Warehouse Layout

Dr. Ron Tibben-Lembke

Layout Typesy Project or Fixed-position layout y Process-oriented layout y Product-oriented layout y Office layout y Warehouse layout y Retail/service layout

Project or Fixed-Positiony Design is for stationary project y Workers & equipment come to site y Complicating factors y Limited space at site y Changing material needs y Examples y Ship building y Highway construction

Process-Oriented Layouty Design places departments with large flows of

material or people together y Dept. areas have similar processesy

e.g., All x-ray machines in same area

y Used with process-focused processes y Examples y Hospitals y Machine shops

Process-Oriented LayoutTable Saws 1995 Corel Corp.

Office

Drill Presses Tool Room

1995 Corel Corp.

Process Layout+ Allows specialization - focus on one skill + Allows economies of scale - worker can watch several machines at once + High level of product flexibility -- Encourages large lot sizes -- Difficult to incorporate into JIT -- Makes cross-training difficult

Process-Oriented Layout Stepsy Construct from-to-matrix y Determine space needs for each dept. y Develop initial schematic diagram y Determine layout cost, 77Xij Cij y By trial-and-error, improve initial layout y Prepare detailed plan y Includes factors besides cost

Process-Oriented ExampleYou work in facilities engineering. You want to find the cost of this layout. The cost of moving 1 load between adjacent dept. is $1. The cost between nonadjacent dept. is $2.Dept. 1 Dept. 4 Dept. 2 Dept. 5 60 ft. Dept. 3 40 ft. Dept. 6

There are 6! or 720 possibilities! Clearly, we cant look at them all.

From-to-Matrix1 1 2 Dept. 3 4 Number of Trips 5 6 250

Department 3 4100 30 0 50 20

50 10 0 50

620 0 100 0 0

Schematic Diagram & Cost1001Dept. Dept.3 2 6 2 3 5 5 3 6

Cost$ $ $ $ $ $ $ $ $ 200 50 40 50 40 50 10 30 100

50

2

30

3

20 504

10 20 1005 6

1 1 1 4 4 4 2 2 3

50

Total Cost

$570

Schematic Diagram & CostDept. Dept.2 3 6 2 3 5 5 3 6

Cost$ $ $ $ $ $ $ $ $ 50 100 20 50 40 50 10 60 100

302

50 10 20

1

100

504

205

1 1 1 4 3 4 4 2 100 2 3

6 Total Cost $480

50

Product-Oriented Layouty Facility organized around product y Design minimizes line imbalance y Delay between work stations y Types: Fabrication line; assembly line y Examples y Auto assembly line y Brewery y Paper manufacturing.

Cellular Layout (Work Cells)y Special case of process-oriented layout y Consists of different machines brought together to

make a product y May be temporary or permanent y Example: Assembly line set up to produce 3000 identical parts in a job shop

Work Cell Floor PlanSaws Drills Office

Tool Room

Work Cell

Work Cell AdvantagesReduces: Inventory Floor space Direct labor costs Increases: Equipment utilization Employee participation Quality

Work Cell Layout+ Facilitates cross-training + Can easily adjust production volumes + Easy to incorporate into JIT -- Requires higher volumes to justify -- May require more capital for equipment

Office Layout Example

Relationship Chart1 President 2 Costing 3 Engineering O 4 Presidents SecretaryI = Important; U = Unimportant

Ordinary 1 closeness: 2 President (1) 3 & costing (2) O U 4

A I

AAbsolutely necessary: President (1) & secretary (4)

Relationship Chart1 2 3 4 5 6 7 8 9 101O I O U U U I E U U E U A E U I U O A U U U A U U U U U I U U U I I I O I I

2E

3O

4U

5U

6U

7U

8U

9

U

10

Warehouse Layouty Design balances space (cube)

utilization & handling cost y Similar to process layouty

Items moved between dock & various storage areas

y Optimum layout depends on

Variety of items stored y No. items pickedy

1995 Corel Corp.

Warehouse FlowReceiving Shipping

Warehouse LayoutTry to organize storage in such a way that order pickers can move through the product in a logical and timely manner.

Warehouse Layouty Fastest near the front y Fastest within easy reach y Bulk storage vs. Single item picking y Serpentine vs. oval picking order y Restocking: frequency, safety stock

Cross-DockingIn-coming

y Transferring goods

Outgoing

from incoming trucks at receiving docks to outgoing trucks at shipping docks y Avoids placing goods into storage 1984-1994 T/Maker Co. 1995 Corel Corp.

Retail/Service Layouty Design maximizes product exposure to customers,

profitability per square foot y Decision variablesy y

Store flow pattern Allocation of (shelf) space to products

y Types y Grid design y Free-flow design

Video

Grid DesignGrocery StoreBread Milk Meat

Office

Carts

Checkout

Free-Flow DesignApparel Store

Feature

Trans. Counter

Display Table

Retail Store Flow Guidelinesy Prisoner aisles make you enter store

in a particular route, and pass by certain displays y Often contain less profitable (for the store) brands y Decompression Zone people walk past first rows of items before settling into shopping mode.

Retail Store Flow Guidelinesy Bakery, coffee shop,

restaurant spread aromas by entrance to stimulate taste buds y Siren song of the Starbucks (Safeway) y Food samplers throughout store do same

Retail Store Flow Guidelinesy Frequently purchased items

Meat

at far sides of stores so you have to go through entire store (produce or meat). y Profitable sections like produce placed where you keep running into them

Milk Produce

Retail Store Flow Guidelinesy Major items in middle of

aisles so you have to walk down into middle of aisle (Cereal, peanut butter) y Power items on both sides of aisle so you have to look at both sides

Peanut Butter Cereal

Retail Store Flow Guidelinesy Quality of produce section

Cereal

important in customer decisions about which stores to visit, so produce is often prominently displayed upon entrance y People like to see what they re looking for, not read signs

Peanut Butter

produce

Retail Flow Guidelinesy End caps for high-

visibility sale items y Large quantities of inventory serve as psychic stock y If there is a lot of it, it must be on sale y Stimulates sales 1995 Corel Corp.

Retail Flow Guidelinesy Eliminate cross-over

aisles:y less wasted floor space, y you have to look at more

items, y the more time you spend in the store, the more you will buy.

Shelf Space Planogramy Computerized tool5 facingsPERT PERT PERT PERT PERT

for shelf-space management y Generated from store s scanner data on sales y Often supplied by manufacturery

SUAVE

VO-5

VO-5

VO-5

VO-5

Example: P&G

VO-5

2 ft.

SUAVE

Shelf Placementy Companies prefer to be at eye-level or at child-

reaching level y Close to leading brands or high-draw items: snack foods next to the peanut butter or across from the cereal: y Lots of kids visit the area

Slotting Feesy Manufacturer pays retailer to get a product into a store y 35,000 new grocery products per year y Grocery stores often stock 30,000 items y Impossible to evaluate all new products to choose the best new ones y Slotting fees guarantee grocer profits on a product, help balance risk of trying unknown product. y Grocery is a narrow margin business, slotting fees can represent a significant revenue source.

Slotting Feesy Senate Small Business Committee held hearings

on them in 2000. y Industry refused to cooperate with GAO. y Growers of produce (not just brand names) now getting involved and complaining. y Small businesses claim they can t afford the big payments big companies can make. y Advocates say small companies can put their money where their mouths are just like anyone else

Perimeter Itemsy People follow perimeter pattern y Sale items on end everyone sees y Half of a store s profit comes from items on the

perimeter y Breakfast cereal brings in the most dollars per square foot y Manufacturer incentives increase profitability of soft drinks y Anchors at ends of a section: milk and butter at opposite ends of dairy case