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Facility layout: What is it and why should I care?

6-minute read

As I write this blog post, some of you will be in the process of considering a commercial facility expansion or relocation.

My goal today is to encourage you to grasp that opportunity to improve the layout of your operations to boost your efficiency and reduce costs.

Proper facility layout is an important enabler of efficient operations. However, when designing or improving a manufacturing plant or warehouse layout, it is easy to underestimate how many factors one needs to consider. This ultimately contributes to what operational efficiency consultants call “the hidden facility”—i.e. a warehouse or manufacturing facility layout where the sources of waste are hidden, not known and ultimately taken for granted!

What is optimal facility layout?

Optimal facility layout aims to create a safe and simple flow of people, work-in-process and information. In other words, an optimal facility layout means the most effective arrangement of the 3 Ms:

  • Men
  • Materials (Work-in Process)
  • Machines

This is where operational efficiency professionals have a role to play. They can optimize facility layout to eliminate waste such as motion, waiting, inventory (work-in process) material handling, transportation and thus improve throughput to meet customer demand.

I choose the word throughput here as opposed to capacity because of important technical minutiae. Capacity is often easy to define but hard to measure: It is the theoretical maximum output you can achieve under ideal conditions. It can be calculated, and is important to know. But the more realistic and easy to measure indicator is throughput. Throughput is what you are actually producing.

Capacity: the theoretical maximum output under ideal conditions

Throughput: actual production

Facility layout is never a just-do-it project and requires planning, yet poor front-end planning is a frequent mistake we encounter. This is true for manufacturing as well as warehousing.

Planning involves establishing a layout team with core members (e.g. operations team) and support staff (e.g. sales team) to ensure that you put some thinking into it.

You’ll want to get consensus on major decisions as well as link sales forecasts and future operational needs. This is important because the layout for a certain (stable) high-volume demand is typically very different from a layout where there is unpredictable (uncertain) low-volume demand.

The planning phase must also include establishing a preliminary budget for capital and project expenses.

Facility layout for manufacturers

For manufacturers, there are four basic types of layouts depending on the nature of demand, volume and product variety:

  • A product or line layout (e.g. automotive assembly line)
  • A process or functional layout (e.g. fabrication or machining job shops)
  • A fixed position layout that is used for larger products (airplanes)
  • Cellular layouts (e.g. L –shaped and U-shaped,)

There is no one-size fits all solution. Each of these basic layouts come with their own set of advantages and disadvantages. Beyond these basic layouts, a combination of these is also an option.

Manufacturers should start by identifying product groups/families from the customer end of the value-chain. If your product mix is complicated, creating a product and equipment/assembly step matrix can help with grouping and establishing a product family.

All available options make the planning phase even more important to ensure you generate different layout options, and ultimately select a layout that best supports your goals. As an example, while designing high-volume layout for certain demand, the takt time (drumbeat of your operation) will have to be understood.

Operational efficiency professionals can help develop anything from space requirements, to block layouts (sometimes called conceptual design), and micro layouts at the workstation level (often referred to as a detailed design)

Facility layout for warehouses

One goal for a warehouse should be to utilize the vertical as well as ground level square-feet. Warehouses need to invest in data collection or analysis efforts for all inventory measures including the number of stock keeping units (SKUs), SKU specifications, SKU velocity and ABC analysis (an inventory classification technique), etc.

In designing for flow in warehouses, the common options are:

  • Aisle width, where you have three basic options: conventional, narrow width and very narrow aisle (VNA)
  • Review of storage space gets into items such as: shelves, adjustable pallet racks, double deep, drive-in and drive-through racks
  • Truck types such as: pallet truck, counterbalance, reach truck, and VNA trucks for VNA aisles

Find ways to work around constraints

Regardless of whether your facility is an office, a warehouse or a manufacturing plant, there are trade-offs involved due to constraints. Constraints are nothing but conditions and policies that affect the layout design in some way—for instance high cost, occupational health and safety rules, zoning by-laws, structural and civil engineering, etc.

To give you an example of what is meant by constraints, our team recently designed a layout for a 200,000 sq. feet (19,580 m2) manufacturing facility in Eastern Ontario. The owner had leased out a third of the space to a tenant for five years prior to our arrival. This left them with access to only one dock-door and zoning laws did not allow for additional dock doors, which affected the flow of raw materials and finished goods. It also prevented overall linear unidirectional flow.

Operational efficiency professionals have a repertoire of tools such as spaghetti diagrams, capacity and throughput analysis, value-added analysis, and weighing grid or decision matrix to help choose the right layout for you.

Make your business more efficient

Too often, we visit companies with great machines, skilled and motivated workers, and great products that have limited throughput because of poor layout design.

At the same time, it’s amazing how much throughput can be boosted with a proper facility layout. A manufacturer in Northern Ontario, for instance, used BDC’s structured methodology and operational efficiency tools to improve throughput in his existing facility by 33%. Another warehouse owner reduced his space requirement, and hence rent, by about 40% while planning for another location.

What about you? Is facility layout something you think about in your business? What has been your experience? What types of constraints have you encountered and how did you get around them?

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