Facility Layout and Design

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Facility Layout and Design

Facility layout and design is an important component of a business's overall operations, both in terms of maximizing the effectiveness of the production process and meeting the needs of employees. The basic objective of layout is to ensure a smooth flow of work, material, and information through a system. The basic meaning of facility is the space in which a business's activities take place. The layout and design of that space impact greatly how the work is donethe flow of work, materials, and information through the system. The key to good facility layout and design is the integration of the needs of people (personnel and customers), materials (raw, finishes, and in process), and machinery in such a way that they create a single, well-functioning system.


Small business owners need to consider many operational factors when building or renovating a facility for maximum layout effectiveness. These criteria include the following:

  1. Ease of future expansion or changeFacilities should be designed so that they can be easily expanded or adjusted to meet changing production needs. "Although redesigning a facility is a major, expensive undertaking not to be done lightly, there is always the possibility that a redesign will be necessary," said Weiss and Gershon in their book Production and Operations Management. "Therefore, any design should be flexible. Flexible manufacturing systems most often are highly automated facilities having intermediate-volume production of a variety of products. Their goal is to minimize changeover or setup times for producing the different products while still achieving close to assembly line (single-product) production rates."
  2. Flow of movementThe facility design should reflect a recognition of the importance of smooth process flow. In the case of factory facilities, the editors of How to Run a Small Business state that "ideally, the plan will show the raw materials entering your plant at one end and the finished product emerging at the other. The flow need not be a straight line. Parallel flows, U-shaped patterns, or even a zig-zag that ends up with the finished product back at the shipping and receiving bays can be functional. However, backtracking is to be avoided in whatever pattern is chosen. When parts and materials move against or across the overall flow, personnel and paperwork become confused, parts become lost, and the attainment of coordination becomes complicated."
  3. Materials handlingSmall business owners should make certain that the facility layout makes it possible to handle materials (products, equipment, containers, etc.) in an orderly, efficientand preferably simplemanner.
  4. Output needsThe facility should be laid out in a way that is conducive to helping the business meet its production needs.
  1. Space utilizationThis aspect of facility design includes everything from making sure that traffic lanes are wide enough to making certain that inventory storage warehouses or rooms utilize as much vertical space as possible.
  2. Shipping and receivingThe J. K. Lasser Institute counseled small business owners to leave ample room for this aspect of operations. "While space does tend to fill itself up, receiving and shipping rarely get enough space for the work to be done effectively," it said in How to Run a Small Business.
  3. Ease of communication and supportFacilities should be laid out so that communication within various areas of the business and interactions with vendors and customers can be done in an easy and effective manner. Similarly, support areas should be stationed in areas that help them to serve operating areas.
  4. Impact on employee morale and job satisfactionSince countless studies have indicated that employee morale has a major impact on productivity, Weiss and Gershon counsel owners and managers to heed this factor when pondering facility design alternatives: "Some ways layout design can increase morale are obvious, such as providing for light-colored walls, windows, space. Other ways are less obvious and not directly related to the production process. Some examples are including a cafeteria or even a gymnasium in the facility design. Again, though, there are costs to be traded off. That is, does the increase in morale due to a cafeteria increase productivity to the extent that the increased productivity covers the cost of building and staffing the cafeteria."
  5. Promotional valueIf the business commonly receives visitors in the form of customers, vendors, investors, etc., the small business owner may want to make sure that the facility layout is an attractive one that further burnishes the company's reputation. Design factors that can influence the degree of attractiveness of a facility include not only the design of the production area itself, but the impact that it has on, for instance, ease of fulfilling maintenance/cleaning tasks.
  6. SafetyThe facility layout should enable the business to effectively operate in accordance with Occupational Safety and Health Administration guidelines and other legal restrictions.

"Facility layout must be considered very carefully because we do not want to constantly redesign the facility," summarized Weiss and Gershon. "Some of the goals in designing the facility are to ensure a minimum amount of materials handling, to avoid bottlenecks, to minimize machine interference, to ensure high employee morale and safety, and to ensure flexibility. Essentially, there are two distinct types of layout. Product layout is synonymous with assembly line and is oriented toward the products that are being made. Process layout is oriented around the processes that are used to make the products. Generally, product layout is applicable for high-volume repetitive operations, while process layout is applicable for low-volume custom-made goods."


Offices and manufacturing facilities are typically designed in much different waysa reflection of the disparate products that the two entities make. "A factory produces things," wrote Stephen Konz in Facility Design. "These things are moved with conveyors and lift trucks; factory utilities include gas, water, compressed air, waste disposal, and large amounts of power as well as telephones and computer networks. A layout criterion is minimization of transportation cost." Konz pointed out, however, that the mandate of business offices is to produce information, whether disseminated in physical (reports, memos, and other documents), electronic (computer files), or oral (telephone, face-to-face encounters) form. "Office layout criteria, although hard to quantify, are minimization of communication cost and maximization of employee productivity," wrote Konz.

Layout requirements can also differ dramatically by industry. The needs of service-oriented businesses, for instance, are often predicated on whether customers receive their services at the physical location of the business (such as at a bank or pet grooming shop, for instance) or whether the business goes to the customer's home or place of business to provide the service (as with exterminators, home repair businesses, plumbing services, etc.) In the latter instances, these businesses will likely have facility layouts that emphasize storage space for equipment, chemicals, and paperwork rather than spacious customer waiting areas. Manufacturers may also have significantly different facility layouts, depending on the unique needs that they have. After all, the production challenges associated with producing jars of varnish or mountaineering equipment are apt to be considerably different than those of making truck chassis or foam beach toys. Retail outlets comprise yet another business sector that has unique facility layout needs. Such establishments typically emphasize sales floor space, inventory logistics, foot-traffic issues, and overall store attractiveness when studying facility layout issues.

Konz also observed that differences in factory and office layouts can often be traced to user expectations. "Historically, office workers have been much more concerned with status and aesthetics than factory workers," he noted. "A key consideration in many office layouts is 'Who will get the best window location?' To show their status, executives expect, in addition to preferred locations, to have larger amounts of space. Rank expects more privacy and more plush physical surroundings." In addition, he stated, "Offices are designed to be 'tasteful' and to 'reflect the organization's approach to business dealings.'" Conversely, in the factory setting, aesthetic elements take a back seat to utility.

Given these emphases, it is not surprising that, as a general rule, office workers will enjoy advantages over their material production brethren in such areas as ventilation, lighting, acoustics, and climate control.


Baykasoglu, Adil, Turkay Dereli, and Ibrahim Sabuncu. "An Ant Colony Algorithm for Solving Budget Constrained and Unconstrained Dynamic Facility Layout Problems." Omega. August 2006.

Cornacchia, Anthony J. "Facility Management: Life in the Fast Lane." The Office. June 1994.

Groover, M. P. Automation, Production Systems, and Computer-Integrated Manufacturing. Prentice-Hall, 1987.

J. K. Lasser Institute. How to Run a Small Business. Seventh Edition. McGraw-Hill, 1994.

Konz, Stephen. Facility Design. John Wiley & Sons, 1985.

Myers, John. "Fundamentals of Production that Influence Industrial Facility Designs." Appraisal Journal. April 1994.

Sherali, Hanif D., Barbara M.P. Fraticelli, and Russell D. Melle. "Enhanced Model Formulations for Optimal Facility Layout." Operations Research. July-August 2003.

Weiss, Howard J., and Mark E. Gershon. Production and Operations Management. Allyn and Bacon, 1989.

                                Hillstrom, Northern Lights

                                 updated by Magee, ECDI