process layout generally the machines are fixed installations and the operators are static in terms of their specified work stations. It is only the materials which move from operation to operation for processing. But where the product is large in size and heavy in weight, it tends to be static e.g. shipbuilding. In such a production system, the product remains static and men and machines move to perform the operations on the product.

30. Advantages Of Stationary Layout Flexible:  This layout is fully flexible and is capable of absorbing any sort of change in product and process. The project can complete according to the needs of the customers and as per their specification. Lower labor cost:  People are drawn from functional departments. They move back to their respective departments as soon as the work is over. This is economical if several orders are at hand and each one is in a different stage of progress. Besides, one or two workers can assign to a project from start to finish. Thus it reduces labor cost. Saving in time:  The sequence of operations can change if some materials do not arrive or if some people are absent. Since the job assignment is so long, different sets of people operate simultaneously on the same assignment doing different operations. Other benefits:  They are; 1) It requires less floor space because machines and equipment are in moving position and there is no need for fixing them. 2) This arrangement is the most suitable way of assembling large and heavy products.

31. Disadvantages Of Stationary Layout Higher capital investment:  Compared to the product or process layout, capital investment is higher in this type of layout. Since several assignments are taking, investment in materials, men, and machines makes at a higher cost. Unsuitability:  This type of layout is not suitable for manufacturing or assembling small products in large quantities. It is suitable only in the case where the product is big or the assembling process is complex.

32. Techniques of Plant Layout Some of the important techniques of plant layout are : ( a) Process chart: It is a graph containing details regarding various activities and operations taking place in the organization from start to the last stage of the work . (b) Process flow diagram: This is an aid to process chart. This relates to details regarding position of machines, area covered by each machine, internal transportation and other operations pertaining to production. This model diagram is prepared on the paper.

33. (c) Templates: The area covered by a machine is cut to scale from a thick paper to form a template. Not only machines but space covered by furniture, equipment and other components can also form a template. These can be well arranged representing the actual plan of layout to be undertaken. (d) Models: Three dimensional wooden models of machinery, equipment and other devices and components can be prepared. By seeing these models even a layman can form an idea about the layout of the plant. But this technique is very costly and only big concern can afford to install such a measure. (e) Drawings: Layout drawings can be got prepared by drafts men showing walls, stairways, machines and equipment etc . (f) Machine data card: These cards are tied with different machines operating in the plant. These obtain valuable information regarding various salient features or characteristics of machines viz., efficiency, capacity space area covered by the machine and technique of operating the machine etc.

34. Features of Good Layout Efficient space utilization Flexibility Accessibility Economy in handling Minimum movement Ensuring Co-ordination Visibility Reduced discomfort Preservation of materials and equipment