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Operations ManagementOperations ManagementChapter 9 – Layout StrategyChapter 9 – Layout Strategy

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PowerPoint presentation to accompanyPowerPoint presentation to accompany Heizer/Render Heizer/Render Principles of Operations Management, 6ePrinciples of Operations Management, 6eOperations Management, 8e Operations Management, 8e

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Innovations at McDonald’sInnovations at McDonald’s

Indoor seating (1950s)Indoor seating (1950s) Drive-through window (1970s)Drive-through window (1970s) Adding breakfast to the menu Adding breakfast to the menu

(1980s)(1980s) Adding play areas (1990s)Adding play areas (1990s)

Three out of the four are Three out of the four are layout decisions!layout decisions!

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McDonald’s New Kitchen McDonald’s New Kitchen LayoutLayout

Fifth major innovation Fifth major innovation Sandwiches assembled in order Sandwiches assembled in order Elimination of some steps, shortening of Elimination of some steps, shortening of

others others No food prepared ahead except pattyNo food prepared ahead except patty New bun toasting machine and new bun New bun toasting machine and new bun

formulationformulation Repositioning condiment containersRepositioning condiment containers Savings of $100,000,000 per year in food Savings of $100,000,000 per year in food

costscosts

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McDonald’s McDonald’s New Kitchen New Kitchen LayoutLayout

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Layout Design Layout Design ConsiderationsConsiderations

Higher utilization of space, equipment, Higher utilization of space, equipment, and peopleand people

Improved flow of information, materials, Improved flow of information, materials, or peopleor people

Improved employee morale and safer Improved employee morale and safer working conditionsworking conditions

Improved customer/client interactionImproved customer/client interaction

FlexibilityFlexibility

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Layout Design ConsiderationsLayout Design Considerations

• Process FlowchartsProcess Flowcharts

• Process DiagramsProcess Diagrams

Analyzing Service Analyzing Service ProcessesProcesses

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• Diagramming a process to identify the bottleneck Diagramming a process to identify the bottleneck in operations:in operations:

– Operation Operation

– Decision Decision

– Wait Wait

– FlowFlow

Process FlowchartsProcess Flowcharts

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Process FlowchartsProcess Flowcharts

• Cycle Time – the average time between Cycle Time – the average time between completions of successive unitscompletions of successive units

• Bottleneck – the factor that limits Bottleneck – the factor that limits production. A bottleneck is a constraint production. A bottleneck is a constraint on the output of the system and could on the output of the system and could arise from several sources. arise from several sources.

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• Capacity – measure of output per unit of Capacity – measure of output per unit of time when the system is fully busytime when the system is fully busy

• Capacity Utilization – measure of how Capacity Utilization – measure of how much output is actually achieved when the much output is actually achieved when the system is fully busysystem is fully busy

Process FlowchartsProcess Flowcharts

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• Throughput Time – the time it takes to Throughput Time – the time it takes to complete a process from time of arrival to complete a process from time of arrival to time of exit. It is the sum of the critical time of exit. It is the sum of the critical path and the average time spent waiting.path and the average time spent waiting.

• Rush Order Flow Time – the time it takes Rush Order Flow Time – the time it takes to go through the system from beginning to go through the system from beginning to end without the waiting time.to end without the waiting time.

Process FlowchartsProcess Flowcharts

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• See Handout – Problem 1See Handout – Problem 1

Sample ProblemSample Problem

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• Also used to diagram a process and Also used to diagram a process and bottlenecksbottlenecks

• Also used to study labor utilizationAlso used to study labor utilization

Process DiagramsProcess Diagrams

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Process DiagramsProcess Diagrams

• Direct Labor Utilization – measure of Direct Labor Utilization – measure of the percentage of time that workers the percentage of time that workers are actually contributing value to the are actually contributing value to the serviceservice

• Equal to: Equal to: Total Direct Labor ContentTotal Direct Labor Content

(Process Cycle Time) (Number of (Process Cycle Time) (Number of Workers)Workers)

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ExampleExample

• Drivers license office is under Drivers license office is under pressure to increase productivity to pressure to increase productivity to accommodate 120 license renewal accommodate 120 license renewal applicants per hourapplicants per hour

• One clerk will be added to the staffOne clerk will be added to the staff

• How can the system be changed to How can the system be changed to meet this goal?meet this goal?

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Driver’s License ExampleDriver’s License ExampleActivityActivity DescriptionDescription CT in secondsCT in seconds

11 Review app for Review app for correctnesscorrectness

1515

22 Process & record Process & record paymentpayment

3030

33 Check for traffic Check for traffic violations violations

6060

44 Conduct eye testConduct eye test 4040

55 PhotoPhoto 2020

66 Issue updated Issue updated licenselicense

3030

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ExampleExample

120/hr130/hr

Can process 120 apps/hourWith 1 additional staff

Can only process60 applications/hr

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Driver’s License ExampleDriver’s License Example

132/hr

Can process 120 apps/hourWith 1 additional staff

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ServicescapesServicescapes Ambient conditions - background Ambient conditions - background

characteristics such as lighting, characteristics such as lighting, sound, smell, and temperaturesound, smell, and temperature

Spatial layout and functionality - Spatial layout and functionality - which involve customer circulation which involve customer circulation path planning, aisle characteristics, path planning, aisle characteristics, and product groupingand product grouping

Signs, symbols, and artifacts - Signs, symbols, and artifacts - characteristics of building design characteristics of building design that carry social significancethat carry social significance

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ServicescapesServicescapes

• Operations Sequence AnalysisOperations Sequence Analysis

• See handout for exampleSee handout for example

Service LayoutsService Layouts