CHAPTER 3- PLANT LOCATION AND PLANT LAYOUT

PLANT LOCATION:
Location decisions represent an integral part of the strategic planning process of virtually every
organization. Although it might appear that location decisions are mostly one-time problems
pertaining to new organizations, the fact is that existing organizations often have a bigger stake
in these kinds of decisions than new organizations have.
Facility location is the process of determining a geographic site for a firm’s operations. Managers
of both service and manufacturing organizations must weigh many factors when assessing the
desirability of a particular site, including proximity to customers and suppliers, labor costs, and
transportation costs.
Location conditions are complex and each comprises a different Characteristic of a tangible (i.e.
Freight rates, production costs) and non-tangible (i.e. reliability, frequency security, quality)
nature.

Location conditions are hard to measure. Tangible cost based factors such as wages and products
costs can be quantified precisely into what makes locations better to compare. On the other hand
non-tangible features, which refer to such characteristics as reliability, availability and security,
can only be measured along an ordinal or even nominal scale. Other non-tangible features like
the percentage of employees that are unionized can be measured as well. To sum this up non-
tangible features are very important for business location decisions.

It is appropriate to divide the factors, which influence the plant location or facility location on
the basis of the nature of the organization as
1. General location factors, which include controllable and uncontrollable factors for all type of
organizations.
2. Specific location factors specifically required for manufacturing and service organizations.

Location factors can be further divided into two categories: Dominant factors are those derived
from competitive priorities (cost, quality, time, and flexibility) and have a particularly strong
impact on sales or costs. Secondary factors also are important, but management may downplay
or even ignore some of them if other factors are more important.
General Location Factors: Following are the general factors required for location of plant in
case of all types of organizations.

CONTROLLABLE FACTORS
1. Proximity to markets.
2. Supply of materials
3. Transportation facilities
4. Infrastructure availability

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5. Labour and wages
6. External economies
7. Capital

UNCONTROLLABLE FACTORS
8. Government policy
9. Climate conditions
10. Supporting industries and services
11. Community and labor attitudes
12. Community Infrastructure

CONTROLLABLE FACTORS:

1. Proximity to markets: Every company is expected to serve its customers by providing goods
and services at the time needed and at reasonable price organizations may choose to locate
facilities close to the market or away from the market depending upon the product. When the
buyers for the product are concentrated, it is advisable to locate the facilities close to the market.
Locating nearer to the market is preferred if

The products are delicate and susceptible to spoilage.

· After sales services are promptly required very often.
· Transportation cost is high and increase the cost significantly.
· Shelf life of the product is low.
Nearness to the market ensures a consistent supply of goods to customers and reduces the cost of
transportation.

2. Supply of raw material: It is essential for the organization to get raw material in right
qualities and time in order to have an uninterrupted production. This factor becomes very
important if the materials are perishable and cost of transportation is very high. General
guidelines suggested by Yaseen regarding effects of raw materials on plant location are:
o When a single raw material is used without loss of weight, locate the plant at the raw material
source, at the market or at any point in between.
o When weight loosing raw material is demanded, locate the plant at the raw material source.
o When raw material is universally available, locate close to the market area.
o If the raw materials are processed from variety of locations, the plant may be situated so as to
minimize total transportation costs.
Nearness to raw material is important in case of industries such as sugar, cement, jute and cotton
textiles.

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3. Transportation facilities:

Speedy transport facilities ensure timely supply of raw materials to the company and finished
goods to the customers. The transport facility is a prerequisite for the location of the plant. There
are five basic modes of physical transportation, air, road, rail, water and pipeline. Goods that are
mainly intended for exports demand a location near to the port or large airport. The choice of
transport method and hence the location will depend on relative costs, convenience, and
suitability. Thus transportation cost to value added is one of the criteria for plant location.

4. Infrastructure availability:

The basic infrastructure facilities like power, water and waste disposal, etc., become the
prominent factors in deciding the location. Certain types of industries are power hungry e.g.,
aluminum and steel and they should be located close to the power station or location where
uninterrupted power supply is assured throughout the year. The non-availability of power may
become a survival problem for such industries. Process industries like paper, chemical, cement,
etc., require continuous. Supply of water in large amount and good quality, and mineral content
of water becomes an important factor. A waste disposal facility for process industries is an
important factor, which influences the plant location.

5. Labor and wages:

The problem of securing adequate number of labor and with skills specific is a factor to be
considered both at territorial as well as at community level during plant location. Importing labor
is usually costly and involve administrative problem. The history of labor relations in a
prospective community is to be studied. Prospective community is to be studied. Productivity of
labor is also an important factor to be considered. Prevailing wage pattern, cost of living and
industrial relation and bargaining power of the unions’ forms in important considerations.

6. External economies of scale:

External economies of scale can be described as urbanization and locational economies of scale.
It refers to advantages of a company by setting up operations in a large city while the second one
refers to the “settling down” among other companies of related Industries. In the case of
urbanization economies, firms derive from locating in larger cities rather than in smaller ones in
a search of having access to a large pool of labor, transport facilities, and as well to increase their
markets for selling their products and have access to a much wider range of business services.
Location economies of scale in the manufacturing sector have evolved over time and have
mainly increased competition due to production facilities and lower production costs as a result

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of lower transportation and logistical costs. This led to manufacturing districts where many
companies of related industries are located more or less in the same area. As large corporations
have realized that inventories and warehouses have become a major cost factor, they have tried
reducing inventory costs by launching “Just in Time” production system (the so called Kanban
System). This high efficient production system was one main factor in the Japanese car industry
for being so successful. Just in time ensures to get spare parts from suppliers within just a few
hours after ordering. To fulfill these criteria corporations have to be located in the same area
increasing their market and service for large corporations.

7. Capital:
By looking at capital as a location condition, it is important to distinguish the physiology of fixed
capital in buildings and equipment from financial capital. Fixed capital costs as building and
construction costs vary from region to region. But on the other hand buildings can also be rented
and existing plants can be expanded. Financial capital is highly mobile and does not very much
influence decisions. For example, large Multinational Corporations such as Coca- Cola operate
in many different countries and can raise capital where interest rates are lowest and conditions
are most suitable.
Capital becomes a main factor when it comes to venture capital. In that case young, fast growing
(or not) high tech firms are concerned which usually have not many fixed assets. These firms
particularly need access to financial capital and also skilled educated employees.

UNCONTROLLABLE FACTORS

8. Government policy:
The policies of the state governments and local bodies concerning labor laws, building codes,
safety, etc., are the factors that demand attention. In order to have a balanced regional growth of
industries, both central and state governments in our country offer the package of incentives to
entrepreneurs in particular locations. The incentive package may be in the form of exemption
from a saves tax and excise duties for a specific period, soft loan from financial institutions,
subsidy in electricity charges and investment subsidy. Some of these incentives may tempt to
locate the plant to avail these facilities offered.

9. Climatic conditions:
The geology of the area needs to be considered together with climatic conditions (humidity,
temperature). Climates greatly influence human efficiency and behavior. Some industries require
specific climatic conditions e.g., textile mill will require humidity.

10. Supporting industries and services:

Now a day the manufacturing organization will not make all the components and parts by itself
and it subcontracts the work to vendors. So, the source of supply of component parts will be the
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one of the factors that influences the location.
The various services like communications, banking services professional consultancy services
and other civil amenities services will play a vital role in selection of a location.

11. Community and labor attitudes:

Community attitude towards their work and towards the prospective industries can make or mar
the industry. Community attitudes towards supporting trade union activities are important
criteria. Facility location in specific location is not desirable even though all factors are favoring
because of labor attitude towards management, which brings very often the strikes and lockouts.

12. Community infrastructure and amenity:

All manufacturing activities require access to a community infrastructure, most notably
economic overhead capital, such as roads, railways, port facilities, power lines and service
facilities and social overhead capital like schools, universities and hospitals.
These factors are also needed to be considered by location decisions as infrastructure is
enormously expensive to build and for most manufacturing activities the existing stock of
infrastructure provides physical restrictions on location possibilities.

Alfred Weber’s Theory of Industrial Location

Introduction:
 The principal aim of an industrial location¢ theory is to find out the economically best
location or optimal location which gives maximum profits.
 The maximum profits can be obtained when¢ the costs are minimum and the revenues are
maximum. therefore., industrial location theories can be classified into two groups.
 A. least coast location theories
 B. maximum revenue location theories.
 Industrial location theory was first propounded by a German location economist, Alfred
weber in 1909, in his book ‘uberden standart der industrien’.
 It was later translated into English in 1929, as ‘ The theory of the Location of Industries’.
Weber’s theory of industrial location is very comprehensive and known as ‘Least Cost
theory’.
 He was the first one to analyse the general regional factors of transport and labour costs
as primary factors, and the agglomeration costs as secondary factors, influencing the
optimal location of the manufacturing industries.

Assumptions: Like other deductive theories, weber too offered¢ certain assumptions to analyze
different cost minimizing factors and processes and their impact on industrial location.
1. The area is typically uniform or isotropic in form of terrain or relief, climate, soils, economic
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system, technology and distribution of population.
2. Manufacturing involves a single product at a time and the product is supplied to a single
market.
3. Raw materials are not evenly distributed in space but a few known and fixed locations which
are available at equal transportation cost throughout.
4. Markets are known and fixed at specific places.
5. Labour is spatially fixed and immobile by nature in general but is abundantly available at
particular wage level at particular places.
6. Transport costs are throughout equal, increases with increasing linear distance and weight of
material.
7. Transportation route is the shortest distance to destination.
8. There is perfect market competition.
9. Each commodity has uniform demand and price. The Perfect Competition is a¢ market
structure where a large number of buyers and sellers are present, and all are engaged in the
buying and selling of the homogeneous products at a single price prevailing in the market.

Important Technical Terms:

1) Ubiquitous materials (Ubiquities): raw material used for manufacturing which are available
everywhere . Such materials does not affect the selection of location. eg. Air, Sunlight
2) Localized materials- coal, gold, petroleum, and other minerals
3) Pure materials- which does not loose their weight in processing. Eg: cotton, cotton yarns, etc
4) Gross materials : materials that loose weight during processing. Eg. Sugercane, sugerbeet,
bauxite ore, iron ore, etc.
5) Location weight- per unit weight of raw material + per unit weight of finished products
6) Material Index: it indicates that location should be near market or near raw material.
Calculated as, Total localized materials used / the weight of product.
7) Isodapane: according to Weber, it is a line joining the places (points) having same transport
cost per unit manufactured good.

Description Of The Theory: Weber’s industrial Location theory¢ is analyzed in two conditions
1. Case of one raw material and one market point, and
2. Case of two or more raw material sources and one market point

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Possibilities Of The Location Of The Industry:
1. If ubiquitous material is used- there is no cost of raw material so industry can be established
anywhere near market because there is no transport cost of finished goods too.
2. If pure materials are used- industry may be established at (i) the source of raw material (ii) at
market point (iii) at any point between raw material and market. Total transport cost will be equal
in all these cases. 3. If gross materials are the raw material then industry must be located near
weight loosing raw materials. Lighter finished products can be transported al lower cost to
market.

Possibilities In This Case

1. If both raw materials are ubiquitous, it is advantageous to set up factory near market. In this
case transport cost of raw materials and finished goods becomes zero.
2. if both raw materials are pure ,it is advantageous to set up the factory at market centre. Raw
materials will be brought to factory and there will be no transportation cost on finished products.
Thus transportation cost will be minimum.
3. if industry uses both pure and ubiquitous materials then, factory should set up near market.
Transport cost of pure and its finished goods will be same and ubiquitous materials and its
finished products has no transportation cost. So, total transportation cost will be minimum at
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market location. 4. If both raw materials are gross materials then, it becomes difficult to find best
location for industry. Weber designed ‘locational triangle’ to solve this problem.

Market-consumption point(C)
One gross raw material source (A)¢
Other gross raw material source ( B),in¢ this case establishing industry at any of these three
location is not advantageous .
So, Optimal location has to be at any point¢ within this triangle made by A,B,C.
If weight of finished good is less than raw materials then location will be closer to raw
materials . Eg: Iron and steel industry
If weight of finished good is more¢ than raw materials then location will be closer to market. Eg.
Bakery factory

Impact Of Labour And Agglomeration On The Location Of Industry Weber’s industrial

location theory is primarily¢ based on least cost of transport of raw materials and finished goods,
but Weber gives much importance to Impact of labour source and agglomeration of industry in a
particular region.
(A) Impact Of Labour: Acc. To Weber, labour is concentrated at some¢ definite places and
different places have different labour cost. In order to save labour cost, the industry
should be relocated away from the point of the least transport cost. Isodapane is the line
joining those points where¢ increased transport costs are balanced by labour movement
cost savings.
(B) Impact Of Agglomeration: Agglomeration economies develop when a firm produces
items in mass or when many firms cluster together in the same location. It significantly
influences the location of the industries. Due to effect of agglomeration one may move to
place where the profit or advantage of agglomeration will be more than the additional
increase in transport cost due to deviation from the least cost location.

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Evaluation Of The Theory: This theory explains some basic influences on the¢ location of
industries, but it has been criticized mainly because of its assumptions and changed
circumstances related with technology, transport system ,etc.
1.Most of the assumptions made by Weber are not realistic. Single market point is unrealistic as
well as transport cost do not increase proportionately with distance and weight.
2.Weber has concentrated mainly on the transport costs and has ignored the costs employed with
production process.
3. Weber has concentrated much on minimizing costs and has given least emphasis on revenue.
4. Socio-cultural and political influences has also been ignored by Weber, which are also a
deciding factor for setting up industries.
5. Weber’s single product, one firm, single market centre, etc has been now replaced by multi-
product, multi-national corporations and companies, import of raw materials from long distance
by sea routes have now become common, unlike hi days early 20th century.

Plant Layout Meaning & Objectives

Planning & arranging manufacturing machinery, equipment & services for the first time in
completely new plants. The improvements in layouts are already in use in order to introduce new
methods & improvements in manufacturing procedure. It includes activities like- Office Area,
Plant Area- Production Dept, Technical Services- stock room, material handling, store room…
etc. A good layout is one which allows materials rapidly & directly for processing. This reduces
transport handling, clerical & other costs down per unit , space requirements are minimized & it
reduces idle machine & idle man time.
According to James Moore, “Plant layout is a plan of an optimum arrangement of facilities
including personnel, operating equipment, storage space, material handling equipments and all
other supporting services along with the design of best structure to contain all these facilities”.

3.5.1. Need (Importance) of Layout planning

1. Economies in handling
2. Effective use of available area
3. Minimization of production delays
4. Improved quality control
5. Minimum Equipment Investment
6. Avoidance of bottlenecks
7. Better production Control
8. Better Supervision
9. Improved utilization of labour
10. Improved employee moral

3.5.2. Objectives of Good Plant Layout

The primary goal of the plant layout is to maximize the profit by arrangement of all the plant
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facilities to the best advantage of total manufacturing of the product.
The objectives of plant layout are:
1. Streamline the flow of materials through the plant.
2. Facilitate the manufacturing process.
3. Maintain high turnover of in-process inventory.
4. Minimize materials handling and cost.
5. Effective utilization of men, equipment and space.
6. Make effective utilization of cubic space.
7. Flexibility of manufacturing operations and arrangements.
8. Provide for employee convenience, safety and comfort.
9. Minimize investment in equipment.
10. Minimize overall production time.

Factors Influencing Plant Layouts:

The following are some important factors, which influence the planning of effective layout to a
significant degree.

1. Nature of the product: The nature of the product to be manufactured will significantly affect
the layout of the plant. Stationary layout will be most suitable for heavy products while line
layout will be best for the manufacture for the light products because small and light products
can be moved from one machine to another very easily and, therefore, more attention can be paid
to machine locations can be paid to machine locations and handling of materials.

2. Volume of production: Volume of production and the standardization of the product also

affect the type of layout. If standardized commodities are to be manufactured on large scale, line
type of layout may be adopted.

3. Basic managerial policies and decisions: The type of layout depends very much on the
decisions and policies of the management to be followed in producing the commodity with
regard to the size of plant, kind and quality of the product, scope for expansion to be provided
for, the extent to which the plant is   to be integrated, amount of stocks to be carried at anytime,
the kind of employee facilities to be provided etc.

4. Nature of plant location: The size shape and topography of the site at which the plant is
located will naturally   affect the type of layout to be followed in view of the maximum
utilization of the space available .For e.g., if a site is near the railway line the arrangement of
general layout for receiving and shipping and for the best flow of production in and out the plant
may be made by the side of the railway lines .If space is narrow and the production process is
lengthy, the layout of plant may be arranged on the land surface in the following manner:

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5. Type of industry process: This is one of the most important factors influencing the choice of
type of plant layout. Generally the types of layout particularly the arrangement of machines and
work centers and the location of workmen vary according to the nature of the industry to which
the plant belongs. For the purpose of lay out, industry may be classified into two broad
categories: (i) Intermittent and (ii) continuous. Intermittent type of industries is those, which
manufacture different component or different machines. Such industries may manufacture the
parts, when required according to the market needs. Examples of such industries are shipbuilding
plants. In this type of industry functional layout may be the best. The second type of industry in
‘continuous industry. in this type of industry raw material are fed at one end and the finished
goods are received at another end. A continuous industry may either be analytical or synthetic. A
analytical industry breaks up the raw material into several parts during the course of production
process or changes its form, e.g. oil and sugar refineries. A synthetic industry on the other hand
mixes the two or more materials to manufacture   one product along with the process of
production or assembles several parts to get finished product. Cement and automobiles industries
are the examples of such industry. Line layout is more suitable in continuous process industries.

6. Types of methods of production: Layout plans may be different according to the method of

production proposed to be adopted. Any of the following three methods may be adopted for
production- (1) Job order production, (2) batch production, and (3) mass production. Under job
production goods are produced according to the orders of the customers and therefore,
specification vary from customer to customer and the production cannot be standardized. The
machines and equipment can be arranged in a manner to suit the need of all types of customers.
Batch production carries the production of goods in batches or group at intervals. In this type of
manufacturing the product is standardized and production is made generally in anticipation of
sales. In such cases functional or process layout may be adopted. In case of mass production of
standardized goods, line layout is most suitable form of plant layout.

7. Nature of machines: Nature of machines and equipment also affects the layout of plants. If
machines are heavy in weight or create noisy atmosphere, stationery layout may reasonably be
adopted. Heavy machines are generally fixed on the ground floor. Ample space should be
provided for complicated machines to avoid accidents.

8. Climate: Sometimes, temperature, illumination and air are the deciding factors in the location
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of machines and their establishments. For example, in lantern manufacturing industry, the spray-
painting room is built along the factory wall to ensure the required temperature control and air
expulsion and the process of spray painting may be undertaken.

9.Nature of material: Design and specification of materials, quantity and quality of materials

and combination of materials are probably the most important factors to be considered in
planning a layout. So, materials storage, space, volume and weight of raw materials, floor load
capacity, ceiling height ,method of storing etc. should be given special consideration. This will
affect the space and the efficiency of the production process in the plant. It will facilitate
economic production of goods and prompt materials flow and soundly conceived materials
handling system.

10. Type of machine: Machines and equipment may be either general purpose or special
purpose. In addition certain tools are used. The requirements of each machine and equipment are
quite different in terms of their space; speed and material handling process and these factors
should be given proper consideration while choosing out a particular type of layout. This should
also be considered that each machine and equipment is used to its fullest capacity because
machines involve a huge investment. For instance, under product layout, certain machines may
not be   used to their full capacity so care should be taken to make full use   of the capacity of the
machines and equipment.

12. Human factor and working conditions: Men are   the most important factor of production
and therefore special consideration for their safety and comforts should be given while planning
a layout, specific safety items like obstruction-free floor, workers not exposed to hazards, exit
etc. should be provided for. The layout should also provide for the comforts to the workers such
as provision of rest rooms, drinking water and other services etc. sufficient space is also to be
provided for free movement of workers.

13. Characteristics of the building: Shape of building, covered and open area, number of
storeys, facilities of elevators, parking area  and so on also influence the layout plan. In most of
the cases where building is hired, layout is to be adjusted within the spaces available in the
building. Although minor modification may be done to suit the needs of the plants and
equipment. But if any building is to be constructed, proper care should be given to construct it
according to the layout plan drawn by experts. Special type of construction is needed to
accommodate huge or technical or complex or sophisticated machines and equipment.

Types Of Plant Layout- After selecting the plant location, based on the type of production
system to be adopted, the layout has to be decided. The types of layout are:
1. Fixed (Stationary & Strata) layout
2. Product layout
3. Group (flexible) layout

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4. Process layout
5. Service Organization layout
1. Fixed (Stationary & Strata) layout

The fixed product layout is developed by locating the workstations or production centers on the
fixed job. Fixed layout type is used when the job size is large. Logistics are involved in ensuring
that the right processes are brought to the product at the right time and at the right place. This has
been mainly used in electronic industry to support computer systems integration and test;
materials, sub assemblies, components, peripherals are brought to the single workstation where
finished system is built. This type of layout requires generally higher number of personnel and
equipments than the other types, since the work piece remains stationary.
Advantages:
1. This method is highly flexible and any changes in product design and product mix can be
easily accommodated.

2. Since work centers are independent, scheduling results in achieving minimum total production
time

3. The teams of personnel are responsible for continuity of operations.

4. Movement of materials is reduced.

5. Job enlargement could be promoted by allowing individuals or teams to perform the whole
job.
Limitations:
1. Skilled labour is required.

2. Supervision is required.

3. Positioning of material and machinery is costly and complex.

4. Equipment duplication may occur.

5. Utilization of equipment is required.

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2. Product Layout

In this layout the machines are arranged according to the processing sequence of the product.
Material flows directly from one workstation to other workstation. Machines are not shared by
the products. This type of layout is used for high volume production. For proper utilization of
machines sufficient production volume is required. Since the processes are located closed
together in the production sequence, the layout minimizes the distance between the work center.
This layout is for product focused systems, and is popularly known as ‘Assembly Line”. The
work centres are arranged in the job sequence. The raw materials enter at one end of the line and
individual operations are performed in the pre-fixed sequence and get converted to the final
shape. There is one flow for each product. This follows the I – pattern of flow. The work in-
process and the material handling are minimized. Following conditions favour the selection of
product layout.
· High volume of production Standardization of product

· Reasonably stable product demand Uninterrupted supply of material Holding up of inventory is

possible.

Product layouts achieve a high degree of both labour and equipment utilization, and this offsets
the high equipment costs. the investment in work-in-process is minimum because the items move
quickly from operation to operation. This also reduces congestion and ensures smooth flow of
items in the shop floor. Overall supervision and control are effective
Advantages:

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1. The total production time is short.
2. The material handling is reduced because of the location of the machines to minimize the
distances between the consecutive operations.
3. Less skilled operator is required. Thus training is simple and short.
4. Less space is occupied by work in transit and temporary storage.
5. The flow is smooth and logical flow line results.
6. Small in process inventory as the work is directly fed from one process to other
Limitations:
1. The production time is determined by the slowest machine.
2. A general supervision is required.
3. Since identical machines are arranged at various locations, initial investment is high.
4. A change in the product design requires an entire change in the layout.
5. A breakdown of one machine lead to complete stoppage of entire production.

3. Group (Mixed) Layout

When production volume is not sufficient for product layout, group layout is used. Here products
are grouped in to logical product families. The groups of processes are called cells. So it is also
called as cellular layout. It is a compromise between product and process layout. Since products
are grouped into families this technology is also called as group technology with each individual
cells are called GT cells.

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Advantages:
1. This supports the use of general purpose equipments.

2. This is a compromise between product and process layout.

3. Shorter travel distances and smoother flow lines than process layout

4. Team attitude and job enlargement tend to occur.

5. Utilization of each machine is increased.

Limitations
1. Higher skilled employees are required

2. General supervision is required.

3. It depends on the balanced material flow through the cell otherwise buffers and WIP storage
are required.

4.Process Layout
In this type the machine are grouped and the product passes from one group to other group based
on the sequence of production. The groups of processes are called cells. The process layout is
used in the rapid changes in the product mix or production volume as well as when both product
and group layout cannot be used. Typically job shop employs process layout due to the variety of
products manufactured and their low production volume. It has high degree of inter departmental
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flow.
These layouts, also known as “Functional Layout’ is process focused systems and are used
widely in manufacturing and service sectors. The use of general purpose machines provides
flexibility necessary to handle a wide range of processing requirements. Workers who operate the
equipments are usually skilled or semi-skilled. The example of process layout includes hospitals,
colleges and universities, banks, airlines and public libraries. For instance, hospitals have many
departments like surgery, maternity, emergency, etc. Similarly universities have separate
departments that concentrate on different areas of study as engineering, business management,
mathematics, and physics. In business organization, there will be departments like accounts,
personnel, and systems.

Advantages:
1. Since the machines are grouped, only fewer machines are required; thus minimum investment
is required.
2. Better utilization of machines could be achieved.
3. High degree of flexibility exists.
4. Supervision could be specialized.
5. The working personnel find the job more satisfying and interesting since there is a diversity of
tasks.

Limitations:
1. Highly skilled labour is required.
2. Work in process inventory is increased.
3. Total production time is longer
4. Planning and control of production system turns out to be tedious.
5. Space and capital are tied up by the work in process.
6. Material handling is more expensive because of longer flow line

5.Service organisation layout

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Services establishments such as Hospitals, 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
organisation 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.
The major factors considered for service providers, is an impact of location on sales and
customer satisfaction. Customers usually look about how close a service facility is, particularly if
the process requires considerable customer contact. Hence, service facility layouts should
provide for easy entrance to these facilities from the freeways. Well-organized Packing areas,
easily accessible facilities, well designed walkways and parking areas are some of the
requirements of service facility layout.

Service facility layout will be designed based on degree of customer contact and the service
needed by a customer. These service layouts follow conventional layouts as required. For
example, for car service station, product layout is adopted, where the activities for servicing a car
follows a sequence of operation irrespective of the type of car. Hospital service is the best
example for adaptation of process layout. Here, the service required for a customer will follow
an independent path. The layout of car servicing and hospital is shown in Figs.

A 4.4 Production & Material Management Page 18