Choosing where to locate the production facility is one of the most important design decisions. The objective of location planning is to position the capacity of the system in a way that minimizes total production and distribution costs. For every new or additional facility, fixed capital costs for construction, land, and equipment, as well as variable operations costs (such as wages, taxes, energy and materials acquisition, and distribution) are incurred The location decision requires balancing all of these costs, effects on potential revenues, and qualitative factors such as labor availability, quality of life, and community attitudes. Clearly, Ernst & Young managers were trying to minimize the disruptions of the merger when they implemented hoteling in Chicago.
Facility location planning is affected, and sometimes complicated, by the efforts of local government officials to woo managers in to locating in that government’s jurisdiction. This happens continually, it seems with owners of professional sports franchises. Among typical enticements offered by government officials are tax reduction or waivers and such infrastructure improvements as new access roads and railroad connections.
Layout planning: Layout planning involves decisions about how to arrange space in the physical facilities. In layout planning process and equipment decisions are translated in to physical arrangements for production:
1. Productive facilities, such as work stations and materials handling equipment.
2. Non-productive facilities, such as storage areas and maintenance facilities.
3. Support facilities, such as offices, restrooms, waiting rooms, cafeterias and parking lots.
Space must also be provided for materials and additional capacity. Any location related requirements such as docking facilities or heating units must also be planned. A good layout minimizes materials handling maximizes worker and equipment efficiency, and satisfies a host of other factors, such as minimizing worker exposure to hazardous fumes.
Who will do the work?
The final decision in designing the operations system concerns the structure of individual jobs – how the work will be done and who will do it, is a process discussed. Because job design is reflected in labor expenses, any inefficiencies or mistakes here will ultimately affect operating costs. In recent years, three issues have become important for job design: (1) the level of skills employees bring to the workplace; (2) workplace safety; and (3) workplace cooperation.
Worker skills: Employers have always expected to provide some on the job training for new employees. The problem today is that many US job applicants lack basic reading and math skills. One international fastener manufacturer in the United States has found it necessary to have applicants fill out application forms in person to be sure they know how to read and write. This “skills shortage” is expected to get worse as computers and other sophisticated technology become more common place. As a consequence, many corporate executives have committed their organizations to take preemptive action by contributing time and money and talent to the improvement of American public schools. This they reason, will help future workers move into job designs necessary in today’s and tomorrow’s global markets.
Worker Safety: Job design must take into account health and safety requirements set forth in the Occupational Safety and Health Act of 1970 (OSHA) and subsequent federal, state and local regulations.
One of the most serious issues is repetitive motion injuries – potentially crippling tendonitis or nerve damage in the hand and wrist that results from performing the same motions over and over again. Such injuries are most common among production workers, who often perform the same task thousands of times on an 8 hour shift, but white collar workers who type at computers for long periods of time are also vulnerable.
Ergonomics, the biological design of jobs to reduce such hazards, is receiving new respect. OSHA officials recently prepared guidelines to prevent repetitive motion injuries. It led Ford Motor Co. managers to institute company wide programs to cut down on such injuries, sometimes by simply repositioning materials. Tendonitis was also a hazard at a zipper company, where workers tested zippers by hand. At first, managers introduced job rotation to minimize the risk. Eventually they decided to turn the testing over to robots.