Way of business yesterday

• Where everyone tried to maximize their

throughput independently
– Countries competed each other
– Schools competed each other
– Companies did not share information

How many independent Japanese car makers are there today?

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Business Today
• Government agencies work together
• Countries work together
• Schools share their research findings,
collaborate with other institutions
• Companies share information with each other
– How do they compete each other?
• Being more efficient, serving better and having good
relationship with their customers, vendors, distributors etc.

• This does not mean know-how of companies are open to

public or to the competitors

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

What makes Apple successful?
• R&D
• Innovation
• Manufacturing
• Servicing
• Efficiency

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 What is the goal in Facilities
Planning
• Design of a facility
– Enables a comfortable work environment for the
workers
– Internally efficient
– Optimal location to sustain the highest level of
relationship with vendors and customers
– Should help the organization to achieve the
Supply Chain Excellence

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 What are the steps to achieve
supply chain excellence
• Business as usual
• Link excellence
• Visibility
• Collaboration
• Synthesis
• Velocity
These are the six steps or levels required to
reach the supply chain excellence

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

• Business as usual
– All the departments should work to be the best in the organization
– Each element should perform at the highest efficiency level
• Link Excellence:
– Those units are trying to be the best in the organizations should communicate to
each other efficiently
– If one unit tries not to share information with the other unit to become the best in
the organization, overall performance of the company will be effected negatively
– Work towards never ending improvement
• Visibility:
– Everyone should work together
– This is not possible in large organizations
– All the links within the organization should be visible to people
• Collaboration:
– Strong relationship, trust with people you work with
• Synthesis:
– Combination of all the relevant entities as one
• Vendors, customers, departments all working and analyzed together
– Increases Return on Assets: Minimize the inventory levels
– Improves the customer satisfaction
– Reduces cost due to less traveling and inventory cost etc.
• Velocity:
– Change faster than your competitors
– See the future faster than anyone else

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Supply Chain and Facilities
Planning
• Business is a multilevel relationship with
many different entities
• Therefore facilities should be planned as
considering those supply chain partners
• Facilities considers supply chain partners
will enable their customers’ needs faster,
cheaper and more efficiently

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

Supply Chain
Excellence

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Today we plan facilities
• Flexible:
– Market changes very fast, customer demands too much.
– Our designs should be able to response the customers and
market
• Modularity:
– Modular facilities include systems that cooperate efficiently over
a wide range of operating rates
• Upgradeability
– You do not want to throw your equipment in two years. It should
be easy to follow technological changes
• Adaptability:
– Considering the
• Calendar
• Cycles
• Peaks
• Selective operability
– Capable of handling unexpected situations as knowing how each
segment in the facility works
INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS
 Creating such facility requires holistic
approach whose elements are
• Total Integration:
– From customer to manufacturing, total integration of material and
information flow
• Blurred boundaries:
– Eliminate the traditional relationships between customer/supplier etc
• Consolidation:
– Merge similar small business entities to create stronger and fewer ones
• Reliability:
– Robust, redundant and fault-tolerant systems to create very high level of
uptime
• Maintenance:
– Preventive and predictive maintenance
• Economic progressiveness:
– Combine scattered innovative practices to use in decision making
processes

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Facilities planning is
• Not the determination of:
– Facilities location
– Facilities design
– Facilities layout
– Plant layout
• Hence, it combines the efforts to
determine location of a facility and design
of it

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

Facilities
planning
Cycle

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

Difference between industries

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Importance of Facilities Planning
and Material Handling

• As an industrial engineer, we consider

facilities planning and material handling as
an exceptionally important topic!
– It is a core discipline in IE training
• What are our objectives in this area?

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Is facilities planning important?
• Facilities planning, plant layout etc is one of the core
subjects in Industrial Engineering field
• Can learning facilities planning and material handling
subject contribute to the economy?
– It better helps. Otherwise we industrial engineers would be out of
jobs
– In 1999 $320.8 billion spend on structures
– $297.4 billion is for new structures
– In average 8% of GNP is spend for new facilities each year
– Some $250 billion is spend each year in modification of existing
facilities????
– Depending on the business, 70% of the manufacturing cost is
spent for material handling
– Can this number be reduced by better facilities planning?

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

• Can we reduce the material handling and
maintenance cost? (20 to 50% of operating
expenses are material handling cost)
• Can we increase the morale of the employees?
Would this change the economics of the
organizations?
• Can we create flexible facilities that can adapt
to changes easier?
• Can we increase the manageability of whole
business with better facility designs?
INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS
 Objective of facilities planning

Technology Government
Optimize the
Customer relationships
between groups
within the
organization
Vendors Environment

Optimize relationship between

the outside factors
To Satisfy the Customers

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Facilities Planning Process
• Define the problem
– New or improving the existing facility?
– Define the primary support activities
• Personal, equipment, material etc.
• Analyze the problem
– Determine the interrelationship between all the activities
• Determine the space requirements
– Equipment, personal and material requirements
– Alternative facilities designs
• Evaluate the alternatives
• Select the one fits best to the overall objective
• Implement the design
– Implement
– Maintain
– Continuously redefine the objectives

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

Winning facilities planning process

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

Engineering design; Facilities Planning; Winning facilities planning

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Cost vs. Design changes

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Some examples of bad planning
• A large company decided to allow each of its
acquisitions remain independent
– Result: Many duplicated activities, logistics etc.
***SONY organize an exhibition seminar for its own employees
to share the ongoing research information in its each
business division ***
• An aerospace related manufacturing decided to
implement group technology without a serious study.
– Result: The new system is less efficient then the previous
one

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

Location selection: What are the issues you
would consider for the following example
• A new hospital
• New school
• New warehouse
• New steel manufacturing company
• New Toyota factory
• New ship construction company
• New fuel-tank manufacturing facility for the
space shuttle

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Facilities design problem for the
following examples
• Design of a new hospital
• Design of a new school
• Addition of a new building to an existing
university
• Design of a bank
• Design of a manufacturing facility
• Design of an Airport

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS

 Design of a new factory
• What kind of information do you need?
• How would you:
– Select your technology
– Determine your capacity
• What are the factors affecting your
capacity
• How would you place your departments
inside of the building?

INDU 421 - FACILITIES DESIGN AND MATERIAL HANDLING SYSTEMS