Chapter 1Introduction to Facility

Planning
IM313 Facilities Planning
Southeast Missouri State University
Compiled by Bart Weihl
Fall 2001

Competitive Business Challenges

What makes some companies products seem

to have a cost advantage over others?
Better manufacturing processes
Desire to continuously improve
Streamlined plant layout

Cycle Time

One of the most noteworthy accomplishments

in keeping the price of Ford products low is the
gradual shortening of the production cycle. The
longer an article is in the process of manufacture
and the more it is moved about, the greater is its
ultimate cost.
Henry Ford, 1926

Cycle Time

One factor contributing to this lengthy production

cycle is the facility layout. Manufacturing facilities
design and material handling affect the productivity
and profitability of a company more than almost any
other corporate decision.

Plant Layout

QC

Raw Stock

Shea
r

Stamp

Brak
e

Mill

Weld

Grind

Screw
Machin
e
Lath
e

Drill

Finish

Ship

Rec

QC

Assembl
y

Parts
Stock

How Can We Improve?

Lean Manufacturing and Cellular Flow
Before:

6 Assemblers
Batch Assembly
C/T 4.5 days

How Can We Improve?

Lean Manufacturing and Cellular Flow
After:

6 Assemblers
Flow / Pull
C/T 53 minutes

Manufacturing Savings

Where can we save costs in manufacturing?

Reduce or Eliminate Work-in-process inventories (WIP)
Non-value added activities
Material handling costs
Processing time
Product defects

Lean = Eliminating the Wastes

Value Added

Non-Value Added

Overproduction

Excess Inventory

Waiting
Transportation
Non-Value Added
Processing

Defects
Excess Motion
Underutilized People

Typically 95% of all lead time is non-value added

Eight Wastes

Manufacturing Savings

The largest components of factory labor and the

cost of materials purchased and used in a
factory are:
Internal transportation costs
Material handling costs
Storage costs
This includes both our manufacturing plants
and those of our suppliers!

Competitive Global Marketplace

Todays world is much more competitive than the

world in which our parents and grandparents
worked.
Open-market countries depend heavily upon
imported manufactured goods.

Through early 1960s

1960s - Present

Competitive Global Marketplace Example

Regulator - Italy

LP Gas Hose - Canada

Brass Fittings - USA

All components assembled in USA . . .

Then shipped to China for assembly into gas grills which
are then shipped back to the USA for retail sale!

Market Driven Competitiveness

Survival of the fittest!

Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest
lion or it will be killed. Every morning a lion
wakes up. It knows it must outrun the
slowest gazelle or it will starve to death.
It doesnt matter whether you are a lion or a
gazellewhen the sun comes up, you had
better be running.

Facilities Layout Goals

Goals should include:

Minimize unit cost. Minimize project cost.
Optimize quality.
Promote the effective use of (a) people, (b) space,
(c) equipment, and (d) energy.
Provide for (a) employee convenience, (b) employee
safety, and (c) employee comfort.
Control project cost.
Achieve the production start date.
Build flexibility into the plan.
Reduce of eliminate excessive inventory.
Achieve miscellaneous goals.

Five Types of Facility Design Projects

1. New Facility fewer restrictions and constraints on the

layout since it is new

2. New Product integration of a new product into the

existing process and layout

3. Design Changes incorporate the impact of design

changes into the manufacturing process

4. Cost Reduction redesign the existing layout to

facilitate cost reduction programs and ideas

5. Retrofit similar to a new facility layout except with the

constraints present

Brief History of Plant Layout

Companies of the past utilized a draftsperson to

complete the plant layout.

The general belief was that there was a void of

expertise in facility layout design.

Problems could be overcome with an extra forklift or

conveyor length.

Impact of Poor Plant Layout

High material handling costs

Cycle and lead time delays
High WIP inventories
Lower quality
Product damage
Safety and morale problems
Poor equipment utilization
Congested aisles
Wasted floor space

Facility Improvement Pitfalls

Poorly planned layout

Lack of employee involvement
Lack of management commitment
Budgetary constraints leading to a piecemeal
approach
Focus on the almighty ROI versus the future of the
business
Short term management focus

Continuous Improvement Doctrine (CID)

The continuous improvement doctrine (CID) mandates
that a company will commit to continuous, ongoing
improvement plans for production processes, materials
handling, and plant layout. They further recognize that
these items are essential to achieve competitive
advantage. The CID plan will be developed and
maintained on an ongoing basis.

#1

Lean Building Blocks

Continuous Improvement
Pull/Kanban
Quality at Source
Standardized Work
5S System

Cellular/Flow
POUS

Quick Changeover

Batch Reduction
Visual

TPM

Teams

Plant Layout

VSM

Continuous Improvement

Old Adage:
If you always do what you always did, youll always get
what you always got.
Competitive Corollary:
If the other guy gets BETTER, youre gonna get LESS.

Cycle Times and Materials Handling

Old Adage:
the smaller the lot size, the higher the materials handling
and setup costs
the faster the assembly line conveyor speed, the higher the
production output
Response:
Ask the right answer and get the right question . . .
Focus on the true problems that prevent smaller lot
sizes and faster production speeds.

Cycle Times and Materials Handling

Getting the right answer to the right question. . .
Range
width
30 in.

30 in.
Typical

Speed
= 60 in. / 18 sec
= 200 in. / min

Units / shift:
60 sec / cycle time per unit = 60 / 18 = 3.33 units per minute
3.33 units per minute X 60 minutes X 7 hours = 1400 units / shift

Cycle Times and Materials Handling

Getting the right answer to the right question. . .
12 in.
Typical

Range
width
30 in.

Speed
= 42 in. / 15 sec
= 168 in. / min

Units / shift:
60 sec / cycle time per unit = 60 / 15 = 4 units per minute
4 units per minute X 60 minutes X 7 hours = 1680 units / shift

Cycle Times and Materials Handling

The right question was how to increasing production
while reducing cycle time. . .the wrong answer was
speeding up the line!
Results:
1,680 / 1,400 = 1.2 = 20% Production Increase

Materials Handling

Materials handling is a non-value activity that your

customer is unwilling to pay for.

Constantly question material handling methods and

manufacturing methods. . . your competitors do!

Just because you have always done it that way does

not make it right.

Materials Handling Mistakes

A Local Companys Materials Handling Process-

Step 1Begin
Assemblies

Step 2Move to WIP

Warehouse

Step 4Move back to

Manufacturing

Step 3Store in WIP

Warehouse
WAREHOUSE

Materials Handling Mistakes

Local Companys Materials Handling ProcessStep 6Back to the
Warehouse

Step 5Begin
Assembly

Continue Until
Complete
36 Trailers / Day

WAREHOUSE

Materials Handling Mistakes

Company Results:
Material was handled so much that damage was inevitable.
Their customer began penalizing them $100 per damaged part
received due to the poor finished goods quality.

The materials handling inefficiencies manifested themselves in

higher product costs, larger amounts of WIP, poor product
quality and longer lead times.

The parts were inspected eight (8) times on average, product

yield was a dismal 60%.

A reduction in two (2) inspections steps generated over $1M in

annual savings. . .the right question should have been Why
are we moving these parts so much?

Materials Handling Example

Electric Lift Hoist

Fabric Rolls in
Excess of 100#

Key Manufacturing Fundamentals

Four Fundamental Customer Expectations:

1. Product Quality
2. Delivery as scheduled / requested
3. Flexibility to handle change and service
4. Low $$$

One method to achieve this is by

implementing Lean Manufacturing
principles

Benefits of Lean

Percentage of Benefits Achieved

Lead Time Reduction
Productivity Increase
WIP Reduction
Quality Improvement
Space Utilization

0
100

25

50

75

Conclusion

Two Major Elements of the Direct and Indirect

Factory Labor Costs Equation are Effected by:
1. The way we handle materials
2. The way our facilities are laid out

This will be our focus this semester