Operations Management:

PLANT LOCATION

AND

PLANT LAYOUT

-Vineet. M. Ganvi. JKITM

PLANT LOCATION

PART - I

Introduction

Plant Location is the geographic coordinates of a plant or facility. It basically refers to the place of existence or the address of the plant. Plant locations decisions concern both manufacturing/assembly units as well as service organisations. Ideal plant location is very important for business houses to carry out their business smoothly and profitably. Plant location decisions being strategic, long term and non repetitive, requires detailed analysis of long term consequences. Location decisions of large projects often involve economists, geographers, town planners, accountants, lawyers, marketing experts, politicians, executives, defense analysts, ecologists, etc. Therefore such an important decision should be taken with care and responsibility.

Reasons for making Locational Decisions

Locational decisions generally arise when:

• a new manufacturing or service unit is to be set up.• existing plant operations are difficult to expand due to poor

selection of the site earlier• the growth of business makes it advisable to establish

additional facilities in new territories• there is emergence of new social, political or economic

condition suggesting a change in the location of the plant• the product developments have outweighed the advantages

of the existing plant• certain GOVT. policies relating to industry, decentralization,

dispersal to achieve overall development of the country, do not permit expansion of existing plant

Factors influencing Plant Location Selection

Regional factors

• Proximity to Markets

• Proximity to Raw-materials

• Infrastructural facility

• Transportation facility

• Labour and wages• Legislation and

taxation• Climatic condition

Community factors

• Industrial and Labour attitudes

• Safety requirements

• Community facilities• Community

attitudes

Site factors

• Supporting industries and services

• Availability of land• Cost of land• Suitability of land

Regional Factors

• Proximity to Markets• Proximity to Raw-materials• Infrastructural facility• Transportation facility• Labour and wages• Legislation and taxation• Climatic condition

Community Factors

• Industrial and labour attitudes• Safety requirements• Community facilities• Community attitudes

Site Factors

• Supporting industries and services• Availability of land• Cost of land• Suitability of land

Process of Selection of Plant Location

An ideal location is one where the cost of obtaining materials and processing them into finished products, plus the cost of distributing the finished product to the customers is minimum.

One of the most commonly used approach is as follows: Step 1 : Prepare a list of all relevant factors. Step 2 : Estimate expenses on materials, transport, wages,

power, etc for each location based on the above factors. Step 3 : Collect data on intangible factors like Community

facilities & Community attitudes. Step 4 : Analyse the tangible data for each location and

calculate rate of return on investment.

Step 5 : Select provisionally a location based on financial data. Step 6 : Carefully compare the data for different locations and

select the optimal location based on tangible and intangible data.

Summary

Plant location decisions are thus important, strategic, long-term and non-repetitive decisions. Plant location depends on various factors, some concerned with general territory selection whereas some factors are relevant for community selection and site selection. Location decisions also take into account the merits and demerits of Urban and Rural areas. Poor location of the plant often involves higher cost of production, difficult marketing and transportation, disturbances in production and overall decline in Profitability.

PLANT LAYOUT

PART - II

Introduction

Plant layout is the disposition of various facilities and services of the plant within the area of the site selected previously. The work of the plant layout begins with the location of the work centre. Plant layout thus involves the determination of the space requirement for the facilities and arranging them in a manner that causes steady flow of production with minimum overall cost. Thus Plant Layout is the placing of right equipment coupled 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.

According to Moore,” plant layout is the plan of or the act of planning an optimum arrangement of facilities, including personnel, operating equipment, storage space, material handling equipment and all other supporting services along with the design of the best structure to contain these facilities”

Reasons for Carrying out Analysis for

Plant Layout

• decision to build a new plant• re-layout of facilities to meet changes in demand

(addition of machines)• introduction of new product• withdrawal of obsolete facilities• changes in production design• adoption of new safety standards• overcoming the deficiencies of the existing layout

Objectives of a Good Plant Layout

• Minimize handling of materials, WIP and finished goods

• Minimisation of production delays• Lesser WIP and minimum manufacturing Cycle Time• Efficient utilization of available space• Easy supervision and better production control• Greater flexibility for changes in production design

and for future expansion• Better work conditions and environment

Principles of a Good Plant Layout

It is not possible to define a good layout in a few words. There are certain criteria which can be used to judge whether or not the layout is efficient. Some good principles of an efficient Layout are listed below:

1) Overall Integration of Factors

A good layout is the one that integrates men, materials, machines and supporting activities in such a way that the best compromise is achieved.

2) Minimum Movement

A good layout is the one that permits the minimum movement between the operations.

3) Unidirectional Flow A good layout is the one that makes

materials move only in the forward direction, towards stage of completion, without any backracking.

4) Maximum Visibility A good layout is the one that always

makes men machines and materials readily observable at all time.

5) Maximum Accessibility A good layout is the one that makes all

services and maintenance points readily accessible.

6) Minimum Handling A good layout is the one that reduces

the material handling activity to its minimum

7) Safe and improved environments A good layout is the one that makes the

work centers and areas around them safe and satisfying to the workmen.

8) Maximum Flexibility A good layout is the one that can be

easily altered after setup without much cost.9) Effective use of Available Space A good layout is the one that makes

optimum use of available space both horizontal and vertical. This involves arrangement of different units in the layout, in such a way that each pattern ensures forward movement of material.

Diagram showing different flow patterns of facilities for Maximum Utilisation of Space

Types of Plant Layout

TYPES OF PLANT LAYOUT

Process or Functional

Layout

Product or Line Layout

Project or Fixed Position Layout

Process or Functional Layout

Process layout also called as “layout by function” is generally associated with batch production. The factory is divided into process units or departments, and within these process units, similar facilities are grouped together.

Process type of layout is suitable when:• the products are non-standard.• there are wide variations in the processing times

of individual operations.

Product or Line Layout Product layout is also called “layout by sequence.”

The layout of plant, shape, and size of its buildings, location of services and storage yards, position of material handling equipment is such that material flows in a unidirectional manner and at a steady rate. Special purpose machinery and equipment with built in-controls to measure output and input are employed. the equipment if necessary are duplicated, to avoid back-tracking and ensure that materials always keep moving in the forward direction towards the state of completion.

Product layout is suitable when:• products are standard and produced in large volumes.• products have reasonably stable demand.• the processing times of individual operations is more or less

equal.• uninterrupted supply of materials can be maintained.

Project or Fixed Position Layout

Project type of industries such as manufacturers of aero planes, ships, locomotives, large turbines, heavy machinery, pressure vessels and others which involves heavy materials and sub-assemblies have this type of layout. The heavy materials and sub-assemblies, under this type of layout remain fixed at one place. Men machines and tools are brought to the location to complete the job. Minor components or sub-assemblies may also be brought to the site itself for assembly.

Fixed position layout is suitable when:• one or few pieces of an identical product are to be

manufactured.• assembly consists of a large number of heavy parts, the cost

of transportation of which is very high.

Summary

Plant layout is the process of placing of the right kind of equipment, coupled with the right method at the right place, so as to permit the processing of the products through the shortest possible distance and in the shortest possible time. Three basic types of plant layouts have been identified as process layout, product layout and fixed position layout. The factors to be considered in designing a plant layout including material, machinery, man, movement, waiting, facilities, building and change.

THANK YOU

-Vineet. M. Ganvi

JKITM

References: Production (Operations) Management – Prof L C Jhamb

www.wikipedia.com