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Transcript of Chapter4 Pom
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Type author names here
Oxford University Press, 2012. All rights reserved.
Operations Management
Chapter 4
Locating, Designing and
Managing Facilities
Jones & Robinson
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Explain how firms select locations for their facilities
Explain outsourcing
Review site selection criteria for different organizations
Describe the layout of work and equipment withindifferent types of operations processes
Explain what is meant by the Servicescape and the
effect this has on customers
Explore trends in operations design
Learning Objectives
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Access to raw materials
Availability of energysupplies
Provision of other utilities,such as water supply
Nature of transportationnetworks
Nature of communicationlinks
Availability of land or property
Selecting Locations for Operations
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Local labourmarkets.
Access to markets orcustomers.
Proximity to or distance from competitors.
Business climate.
Governmentpolicies.
Other Location Selection Criteria
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Make or buy decisionnecessary for all firmsto decide as this has a bearing on profitability.
Outsourcingthe shifting of production or a
service from in-house to another supplier Reduced operating costs
Restructuring opportunities
Allows focus on core activities Access to better capability for the outsourced
product or service
Outsourcing
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Some potential disadvantages
Financial costs
Loss of control
Increased risksecurity of information
quality of product or service
supply risk
loss of expertise
Outsourcing
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Size of trading areahow far will customers
travel to get to the operation?
Market structure
Demographics
Travel patterns
Access
VisibilityMany companies use a weighted factor technique
based on the above criteria to select sites
Specific Site Selection
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Weighted factor technique. A business selects themost important criteria in relation to a site and thenweights them according to their relative importance.
Regression modelling.A more sophisticated
approach based on statistics is undertaken on eachsite.
Expert estimation.A technique based on previousexperience and intuition.
Location intelligence. This technique has emergedrecently, combining geographic data such as aerialmaps, demographics, and business information tofacilitate site selection
Specific Site Selection
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Competitive clustering. This refers to operations thatco-locate next to each other so deliberately site their
operation next to one or more competitors. e.g. high
street shops
Saturation marketing. This refers to a single companyco-locating lots of its operations together so that it creates
market dominance.
For exampleLettuce Entertain You, a restaurant
chain that has 38 different restaurants - all in Chicago!Personalpreferences. Sometimes a location is selected
for no other reason than founder or owner wants to locate
there. e.g. The Oban Chocolate Company
Bucking the Trend!
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Fixed position layout
Process layout
Product layout
Cell layout
Process Layout Types in Operations
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Fixed Position Layout
Recipient of the processing is stationaryand the resources, plant and peoplecome to the service.
motorway building shipbuilding
construction site
solicitors office
open heart surgery
high class restaurant.
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Fixed Position Layout
Advantages
High product flexibility
Product or customer remain in one place
High variety of tasks
Disadvantages
High unit cost
May be difficult to schedule tasks Limited space may be a problem
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Process Layout
Similar products or processes (or thosewith similar needs) are grouped together.The product (or Customer) travels betweenthe resources.
X-ray department in a hospital
specialist machining or processing
restaurant kitchen
tinned or frozen food in a supermarket.
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Process Layout
Advantages
High product mix flexibility
Not liable to be disrupted
Easy to control
Disadvantages
Complex flow process
May generate high work in process (WIP)inventory
Low utilization of equipment
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Product Layout
All operations follow the same sequence
of processes.
automobile assembly
self-service cafeteria
paper manufacturing
television and domestic goodsassembly
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Product Layout
Advantages
High volumes give low costs
Specialized equipment opportunity
Disadvantages
Work can be repetitive
Inflexible process
Flow easily disrupted
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Cell Layout
Self contained areas which contain all of
the processes to complete a particular
operation or service.
maternity unit in a hospital
lunch products in a supermarket
sports shop within a department store final machining, testing and packing in
a factory.
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Cell Layout
Advantages
Fast throughput process
Group work adds to motivation
Often used in lean operations
Disadvantages
Need extra equipment
Low utilization of some equipment Costly to reorganize
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Servicescape
Bitner (1992) summarizes the different elements of aServicescape into three composite dimensions namely:
ambient conditions - such as temperature and lighting
spatial layout and functionality
signs, symbols, and artefacts
Different operations use different combinations of theelements to influence particular forms and sets ofbehaviour.
e.g. retail clothing stores such as Karen Millen or Gapcan each create very different kinds of displays andinteriors depending on their market
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Trends in Operations Design
Production-lining serviceorganizing plant,equipment and employees in a product flow layout.Removes the barrier between back of house andfront of house operations
Decoupling back of house (BoH) from front ofhouse (FoH)removing some of the activitiesaltogether, such as food preparation for local
authority schools and hospitals
These are best illustrated by the Servuction System
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Servuction System
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Self-Serviceemployees are removed frommany FoH operations, such as supermarkets.This is covered further in Chapter 8
Co-Brandingmore than one kind ofoperation within the same premises. Usessame BoH facility but different FoH staff.
ExampleLittle Chef and Burger King sharethe same premises in the UK.
Trends in Operations Design
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Facilities Management
Includes:
property strategy
space management
communications infrastructure building maintenance and cleaning
energy and utilities monitoring
waste management and recycling
security and reception services
contract services management