- Choosing a location and layout are distinct yet related decisions for organizations. Location concerns where to site a facility while layout concerns how to arrange operations within the facility. - Several factors must be considered at multiple levels when choosing a location, from continent/region to country to city to site. This is a large, fixed investment so uncertainty must be reflected. - There are three basic types of layouts: fixed position, process/functional, and service/product. Process/functional is best for repeat, high-volume delivery while fixed position suits project manufacturing.

1. Alex Hill and Terry Hill

2. Lecture outline
• Choosing a LOCATION
• Choosing a LAYOUT
• Critical REFLECTIONS
• SUMMARY

3. Choosing a
location
DECIDING WHERE TO LOCATE
• Size of the INVESTMENT
• The FIXED NATURE of the choice
• The UNCERTAINTY of the future

4. The two tasks of deciding location and layout are
distinct yet related. They are distinct in that location
concerns where best to site a facility, whereas
layout concerns how best to arrange the staff,
processes and equipment within that facility. And
they are related in that they form two parts of a key
decision – how best to position facilities in order to
perform the operations task and meet the needs
of the business.
Once chosen, many organisations
NEVER CHANGE location

5. Choosing a location
Levels of decision
• CONTINENT or REGION
• COUNTRY
• AREA or CITY
• SITE
> KEY IDEA
The number of LEVELS and FACTORS
involved differ DECISION

6. Background factors influencing location
decisions
• The ORIGIN of existing location decisions
• POLITICALLY based constraints
• TECHNOLOGY developments
• Market ACCESS or local PRESENCE in large
consumer markets
• CURRENCY value fluctuations

7. Factors affecting the choice of location
• A well developed INFRASTRUCTURE
• Proximity to MARKETS
• Proximity to SUPPLIERS
• Hospitable BUSINESS CLIMATE
• Availability of STAFF
• Quality of LIFE for employees
• COSTS and INVESTMENTS
• Favourable GOVERNMENT policies
• Proximity to CUSTOMERS

8. CASE 6.1
GROWTH AT
SOFTWARE
TECHNOLOGY PARKS
OF INDIA
1.What are the REASONS
for the rapid growth in
Noida’s IT-based
services?
2.What FACTORS have
affected the choice of
continent/region,
country and area/city?

9. CASE 6.1
Questio
n
GROWTH AT SOFTWARE
TECHNOLOGY PARKS OF INDIA
Answer
REASON
S for
growth
FACTORS
affecting
decision
• IT services EASY to source from
abroad
• STPI FACILITATES the transfer
• Plentiful supply of English-speaking
STAFF
• Lower COSTS to provide service
Well-developed INFRASTRUCTURE
• Hospital BUSINESS CLIMATE
• Availability of STAFF
• Quality of LIFE for employees
• Lower VARIABLE COSTS
• Favourable GOVERNMENT policies

10. Choosing a
lFoaccatotiros naffecting the choice of site
• FACILITIES for staff and
customers
• Building’s DESIGN
• RENTAL costs and local taxes
• SPACE
• Proximity to SUPPORT SERVICES
• Room for EXPANSION
• Level of cutsomer TRAFFIC
• VISIBILITY to customers
• Proximity to CUSTOMERS
• Proximity to COMPETITORS

11. Choosing a
lFoaccatotiros naffecting the choice of site

12. CASE 6.2
GROWTH AT
PLASTIC OMNIUM
1.How has PLANT
LOCATION been central
to its growth in the last
25 years?

13. Question Answer
GROWTH
Impact of
LOCATION
• Over last 25 years GROWN:
- From 4 factories in France
- To 25 factories in 25 countries
CASE 6.2
GROWTH AT PLASTIC
OMNIUM
• Decide to locate near CUSTOMER
- BMW in Munich
• Grew with CUSTOMER

14. CASE 6.3
HSBC RELOCATES
CALL CENTRE
OPERATIONS
1.How did it CHANGE its
approach in the 1990s?
2.What were the
ADVANTAGES and
DISADVANTAGES of
these changes?

15. CASE 6.3
HSBC RELOCATES CALL
CENTRE OPERATIONS
Question Answer
Changes
Advantages
Disadvantag
es
• Moved IT services OFFSHORE
- 4,000 jobs moved
• Lower COSTS
• Used profits to REINVEST and grow
sales
• Large number of well educated,
English speaking STAFF
• Start-up COSTS
• Initial RISK

16. Choosing a
lSoitcea loticoantion techniques
•WEIGHTED
factor
• Centre of
GRAVITY

17. Choosing a
lSoitcea loticoantion techniques

18. Choosing a
lSoitcea loticoantion techniques

19. CCRAESAE T6I.N4G SPACE
ON PASSENGER
JETS
1.Why is ELBOW ROOM
an increasingly
important factor on
passenger airlines?
2.Why is LEGROOM often
easier to provide than
elbow room?

20. Question Answer
ELBOW
ROOM
important
LEG
ROOM
easier
• COMFORT is important for customers:
- Leg room, elbow room and seat
cushioning
• ELBOW room is shared with other
passengers
• Increasing LEG ROOM will remove:
- 1 or 2 rows (4 to 12 seats)
• Increasing ELBOW ROOM will remove:
- 1 or 2 seats per room (30 to 60 seats)
CASE 6.4
CREATING SPACE
ON PASSENGER
JETS

21. Chosen a
LOCATION
Choose a LAYOUT
Choosing a
layout

22. Choosing a
lFaaycotourts influencing layout
• Core TASK
• Available SPACE
• Making space for future
EXPANSION and layout
changes
• HEALTH and SAFETY

23. Choosing a
lBaaysoicu ttypes of layout
• FIXED position
• PROCESS or
FUNCTIONAL
• SERVICE or PRODUCT

24. > KEY IDEA
The BASIC TYPES of layout are:
• FIXED POSITION,
• PROCESS or FUNCTIONAL and
• SERVICE or PRODUCT

26. Choosing a
lBaaysoicu ttypes of layout

27. Choosing a
lBaaysoicu ttypes of layout

28. Choosing a
lBaaysoicu ttypes of layout

29. Choosing a
lBaaysoicu ttypes of layout

30. Choosing a
lSaeyrvoicuet or product type, process and
layout
Ikiru
(1952)
A Bug’s
Life
(1998)
Le
Mans
(1971)
Gung
Ho
1986)
Government Bird Car Pit stop

31. Choosing a
lSaeyrvoicuet or product type, process and
layout
Film clip Government
Film
Title
Director
(year)
Ikiru (Living)
Kurosawa (1952)
Clip Start
Finish
00:58:58
Duration 00:03:07
What clip shows A group of slaves who are served
(unsuccessfully) by a government department
Key learning
objective
The characteristics of a:
•Process or functional layout
•Repeat high-volume service delivery system

32. Choosing a
lSaeyrvoicuet or product type, process and
layout
Film clip Bird
Film
Title
Director
(year)
A Bug’s Life
John Lasseter and Andrew Stanton (1998)
Clip Start
Finish
00:47:00
00:51:22
What clip shows The bugs building a bird to protect their
community
Key learning
objective
The characteristics of a:
•Fixed position layout
•Project manufacturing process

33. Choosing a
lSaeyrvoicuet or product type, process and
layout
Film clip Factory
Film
Title
Director
(year)
Gung Ho
Ron Howard (1986)
Clip Start
Finish
01:33:13
01:34:31
What clip shows Cars being manufactured on a production line
Key learning
objective
The characteristics of a:
•Product layout
•Line manufacturing process

34. Choosing a
lSaeyrvoicuet or product type, process and
layout
Film clip Pit stop
Film
Title
Director
(year)
Le Mans
Lee H. Katzin (1971)
Clip Start
Finish
00:47:40
00:50:43
What clip shows
The pit crew decide to bring in the racing cars
to put on new tyres that will drive better in the
rain
Key learning
objective
The characteristics of a:
•Cell layout
•Repeat low-volume service delivery system

35. Choosing a
lSaeyrvoicuet or product type, process and
layout
Low VARIETY High
Low VOLUME High

36. Choosing a
lSaeyrvoicuet or product type, process and
layout
Question Governme
nt Bird Car Pit stop
Service or
product
Process
Layout

37. Choosing a
lSaeyrvoicuet or product type, process and
layout
Low VARIETY High
Government
Car
Bird
Pit stop
Low VOLUME High

38. Question Governme
nt Bird Car Pit stop
Service or
product
Process
Layout
Repeat
high-volume
delivery
system
Project
manufacturi
ng process
Process
or
functional
Fixed position
Mass product
Product
Service
shop
Special
product
Made on-site
Line
manufacturi
ng process
Service
shop
Repeat
low-volume
delivery
system
Cell
Choosing a
lSaeyrvoicuet or product type, process and
layout

39. Choosing a
lDaeytoaiuletd layout design

40. Choosing a
lDaeytoaiuletd layout design

41. CASE 6.5
FUNCTIONS AT A
TELECOMMUNICATIO
NS COMPANY CALL
CENTRE
1.How did the ORIGINAL
call centre result in
delays?
2.How did the CELL-BASED
redesign reduce
delays?
3.What other
ADVANTAGES could a
cell-based structure
offer this company?

42. CASE 6.5
FUNCTIONS AT A
TELECOMMUNICATIONS COMPANY
CALL CENTRE
Question Answer
Causes of
delays
Cell reduced
delays
Other
advantages
• Customers HANDED OFF between different
departments
• SERVICE based teams handle a customer
• ELIMINATED hand offs
• BACKLOGS become more visible
• Can introduce friendly COMPETITION between
teams
• Common GOALS and TARGETS within cells
• Identify and share BEST PRACTICE between
cells

43. Critical
reflections
• The choice of location and layout significantly
impacts COSTS and SALES
• Therefore, they must clearly reflect the NEEDS
of
- CUSTOMER and MARKET (external)
- BUSINESS (internal)
• In particular, the CHOICE of location is:
- DIFFICULT to change
- LARGE and FIXED investment

44. Summar
y• TASKS of deciding location and layout
- Distinct, but related
• Decisions need to be made at a number of
LEVELS
- Continent/region, country, area/city and site
• Various FACTORS impact the choice of
location
- Exiting sites, proximity, political, economic, etc
• Three basic TYPES of layout
- Fixed position, process or functional, service or
product

46. Revision
questions
1 Organisations:
a) Frequently change location
b) Often never change location
c) Are not concerned about their location

47. Revision
questions
1 Organisations:
a) Frequently change location
b) Often never change location
c) Are not concerned about their location

48. Revision
questions
2 The choice of location needs to reflect that:
a) It is a fixed and large investment
b) The uncertainty of the future
c) Both a) and b)

49. Revision
questions
2 The choice of location needs to reflect that:
a) It is a fixed and large investment
b) The uncertainty of the future
c) Both a) and b)

50. Revision
questions
3 Choosing a location concerns decisions around:
a) Continent/region, country and area/city
b) Site
c) Both a) and b)

51. Revision
questions
3 Choosing a location concerns decisions around:
a) Continent/region, country and area/city
b) Site
c) Both a) and b)

52. Revision
questions
4 Factors affecting the choice of site include:
a) Proximity to customers, staff and suppliers
b) Proximity to competitors
c) Both a) and b)

53. Revision
questions
4 Factors affecting the choice of site include:
a) Proximity to customers, staff and suppliers
b) Proximity to competitors
c) Both a) and b)

54. Revision
questions
5 The basic types of layout are:
a) Jobbing, batch and line
b) Non-repeat, repeat low volume and repeat high
volume
c) Fixed position, process or functional and service
or product

55. Revision
questions
5 The basic types of layout are:
a) Jobbing, batch and line
b) Non-repeat, repeat low volume and repeat high
volume
c) Fixed position, process or functional and service
or product

56. MCcADSEO NFOARLD T’UST AONRDIA L
McCAFE