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Management Consulting/sir help me my assignment for PRODUCTION AND MATERIALS MANAGEMENT


2.   "An ideally laid out plant goes a long way in reducing  manufacturing costs through materials handling, reduced personnel and equipment requirements and reduced in process inventory" -Elaborate.

The efficiency of production depends on how well the various machines; production facilities and employee’s amenities are located in a plant. Only the
properly laid out plant can ensure the smooth and rapid movement of material, from the raw material stage to the end product stage. Plant layout encompasses
new layout as well as improvement in the existing layout.
It may be defined as a technique of locating machines, processes and plant services within the factory so as to achieve the right quantity and quality of output
at the lowest possible cost of manufacturing. It involves a judicious arrangement of production facilities so that workflow is direct.

Plant layout refers to the arrangement of physical facilities such as machinery, equipment, furniture etc. with in the factory building in such a manner so as to
have quickest flow of material at the lowest cost and with the least amount of handling in processing the product from the receipt of material to the shipment of
the finished product.

“the overall objective of plant layout is to design a physical arrangement that most economically meets the required output – quantity and quality.”
, “Plant layout ideally involves allocation of space and
arrangement of equipment in such a manner that overall operating costs are minimized.

Plant layout is an important decision as it represents long-term commitment. An ideal plant layout should provide the optimum relationship among output, floor
area and manufacturing process. It facilitates the production process, minimizes material handling, time and cost, and allows flexibility of operations, easy
production flow, makes economic use of the building, promotes effective utilization of manpower, and provides for employee’s convenience, safety,
comfort at work, maximum exposure to natural light and ventilation. It is also  important because it affects the flow of material and processes, labour efficiency,
supervision and control, use of space and expansion possibilities etc.

An efficient plant layout is one that can be instrumental in achieving the following objectives:
a) Proper and efficient utilization of available floor space
b) To ensure that work proceeds from one point to another point without any delay
c) Provide enough production capacity.
d) Reduce material handling costs
e) Reduce hazards to personnel
f) Utilise labour efficiently
g) Increase employee morale
h) Reduce accidents
i) Provide for volume and product flexibility
j) Provide ease of supervision and control
k) Provide for employee safety and health
l) Allow ease of maintenance
m) Allow high machine or equipment utilization
n) Improve productivity

As discussed so far the plant layout facilitates the arrangement of machines, equipment and other physical facilities in a planned manner within the factory
premises. An entrepreneur must possess an expertise to lay down a proper layout for new or existing plants. It differs from plant to plant, from location to location
and from industry to industry. But the basic principles governing plant layout are more or less same.
As far as small business is concerned, it requires a smaller area or space and can be located in any kind of building as long as the space is available and it is
convenient. Plant layout for Small Scale business is closely linked with the factory building and built up area.
From the point of view of plant layout, we can classify business or unit into three categories:

1. Manufacturing units
2. Traders
3. Service Establishments

1. Manufacturing units
In case of manufacturing unit, plant layout may be of four types:
(a) Product or line layout
(b) Process or functional layout
(c) Fixed position or location layout
(d) Combined or group layout
(a) Product or line layout:
Under this, machines and equipments are arranged in one line depending upon the sequence of operations required for the product. The materials move form one
workstation to another sequentially without any backtracking or deviation. Under this, machines are grouped in one sequence. Therefore materials are fed into the first machine and finished goods travel automatically from machine to machine, the output of one machine becoming input of the next, e.g. in a paper mill,
bamboos are fed into the machine at one end and paper comes out at the other end.
The raw material moves very fast from one workstation to other stations with a minimum work in progress storage and material handling.
The grouping of machines should be done keeping in mind the following general principles.
a) All the machine tools or other items of equipments must be placed at the point demanded by the sequence of operations
b) There should no points where one line crossed another line.
c) Materials may be fed where they are required for assembly but not necessarily
at one point.
d) All the operations including assembly, testing packing must be included in the
Advantages: Product layout provides the following benefits:
a) Low cost of material handling, due to straight and short route and absence of backtracking
b) Smooth and uninterrupted operations
c) Continuous flow of work
d) Lesser investment in inventory and work in progress
e) Optimum use of floor space
f) Shorter processing time or quicker output
g) Less congestion of work in the process
h) Simple and effective inspection of work and simplified production control
i) Lower cost of manufacturing per unit

Disadvantages: Product layout suffers from following drawbacks:
a. High initial capital investment in special purpose machine
b. Heavy overhead charges
c. Breakdown of one machine will hamper the whole production process
d. Lesser flexibility as specially laid out for particular product.
Suitability: Product layout is useful under following conditions:
1) Mass production of standardized products
2) Simple and repetitive manufacturing process
3) Operation time for different process is more or less equal
4) Reasonably stable demand for the product
5) Continuous supply of materials
Therefore, the manufacturing units involving continuous manufacturing process,
producing few standardized products continuously on the firm’s own specifications and in anticipation of sales would prefer product layout e.g.
chemicals, sugar, paper, rubber, refineries, cement, automobiles, food processing
and electronics etc.
(b) Process layout:
In this type of layout machines of a similar type are arranged together at one place.
E.g. Machines performing drilling operations are arranged in the drilling
department, machines performing casting operations be grouped in the casting
department. Therefore the machines are installed in the plants, which follow the
process layout.
Hence, such layouts typically have drilling department, milling department, welding department, heating department and painting department etc. The process
or functional layout is followed from historical period. It evolved from the handicraft method of production. The work has to be alloca ted to each
department in such a way that no machines are chosen to do as many different job
as possible i.e. the emphasis is on general purpose machine.

The grouping of machines according to the process has to be done keeping in mind the following principles
a) The distance between departments should be as short as possible for avoiding
long distance movement of materials
b) The departments should be in sequence of operations
c) The arrangement should be convenient for inspection and supervision

Advantages: Process layout provides the following benefits
a) Lower initial capital investment in machines and equipments. There is high
degree of machine utilization, as a machine is not blocked for a single product
b) The overhead costs are relatively low
c) Change in output design and volume can be more easily adapted to the output
of variety of products
d) Breakdown of one machine does not result in complete work stoppage
e) Supervision can be more effective and specialized
f) There is a greater flexibility of scope for expansion.
Disadvantages: Product layout suffers from following drawbacks
a. Material handling costs are high due to backtracking
b. More skilled labour is required resulting in higher cost.
c. Time gap or lag in production is higher
d. Work in progress inventory is high needing greater storage space
e. More frequent inspection is needed which results in costly supervision
Suitability: Process layout is adopted when
1. Products are not standardized
2. Quantity produced is small
3. There are frequent changes in design and style of product
4. Job shop type of work is done
5. Machines are very expensive
Thus, process layout or functional layout is suitable for job order production
involving non-repetitive processes and customer specifications and non standardized
products, e.g. tailoring, light and heavy engineering products, made
to order furniture industries, jewelry.
(c) Fixed Position or Location Layout
In this type of layout, the major product being produced is fixed at one location.
Equipment labour and components are moved to that location. All facilities are
brought and arranged around one work center. This type of layout is not relevant for small scale entrepreneur.

Advantages: Fixed position layout provides the following benefits
a) It saves time and cost involved on the movement of work from one
workstation to another.
b) The layout is flexible as change in job design and operation sequence can be
easily incorporated.
c) It is more economical when several orders in different stages of progress are
being executed simultaneously.
d) Adjustments can be made to meet shortage of materials or absence of workers
by changing the sequence of operations.
Disadvantages: Fixed position layout has the following drawbacks
a. Production period being very long, capital investment is very heavy
b. Very large space is required for storage of material and equipment near the
c. As several operations are often carried out simultaneously, there is possibility
of confusion and conflicts among different workgroups.
Suitability: The fixed position layout is followed in following conditions
1. Manufacture of bulky and heavy products such as locomotives, ships, boilers,
generators, wagon building, aircraft manufacturing, etc.
2. Construction of building, flyovers, dams.
3. Hospital, the medicines, doctors and nurses are taken to the patient (product).
(d) Combined layout
Certain manufacturing units may require all three processes namely intermittent
process (job shops), the continuous process (mass production shops) and the
representative process combined process [i.e. miscellaneous shops].
In most of industries, only a product layout or process layout or fixed location
layout does not exist. Thus, in manufacturing concerns where several products
are produced in repeated numbers with no likelihood of continuous production,
combined layout is followed. Generally, a combination of the product and
process layout or other combination are found, in practice, e.g. for industries
involving the fabrication of parts and assembly, fabrication tends to employ the
process layout, while the assembly areas often employ the product layout. In soap,
manufacturing plant, the machinery manufacturing soap is arranged on the
product line principle, but ancillary services such as heating, the manufacturing of
glycerin, the power house, the water treatment plant etc. are arranged on a
functional basis.

2. Traders
When two outlets carry almost same merchandise, customers usually buy in the
one that is more appealing to them. Thus, customers are attracted and kept by
good layout i.e. good lighting, attractive colours, good ventilation, air
conditioning, modern design and arrangement and even music. All of these things
mean customer convenience, customer appeal and greater business volume.
The customer is always impressed by service, efficiency and quality. Hence, the
layout is essential for handling merchandise, which is arranged as per the space
available and the type and magnitude of goods to be sold keeping in mind the
convenience of customers.
There are three kinds of layouts in retail operations today.
1. Self service or modified self service layout
2. Full service layout
3. Special layouts
The self-service layouts, cuts down on sales clerk’s time and allow customers to
select merchandise for themselves. Customers should be led through the store in
a way that will expose them to as much display area as possible, e.g. Grocery
Stores or department stores. In those stores, necessities or convenience goods
should be placed at the rear of the store. The use of color and lighting is very
important to direct attention to interior displays and to make the most of the stores
All operations are not self-service. Certain specialty enterprises sell to fewer
numbers of customers or higher priced product, e.g. Apparel, office machines,
sporting goods, fashion items, hardware, good quality shoes, jewelry, luggage and
accessories, furniture and appliances are all examples of products that require
time and personal attention to be sold. These full service layouts provide area and
equipment necessary in such cases.
Some layouts depend strictly on the type of special store to be set up, e.g. TV
repair shop, soft ice cream store, and drive-in soft drink stores are all examples of
business requiring special design. Thus, good retail layout should be the one,
which saves rent, time and labour.

3. Services centers and establishment
Services establishments such as motels, hotels, restaurants, must give due
attention to client convenience, quality of service, efficiency in delivering services
and pleasing office ambience. In today’s environment, the clients look for ease in
approaching different departments of a service organization and hence the layout
should be designed in a fashion, which allows clients quick and convenient access
to the facilities offered by a service establishment.

While deciding his factory or unit or establishment or store, a small-scale
businessman should keep the following factors in mind:
a) Factory building: The nature and size of the building determines the floor
space available for layout. While designing the special requirements, e.g. air
conditioning, dust control, humidity control etc. must be kept in mind.
b) Nature of product: product layout is suitable for uniform products whereas
process layout is more appropriate for custom-made products.
c) Production process: In assembly line industries, product layout is better. In
job order or intermittent manufacturing on the other hand, process layout is desirable.
d) Type of machinery: General purpose machines are often arranged as per
process layout while special purpose machines are arranged according to
product layout
e) Repairs and maintenance: machines should be so arranged that adequate
space is available between them for movement of equipment and people
required for repairing the machines.
f) Human needs: Adequate arrangement should be made for cloakroom,
washroom, lockers, drinking water, toilets and other employee facilities,
proper provision should be made for disposal of effluents, if any.
g) Plant environment: Heat, light, noise, ventilation and other aspects should be
duly considered, e.g. paint shops and plating section should be located in
another hall so that dangerous fumes can be removed through proper
ventilation etc. Adequate safety arrangement should also be made.
Thus, the layout should be conducive to health and safety of employees. It
should ensure free and efficient flow of men and materials. Future expansion and
diversification may also be considered while planning factory layout.

Plant layout is a dynamic rather than a static concept meaning thereby if once
done it is not permanent in nature rather improvement or revision in the existing
plant layout must be made by keeping a track with development of new machines
or equipment, improvements in manufacturing process, changes in materials
handling devices etc. But, any revision in layout must be made only when the
savings resulting from revision exceed the costs involved in such revision.
Revision in plant layout may become necessary on account of the following

a) Increase in the output of the existing product
b) Introduction of a new product and diversification
c) Technological advancements in machinery, material, processes, product
design, fuel etc.
d) Deficiencies in the layout unnoticed by the layout engineer in the beginning.

Plant layout is applicable to all types of industries or plants. Certain plants
require special arrangements which, when incorporated make the layout look distinct form the types already discussed above. Applicability of plant layout in
manufacturing and service industries is discussed below.
In case of the manufacturing of detergent powder, a multi-storey building is specially constructed to house the boiler. Materials are stored and poured into the
boiler at different stages on different floors. Other facilities are also provided around the boiler at different stations.
Another applicability of this layout is the manufacture of talcum powder. Here
machinery is arranged vertically i.e. from top to bottom. Thus, material is poured
into the first machine at the top and powder comes out at the bottom of the
machinery located on the ground floor.
Yet another applicability of this layout is the newspaper plant, where the time
element is of supreme importance, the accomplishment being gapped in seconds.
Here plant layout must be simple and direct so as to eliminate distance, delay and
confusion. There must be a perfect coordination of all departments and
machinery or equipments, as materials must never fail.
Plant layout is also applicable to five star hotels as well. Here lodging, bar,
restaurant, kitchen, stores, swimming pool, laundry, shaving saloons, shopping
arcades, conference hall, parking areas etc. should all find an appropriate place in
the layout. Here importance must be given to cleanliness, elegant appearance,
convenience and compact looks, which attract customers.
Similarly plant layout is applicable to a cinema hall, where emphasis is on
comfort, and convenience of the cinemagoers. The projector, screen, sound box,
fire fighting equipment, ambience etc. should be of utmost importance.
A plant layout applies besides the grouping of machinery, to an arrangement for
other facilities as well. Such facilities include receiving and dispatching points,
inspection facilities, employee facilities, storage etc.
Generally, the receiving and the dispatching departments should be at either end
of the plant. The storeroom should be located close to the production, receiving and dispatching centers in order to minimize handling costs. The inspection
should be right next to other dispatch department as inspections are done finally, before dispatch.
The maintenance department consisting of lighting, safety devices, fire protection,
collection and disposal of garbage, scrap etc. should be located in a place which is
easily accessible to all the other departments in the plant. The other employee
facilities like toilet facilities, drinking water facilities, first aid room, cafeteria etc.
can be a little away from other departments but should be within easy reach of the
employees. Hence, there are the other industries or plants to which plant layout is
The importance of a layout would be better appreciated if one understands the influence of an efficient layout on the manufacturing function: it makes it smooth and efficient. Operating efficiencies, such as economies in the cost of handling materials, minimization of production delays and avoidance of bottlenecks—all these depend on a proper layout.
An ideally laid out plant reduces manufacturing costs through reduced materials handling, reduced personnel and equipment requirements and reduced process inventory.
The objectives or advantages of an ideal layout are outlined in the paragraphs that follow. The advantages are common to all the plants, irrespective of age; and whether a plant employs 50 workers or 50,000 makes no difference in so far as the applicability of the plant layout advantages is concerned. Some of these advantages are:
Economies in Handling
Nearly 30% to 40% of the manufacturing cost is accounted for, by materials handling. Every effort should, therefore, be made to cut down on this cost. Long distance movements should be avoided and specific handling operations must be eliminated. A cynic may say that the cheapest way to handle materials is not to handle them at all. But, in a factory, materials have to be handled; and therefore, it all depends on the layout.
Effective Use of Available Area
Every inch of the plant area is valuable, especially in urban areas. Efforts should therefore be made to make use of the available area by planning the layout properly. Some steps for achieving this end are: location of equipment and services in order that they may perform multiple functions; development of up-to-date work areas and operator job assignments for a full utilization of the labor force.
Minimization of Production Delays
Repeat orders and new customers will be the result of prompt execution of orders. Every management should try to keep to the delivery schedules. Often, the deadline dates for delivery of production orders are a bug-a-boo to the management.
Plant layout is a significant factor in the timely execution of orders. An ideal layout eliminates such causes of delays as shortage of space, long-distance movements of materials, spoiled work and thus contributes to the speedy execution of orders.
Improved Quality Control
Timely execution of orders will be meaningful when the quality of the output is not below expectations. To ensure quality, inspection should be conducted at different stages of manufacture. An ideal layout provides for inspection to ensure better quality control.
Minimum Equipment Investment
Investment on equipment can be minimized by planned machine balance and location, minimum handling distances, by the installation of general purpose machines and by planned machine loading. A good plant layout provides all these advantages.
Avoidance of Bottlenecks
Bottlenecks refer to any place in a production process where materials tend to pile up or are produced at a speed, less rapid than the previous or subsequent operations. Bottlenecks are caused by inadequate machine capacity, inadequate storage space or low speed on part of the operators. The results of bottlenecks are delays in productions schedules, congestion, accidents and wastage of floor area. All these may be overcome with an efficient layout.
Better Production Control
Production Control is concerned with the production of the product of the right type, at the right time and at a reasonable cost. A good plant layout is a requisite for good production control and provides the production control officers with a systematic basis upon which to build organization and procedures.
Better Supervision
A good plant layout ensures better supervision in two ways:
1.Determining the number of workers to be handled by a supervisor and
2.Enabling the supervisor to get a full view of the entire plant at one glance.
A good plant layout is, therefore, the first step to good supervision.
Improved Utilization of Labor
Labor is paid for every hour it spends in the factory. The efficiency of a management lies in utilizing the time for productive purpose. A good plant layout is one of the factors in effective utilization of labor. It makes possible individual operations, the process and flow of materials handling in such a way that the time of each worker is effectively spent on productive operations.
Improved Employee Morale
Employee morale is achieved when workers are cheerful and confident. This state of mental condition is vital to the success of any organization.
Morale depends on:
(a)Better working condition;
(b)Better employee facilities;
(c)Reduced number of accidents;
(d)Increased earnings.
Plant layout has a bearing on all these.
Avoidance of Unnecessary and Costly Changes
A planned layout avoids frequent changes which are difficult and costly. The incorporation of flexibility elements in the layout would help in the avoidance of revisions.

Process layout
similar equipment & tasks grouped; also called functional layout; useful for low volume, high variety jobs
used when small batches of different products are created or worked on in a different operating sequence

Characteristicsof Process Layouts
Low Volume, High Variety Production with Random Routing (Spaghetti-Like Flow)
General Purpose Machines--
Machine setups are frequent and long
Work-In-Process -- High
Throughput Rates tend to be Low
Material Handling -- High
Operator Utilization -- Low?
Throughput Times (Lead Time) -- High
System is Very Flexible, produces many different types of parts: gears, shafts, pinions, housings, clamps, etc.

Process(Functional) Layout
low capital investment,
fewer m/c;
higher space utilisation;
flexibility in equipment allocation;
workers gain expertise;
problems localised;
job variety

needs more space;
no mechanisation;
high wip;
work scheduling problems;
high set-up
inspection costs

Product Layout
Equipment placed in usage sequence; also called line layout; useful in assembly work such as cars, m/cycle
The product layout (assembly line) is used when all products undergo the same operations in the same sequence

High volume production
Special purpose machines and material handling equipment
Throughput rates--high
Setup/Run time ratio--low
System is very inflexible
Control is relatively simple

Product Layout

Small mfg cycle;
low wip;
min material handling;
lower labour cost;
effective quality control;
easy to schedule;
easy prodn control;
low variety

Change in work nature needs change in layout;
m/c utilisation may not be optimum;
m/c breakdown delays work;
work area expansion/m/c addition not possible

Project Layout
Raw material placed in fixed positions; also called fixed position layout

Reduces movement of m/c & equipment;
Minimizes damage/cost of movement;
continuity of assigned work force

Skilled & versatile workers needed due to multiple operations;
skill combination may be difficult to obtain;
higher pay;
Movement of people/material may be expensive;
equipment utilization low as they are left at location for subsequent usage instead of being moved as & where needed

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Leo Lingham


management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc


18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc


24 years in management consulting which includes business planning, strategic planning, marketing , product management,
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