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In manufacturing, facility layout consists of configuring the plant site with lines, buildings, major facilities, work areas, aisles, and other pertinent features such as department boundaries. While facility layout for services may be similar to that for manufacturing, it also may be somewhat differentas is the case with offices, retailers, and warehouses. Because of its relative permanence, facility layout probably is one of the most crucial elements affecting efficiency. An efficient layout can reduce unnecessary material handling, help to keep costs low, and maintain product flow through the facility. Types of layouts include process, product, fixed-position, combination, cellular, and certain types of service layouts.


Process layouts are found primarily in job shops, or firms that produce customized, low-volume products that may require different processing requirements and sequences of operations. Process layouts are facility configurations in which operations of a similar nature or function are grouped together. As such, they occasionally are referred to as functional layouts. Their purpose is to process goods or provide services that involve a variety of processing requirements. A manufacturing example would be a machine shop. A machine shop generally has separate departments where general-purpose machines are grouped together by function (e.g., milling, grinding, drilling, hydraulic presses, and lathes). Therefore, facilities that are configured according to individual functions or processes have a process layout. This type of layout gives the firm the flexibility needed to handle a variety of routes and process requirements. Services that utilize process layouts include hospitals, banks, auto repair, libraries, and universities.

Improving process layouts involves the minimization of transportation cost, distance, or time. To accomplish this some firms use what is known as a Muther grid, where subjective information is summarized on a grid displaying various combinations of department, work group, or machine pairs. Each combination (pair), represented by an intersection on the grid, is assigned a letter indicating the importance of the closeness of the two (A = absolutely necessary; E = very important; I = important; O = ordinary importance; U = unimportant; X = undesirable). Importance generally is based on the shared use of facilities, equipment, workers or records, work flow, communication requirements, or safety requirements. The departments and other elements are then assigned to clusters in order of importance.

Advantages of process layouts include:

  • Flexibility. The firm has the ability to handle a variety of processing requirements.
  • Cost. Sometimes, the general-purpose equipment utilized may be less costly to purchase and less costly and easier to maintain than specialized equipment.
  • Motivation. Employees in this type of layout will probably be able to perform a variety of tasks on multiple machines, as opposed to the boredom of performing a repetitive task on an assembly line. A process layout also allows the employer to use some type of individual incentive system.
  • System protection. Since there are multiple machines available, process layouts are not particularly vulnerable to equipment failures.
    Disadvantages of process layouts include:
  • Utilization. Equipment utilization rates in process layout are frequently very low, because machine usage is dependent upon a variety of output requirements.
  • Cost. If batch processing is used, in-process inventory costs could be high. Lower volume means higher per-unit costs. More specialized attention is necessary for both products and customers. Setups are more frequent, hence higher setup costs. Material handling is slower and more inefficient. The span of supervision is small due to job complexities (routing, setups, etc.), so supervisory costs are higher. Additionally, in this type of layout accounting, inventory control, and purchasing usually are highly involved.
  • Confusion. Constantly changing schedules and routings make juggling process requirements more difficult.


Product layouts are found in flow shops (repetitive assembly and process or continuous flow industries). Flow shops produce high-volume, highly standardized products that require highly standardized, repetitive processes. In a product layout, resources are arranged sequentially, based on the routing of the products. In theory, this sequential layout allows the entire process to be laid out in a straight line, which at times may be totally dedicated to the production of only one product or product version. The flow of the line can then be subdivided so that labor and equipment are utilized smoothly throughout the operation.

Two types of lines are used in product layouts: paced and unpaced. Paced lines can use some sort of conveyor that moves output along at a continuous rate so that workers can perform operations on the product as it goes by. For longer operating times, the worker may have to walk alongside the work as it moves until he or she is finished and can walk back to the workstation to begin working on another part (this essentially is how automobile manufacturing works).

On an unpaced line, workers build up queues between workstations to allow a variable work pace. However, this type of line does not work well with large, bulky products because too much storage space may be required. Also, it is difficult to balance an extreme variety of output rates without significant idle time. A technique known as assembly-line balancing can be used to group the individual tasks performed into workstations so that there will be a reasonable balance of work among the workstations.

Product layout efficiency is often enhanced through the use of line balancing. Line balancing is the assignment of tasks to workstations in such a way that workstations have approximately equal time requirements. This minimizes the amount of time that some workstations are idle due to waiting on parts from an upstream process. It also avoids the problem of building up an inventory queue in front of a downstream process.

Advantages of product layouts include:

  • Output. Product layouts can generate a large volume of products in a short time.
  • Cost. Unit cost is low as a result of the high volume. Labor specialization results in reduced training time and cost. A wider span of supervision also reduces labor costs. Accounting, purchasing, and inventory control are routine. Because routing is fixed, less attention is required.
  • Utilization. There is a high degree of labor and equipment utilization.
    Disadvantages of product layouts include:
  • Motivation. The system's inherent division of labor can result in dull, repetitive jobs that can prove to be quite stressful. Also, assembly-line layouts make it very hard to administer individual incentive plans.
  • Flexibility. Product layouts are inflexible and cannot easily respond to required system changesespecially changes in product or process design.
  • System protection. The system is at risk from equipment breakdown, absenteeism, and downtime due to preventive maintenance.


A fixed-position layout is appropriate for a product that is too large or too heavy to move. For example, battleships are not produced on an assembly line. For services, other reasons may dictate the fixed position (e.g., a hospital operating room where doctors, nurses, and medical equipment are brought to the patient). Other fixed-position layout examples include construction (e.g., buildings, dams, and electric or nuclear power plants), shipbuilding, aircraft, aerospace, farming, drilling for oil, home repair, and automated car washes. In order to make this work, required resources must be portable so that they can be taken to the job for on the spot performance.

Due to the nature of the product, the user has little choice in the use of a fixed-position layout. Disadvantages include:

  • Space. For many fixed-position layouts, the work area may be crowded so that little storage space is available. This also can cause material handling problems.
  • Administration. Oftentimes, the administrative burden is higher for fixed-position layouts. The span of control can be narrow, and coordination difficult.


Many situations call for a mixture of the three main layout types. These mixtures are commonly called combination or hybrid layouts. For example, one firm may utilize a process layout for the majority of its process along with an assembly in one area. Alternatively, a firm may utilize a fixed-position layout for the assembly of its final product, but use assembly lines to produce the components and subassemblies that make up the final product (e.g., aircraft).


Cellular manufacturing is a type of layout where machines are grouped according to the process requirements for a set of similar items (part families) that require similar processing. These groups are called cells. Therefore, a cellular layout is an equipment layout configured to support cellular manufacturing.

Processes are grouped into cells using a technique known as group technology (GT). Group technology involves identifying parts with similar design characteristics (size, shape, and function) and similar process characteristics (type of processing required, available machinery that performs this type of process, and processing sequence).

Workers in cellular layouts are cross-trained so that they can operate all the equipment within the cell and take responsibility for its output. Sometimes the cells feed into an assembly line that produces the final product. In some cases a cell is formed by dedicating certain equipment to the production of a family of parts without actually moving the equipment into a physical cell (these are called virtual or nominal cells). In this way, the firm avoids the burden of rearranging its current layout. However, physical cells are more common.

An automated version of cellular manufacturing is the flexible manufacturing system (FMS). With an FMS, a computer controls the transfer of parts to the various processes, enabling manufacturers to achieve some of the benefits of product layouts while maintaining the flexibility of small batch production.

Some of the advantages of cellular manufacturing include:

  • Cost. Cellular manufacturing provides for faster processing time, less material handling, less work-in-process inventory, and reduced setup time, all of which reduce costs.
  • Flexibility. Cellular manufacturing allows for the production of small batches, which provides some degree of increased flexibility. This aspect is greatly enhanced with FMSs.
  • Motivation. Since workers are cross-trained to run every machine in the cell, boredom is less of a factor. Also, since workers are responsible for their cells' output, more autonomy and job ownership is present.

In the twenty-first century, companies are taking advantage of software simulation capabilities to cut the cost of building new production facilities. Such software enables three-dimensional visualization of building and work cell layouts. For example, a German truck manufacturer used simulation software when developing an initial draft plan of its new manufacturing facility. The trucks manufactured consisted of about 6,500 parts delivered in containers to the workstations. Each container of parts was required to be available at the right time and the right place to keep production flowing. The facility simulation revealed how the original plans would have led to the concentration of materials at certain locations and rendered feasible work processes impossible. The company used the software to configure alternative manufacturing designs, systems layouts, material handling, tests for usability, and the supply concept. Additionally, line balancing and cycle periods were all placed in the facility, then visualized and optimized. The software helped the truck manufacturer minimize costs and reduce production problems.


In addition to the aforementioned layouts, there are others that are more appropriate for use in service organizations. These include warehouse/storage layouts, retail layouts, and office layouts.

With warehouse/storage layouts, order frequency is a key factor. Items that are ordered frequently should be placed close together near the entrance of the facility, while those ordered less frequently remain in the rear of the facility. Pareto analysis is an excellent method for determining which items to place near the entrance. Since 20 percent of the items typically represent 80 percent of the items ordered, it is not difficult to determine which 20 percent to place in the most convenient location. In this way, order picking is made more efficient.

While layout design is much simpler for small retail establishments (shoe repair, dry cleaner, etc.), retail stores, unlike manufacturers, must take into consideration the presence of customers and the accompanying opportunities to influence sales and customer attitudes. For example, supermarkets place dairy products near the rear of the store so that customers who run into the store for a quick gallon of milk must travel through other sections of the store. This increases the chance of the customer seeing an item of interest and making an impulse buy. Additionally, expensive items such as meat are often placed so that the

customer will see them frequently (e.g., pass them at the end of each aisle). Retail chains are able to take advantage of standardized layouts, which give the customer more familiarity with the store when shopping in a new location.

Office layouts must be configured so that the physical transfer of information (paperwork) is optimized. Communication also can be enhanced through the use of low-rise partitions and glass walls.

A number of changes taking place in manufacturing have had a direct effect on facility layout. One apparent manufacturing trend is to build smaller and more compact facilities with more automation and robotics. In these situations, machines need to be placed closer to each other in order to reduce material handling. Another trend is an increase in automated material handling systems, including automated storage and retrieval systems (AS/AR) and automated guided vehicles (AGVs). There also is movement toward the use of U-shaped lines, which allow workers, material handlers, and supervisors to see the entire line easily and travel efficiently between workstations. So that the view is not obstructed, fewer walls and partitions are incorporated into the layout. Finally, thanks to lean manufacturing and just-in-time production, less space is needed for inventory storage throughout the layout.

SEE ALSO Lean Manufacturing and Just-in-Time Production; Product-Process Matrix


Finch, Byron J. Operations Now: Profitability, Processes, Performance. 2nd ed. Boston: McGraw-Hill/Irwin, 2006.

Seeing a Better Future: Simulation Software Renders Optimal Plant Layout Before Construction. Manufacturing Business Technology 20 December 2007. Available from:

Stevenson, William J. Operations Management. 8th ed., Boston: McGraw-Hill/Irwin, 2005.


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