Module 2

Facility Planning
 Facility Planning
• Facility planning, also known as facility location
planning or facility design planning, is the process
of determining the optimal placement and layout
of physical structures, equipment, and resources
within a space to achieve specific objectives.
• This planning process is crucial for various types
of facilities, including manufacturing plants,
warehouses, office buildings, hospitals,
educational institutions, and more.
 Key Aspects of Facility Planning
• Location selection: Determining the most suitable
geographic area to establish the facility based on
factors like proximity to suppliers, customers,
transportation infrastructure, and labor force
availability.
• Layout design: Planning the internal arrangement
of the facility, including the placement of
machinery, workstations, storage areas, and
support facilities to optimize workflow and
minimize unnecessary movements.
 Key Aspects of Facility Planning
• Space utilization: Ensuring the efficient use of
available space to accommodate the required
activities and resources while avoiding wasted
or unused areas.
• Workflow analysis: Studying the flow of
materials, products, or people within the
facility to identify bottlenecks and improve
overall efficiency.
 Key Aspects of Facility Planning
• Safety considerations: Implementing safety protocols
and adhering to relevant regulations to create a secure
and risk-free working environment for employees and
visitors.
• Expansion and flexibility: Anticipating future growth
and ensuring the facility design allows for expansion or
modification to adapt to changing needs and demands.
• Cost analysis: Evaluating the financial implications of
different facility planning options, including initial
setup costs, ongoing operational expenses, and
potential return on investment.
 Facility Location Decisions
• Facility location decisions are critical choices
made by organizations to determine the optimal
geographic location for establishing new facilities
or expanding existing ones.
• The selection of the right location can
significantly impact the success and profitability
of the business.
• Facility location decisions involve a careful
analysis of various factors, considering both
quantitative and qualitative aspects.
 Key considerations involved in facility
location decisions:
• Market Access: Proximity to target markets and
customers is a crucial factor in facility location
decisions. Organizations aim to reduce
transportation costs, delivery times, and logistics
expenses by locating facilities closer to their
customer base.
• Labor Force Availability: The availability of skilled
and qualified labor in the chosen location is
essential for the smooth functioning of the
facility. Factors like labor cost, education level,
and workforce stability are considered.
• Transportation and Infrastructure: Access to
transportation networks, including highways,
ports, railways, and airports, can influence the
ease of moving raw materials and finished
products to and from the facility.
• Cost Factors: Various cost factors play a role in
location decisions, such as land costs,
construction costs, utility expenses, taxes, and
regulatory fees. Organizations seek cost-effective
locations to maximize their profitability.
• Suppliers and Supply Chain: Proximity to suppliers
and raw materials sources can lead to cost
savings and better supply chain management.
• Government Policies and Regulations: Companies
consider the regulatory environment, tax
incentives, and other government policies of
potential locations to ensure compliance and
favorable operating conditions.
• Competition: Analyzing the presence and
strength of competitors in the area helps
determine the level of market saturation and
potential challenges.
• Environmental and Social Factors: Companies
may consider environmental impact, community
support, and local labor practices when selecting
a facility location, as these factors can affect
public perception and brand reputation.
• Risk and Resilience: Assessing the location's
vulnerability to natural disasters, political instability,
and other risks helps organizations make informed
decisions about potential threats.
• Expansion Opportunities: Organizations often assess
the potential for future expansion in the chosen
location, considering factors like available land for
future growth.
• Proximity to Research and Innovation Hubs: In certain
industries, companies may choose to locate facilities
near research centers, universities, or innovation hubs
to leverage knowledge and talent.
 Factors affecting facility location
decision
1. Macroeconomic Factors:
2. Microeconomic Factors:
 Macroeconomic Factors
• a. Market Demand: The size and growth potential
of the market in the region can significantly
impact facility location decisions. Organizations
want to be close to their customer base to reduce
transportation costs and improve customer
service.
• b. Labor Force Availability and Cost: The
availability of skilled labor in the region and the
prevailing labor costs are crucial considerations. A
well-educated and trained workforce can
positively impact productivity and efficiency.
• c. Transportation Infrastructure: The quality and
accessibility of transportation networks, including
highways, railways, ports, and airports, are
important for the movement of raw materials
and finished products.
• d. Government Regulations and Incentives: The
regulatory environment, tax policies, and
incentives provided by governments at the local,
regional, or national level can influence facility
location decisions.
• e. Economic Incentives: Some regions may offer
financial incentives, grants, or subsidies to attract
businesses and encourage economic
development.
• f. Exchange Rates and Currency Stability: For
multinational companies, exchange rates and
currency stability can impact the cost of
operations and revenue generation.
• g. Economic Stability: The overall economic
stability of a region affects business continuity
and risk management.
 Microeconomic Factors
• a. Proximity to Suppliers: Being close to suppliers
can reduce transportation costs, lead times, and
inventory holding costs.
• b. Access to Raw Materials: Industries heavily
reliant on specific raw materials may prefer
locations with easy access to those resources.
• c. Competition: Analyzing the presence and
strength of competitors in the region can help in
understanding market dynamics and the
potential for market share.
• d. Land and Real Estate Costs: The cost and
availability of suitable land or real estate for the
facility can impact the overall project's feasibility.
• e. Utilities and Infrastructure: The availability and
reliability of utilities such as water, electricity, and
telecommunications are essential for smooth
operations.
• f. Environmental Considerations: Environmental
factors, such as regulations, sustainability goals,
and the impact of the facility on the environment,
can influence location decisions.
• g. Social and Cultural Factors: Understanding
the local culture and community support can
affect the company's image and acceptance in
the region.
• h. Political Stability: A stable political
environment is essential for business
continuity and minimizing potential
disruptions.
• i. Risks: Assessing the region's vulnerability to
natural disasters, geopolitical risks, and other
uncertainties is crucial for risk management.
• j. Expansion Opportunities: Considering the
potential for future expansion and scalability
in the chosen location.
 Facility Location Models
1. Single Facility Location Model: This model
involves selecting the optimal location for a
single facility to serve a given set of demand
points. The objective is usually to minimize the
total transportation cost or distance between
the facility and the demand points.
2. Multi-Facility Location Model: In this model,
multiple facilities need to be located to serve a
set of demand points. The objective could be to
minimize total costs, maximize coverage, or
balance the workload among facilities.
 Facility Location Models
3. P-Median Model: This model is well-known
facility location problem that seeks to determine
the optimal locations for a fixed number of facilities
to serve a set of customers, with the goal of
minimizing the total distance or cost of serving the
customers..
4. P-Center Model: This model well known facility
location problem that involves locating p identical
facilities on a network to minimize the maximum
distance between demand nodes and their closest
facilities.
 Facility Location Models
5. Uncapacitated Facility Location Model: This
model considers that each facility can serve an
unlimited number of customers and seeks to
minimize the total cost of opening facilities and
meeting demand.
6. Capacitated Facility Location Model: In this
model, facilities have limited capacities, and the
objective is to minimize the total cost while
satisfying the demand within these capacity
constraints.
 Facility Location Models
7. Hierarchical Location Model: These models
consider multiple levels of facilities, such as
regional, intermediate, and local facilities, and
aim to optimize the location and assignment of
facilities at each level.
8. Hub Location Model: Hub location models
involve locating hub facilities that consolidate
and distribute goods to other facilities or
customers.
 Facility Layout Planning
• Facility layout planning is the process of arranging
and organizing the physical components of a
facility, such as machinery, workstations, storage
areas, offices, and other resources, in a way that
maximizes efficiency, productivity, safety, and
overall operational performance.
• It is an essential aspect of facility design and
management, applicable in various industries
such as manufacturing, warehousing, healthcare,
offices, retail, and service facilities.
 The main goals of facility layout
planning are:
• Maximize Efficiency: Optimize the flow of
materials, products, and information within the
facility to minimize travel time, reduce material
handling, and improve production or service
processes.
• Enhance Productivity: Ensure that workstations
and resources are arranged in a manner that
minimizes idle time and promotes a smooth
workflow, thereby increasing overall productivity.
 The main goals of facility layout
planning are
• Ensure Safety: Design layouts that prioritize
the safety and well-being of employees,
customers, and visitors by minimizing hazards
and ergonomic risks.
• Optimize Space Utilization: Make the best use
of available space to accommodate all
necessary activities and resources efficiently.
 The main goals of facility layout
planning are
• Facilitate Communication: Arrange
departments or workstations in a way that
fosters effective communication and
collaboration among employees.
• Support Lean Principles: Implement layouts
that align with lean manufacturing or service
principles to minimize waste, inventory, and
downtime.
 Principles of Facility Layout
• Flow of Materials and Information: Arrange
workstations and departments in a sequence that
promotes a smooth flow of materials and information
throughout the facility. Minimize unnecessary
movement and handling of materials to reduce lead
times and increase productivity.
• Minimization of Transportation: Position workstations
and resources in close proximity to each other to
minimize the distance materials, products, or
information need to travel. This helps reduce
transportation costs and improves overall efficiency.
 Principles of Facility Layout
• Flexibility: Design the layout with flexibility in
mind to accommodate changes in production
processes, customer demands, or business
requirements. A flexible layout allows for easy
adjustments and adaptations without significant
disruptions.
• Safety and Ergonomics: Ensure that the layout
prioritizes the safety and well-being of
employees. Consider ergonomic principles to
design workstations that reduce physical strain
and the risk of workplace injuries.
 Principles of Facility Layout
• Space Utilization: Make efficient use of available
space to optimize the layout. Avoid wasted or
unused space, and consider vertical space
utilization when appropriate.
• Grouping of Similar Activities: Arrange similar or
related activities together to create functional
departments or work cells. This grouping
improves communication, reduces material
handling, and enhances collaboration among
employees.
 Principles of Facility Layout
• Minimization of Cross-Traffic: Minimize the
cross-traffic of employees, materials, or
equipment to avoid congestion and delays.
Separate conflicting flows to maintain a smooth
and safe working environment.
• Visibility and Supervision: Ensure good visibility
across the facility to promote effective
supervision and control of operations. This helps
managers monitor activities and respond to
issues promptly.
 Principles of Facility Layout
• Standardization: Use standard sizes for
equipment, workstations, and materials
whenever possible. Standardization simplifies
maintenance, replacement, and inventory
management.
• Zoning: Divide the facility into zones based on the
nature of activities or processes. Group similar
activities together and keep incompatible or
hazardous operations separate.
 Principles of Facility Layout
• Future Expansion and Growth: Consider the potential
for future expansion and growth when designing the
layout. Allow for scalability and adaptability to meet
the facility's changing needs.
• Lean Principles: Incorporate lean manufacturing or
service principles into the layout design to minimize
waste, reduce inventory, and improve overall efficiency.
• Employee Input: Involve employees in the layout
planning process. Their insights and feedback can
contribute to a layout that meets their needs and
improves their work environment.
 Types of Plant Layout
1. Process Layout (Functional Layout): In a
process layout, similar machines or equipment
are grouped together based on their functions
or processes. Each department or section
handles a specific type of operation, and the
flow of materials may be complex. Process
layouts are suitable for job shops or batch
production where products have varying
processing requirements
 Types of Plant Layout
2. Product Layout (Line Layout): In a product
layout, the equipment and workstations are
arranged in a linear or straight-line sequence.
This layout is best suited for continuous or mass
production of standardized products. The
product moves along the line, and each
workstation performs a specific operation in the
production process.
 Types of Plant Layout
3. Fixed Position Layout: This layout is used
when the product is too large or bulky to move
during the manufacturing process. The product
remains stationary, and workers, machines, and
tools are brought to the product. It is commonly
used in construction projects and shipbuilding.
 Types of Plant Layout
4. Cellular Layout (Group Technology Layout):
Cellular layout involves grouping machines and
workstations into cells, each dedicated to
producing a particular family of products with
similar processing requirements. It is an efficient
layout for batch production of diverse products.
 Types of Plant Layout
5. Hybrid Layout: A hybrid layout is a combination
of two or more of the above layouts. It is suitable
when the manufacturing process involves different
types of products or a mix of continuous and batch
production.
6. Fixed-Position Layout (Static Layout): This layout
is used when the product is too large or heavy to
move during the manufacturing process. Workers,
equipment, and materials are brought to the fixed
position where the product is being assembled or
fabricated.
 Types of Plant Layout
7. Functional Layout (Process Layout): Similar
machines or equipment are grouped together
based on their functions or processes. Each
department or section handles a specific type of
operation, and the flow of materials may be
complex.
8. Office Layout: Office layouts involve arranging
workspaces, desks, and resources in an office
environment. Common office layouts include open-
plan layouts, cubicle layouts, and closed-office
layouts.
 Types of Plant Layout
9. Warehouse Layout: Warehouse layouts are
designed for efficient storage and movement of
goods within a distribution center or storage
facility. Common warehouse layouts include the
grid layout, U-shaped layout, and cross-docking
layout.
 Factors influencing layout changes:
• Changing Product Mix: When a company
introduces new products or changes its product
mix, the existing layout may no longer be
optimal. The facility might need to reconfigure its
layout to accommodate the new product
requirements and production processes.
• Production Volume Changes: Significant changes
in production volume, whether an increase or
decrease, can necessitate layout modifications to
match the new production capacity and
demands.
 Factors influencing layout changes:
• Technological Advancements: Advances in technology,
automation, and machinery can improve production
processes, reduce space requirements, or alter the
flow of materials, necessitating a new layout that
incorporates these changes.
• Cost Reduction and Efficiency Improvement:
Companies often seek to streamline their operations
and reduce costs. Layout changes can be a part of lean
manufacturing initiatives to eliminate waste, reduce
material handling, and improve overall efficiency.
 Factors influencing layout changes:
• Market Demand and Customer Expectations:
Shifting market demands and customer
expectations may require alterations in the layout
to increase responsiveness and agility in meeting
customer needs.
• Safety and Regulatory Compliance: Changes in
safety regulations or a focus on improving
workplace safety may prompt layout changes to
eliminate hazards, reduce accidents, and enhance
ergonomics.
 Factors influencing layout changes:
• Expansion or Consolidation: Business growth,
mergers, or acquisitions may lead to facility
expansion or consolidation, requiring
adjustments in the layout to accommodate new
capacities or locations.
• Inventory Management: Changes in inventory
management strategies, such as adopting just-in-
time (JIT) practices, might lead to layout
modifications to reduce inventory storage and
handling costs.
 Factors influencing layout changes:
• Environmental Considerations: Organizations
increasingly consider environmental sustainability
in their operations. Layout changes may be
implemented to reduce energy consumption,
optimize resource utilization, and minimize
environmental impacts.
• Operational Bottlenecks and Inefficiencies:
Identification of operational bottlenecks or
inefficiencies can trigger layout changes to
improve workflow and reduce delays.
 Factors influencing layout changes:
• Workforce Considerations: The workforce's
skills and expertise may influence layout
changes to optimize workstations and improve
employee productivity and satisfaction.
• Technological Obsolescence: Outdated
equipment or machinery may require
replacement or repositioning, leading to
layout adjustments.
 Factors influencing layout changes:
• Competitive Pressure: In a competitive
market, companies may need to update their
layouts to match or outperform competitors'
efficiency and capabilities.
• Government Incentives: Incentives offered by
governments or local authorities to promote
industrial development or regional growth
may encourage layout changes.