Space the final frontier or the route to better business performance?

This is not another promotion for Star Trek but there must be a few Trekkies out there who run businesses and hence will appreciate this case study on the impact space can have on business performance.

In this article we review three impacts work we’ve done has had. In general improved space utilisation can reduce costs and improve productivity. However the first is not always easy to realise whilst the second involves people buy-in.

Warehouse layout

Its not very often you get presented with a green field site, or should I say work space, but our client had built a 2679 sq metre warehouse with the aim of improving delivery performance (by holding strategic finished goods stock).

First we collected some facts:

• Frequency of incoming goods
• Frequency of out going goods
• Number of SKU’s to be held and ideal quantity of each
• Pallet quantities of product
• Other activities to be held in the warehouse

An issue to be born in mind in all the above is growth. In addition in designing layouts don’t forget about the usable height of the building and the type of fire protection needed (roof mounted, in rack etc).

With the above facts it’s possible to design the racking system but also impacting on this is the type of auxiliary equipment to be used. The main issue hear is are you going to use a counter balance, narrow isle or reach truck this decision governs the width of isles and hence your racking layout.

So from all of this you can optimise your warehouse and know the maximum number of units it will hold – in our client’s case this was 850 after allowing for other activities in the warehouse.

Back to the fork lift truck issue. You should not forget about activity this will govern how many trucks you will need and hence the manning of the warehouse.

Accuracy and monitoring stock levels is key – don’t forget the clients aim was to improve delivery performance. In essence this smoothes demand and provides information for a pull type scheduling of the factory. It’s essential the minimum stocks held are regularly reviewed against market demand and factory replenishment time. The strategy is also dependant on the market place, in our client’s case they were supplying to a market lead-time.

Benefits of spending some time in arriving at an effective layout for your warehouse:

• Improved delivery performance
• Improved space utilisation
• Reliable activity profile
• Stock accuracy
• Accurate space requirements
• Cost minimisation (if starting from new)

Office layout

Office layouts are a bit different to warehouse layouts and work shop layouts since hear we’re dealing with reduction in overhead. Traditional office space is full of corners, privacy, and status or at best partitions.

Again when tackling this task you need to collect data:

• How many people need to be housed?
• Who needs to be close to whom?
• Who works with whom?
• What workspace and facilities does each person need?
• Don’t forget growth
• Don’t forget filing

Since this exercise is likely to be relocation rather than starting from new you need to check existing equipment - will it fit together. It’s also quite sensitive since a persons desk is second to company cars and salary as far as an individual is concerned. Like all change communications are key. Disagree on paper rather than making the change then finding it won’t work or people don’t like it.

It’s a never ending debate open plan versus closed offices. Yes there is increased noise and diversions but in our view these negatives are far outweighed by improved communication and productivity. If there is a need for a confidential debate or phone call then most businesses have meeting rooms that can be used.

Generate a draft layout and review with those involved and Senior Management. Following this adjust the layout and agree the final layout. Now plan the moves – these may have to take place out of normal hours since business is unlikely to stop whilst the move takes place. Ideally the people whose area it is should be involved in executing the move but this is not always the case. In this event ensure those not involved know what to expect when they come in to work after the move.

Benefits of spending some time in arriving at an effective layout of your offices:

• Reduced space
• Improved productivity
• Improved communications
  

Work shop layouts – lean layouts

LEAN has a lot to teach us about how to lay out a workshop and design the whole process flow for a particular product. As you will see in previous articles ‘Two’s Company’ and ‘Engagement’ the underlying principals of LEAN are that we eliminate waste, reduce non-value added activity and let the customer pull his requirements through the system.

Often (but not essential) this process starts with an evaluation of a product line by drawing the Value Stream Map. This purely identifies in-balance in the system, evaluates stock to optimise it, and is generally aimed at reducing the total lead time. The map must look at the whole system from supplier to delivery to the customer.

The following two maps show a before and after situation where the lead time for these products has been reduced from 9.5 days to 3.2 days by combining the stamping and assembly operation even though the process time increases from 110 seconds to 128 seconds. Can you spot how the work in progress stock has been reduced (the triangles)? Look at how the schedules have been smoothed from the customer and to the supplier.

Before Map:

After Map:

Let’s assume that you want to leave all that to the experts. Where can you start now with your existing layout? How about looking at the 8 wastes in your system and trying to eliminate as much or as many of those as you can. So what are they?

1. Motion Excessive movement by people or equipment
2. Transportation Product moving from person to person or between locations
3. Over Production Producing more product than is required at the current time
4. Over Processing Unnecessary content - beyond what is required to meet customer requirements
5. Waiting Period of inactivity while waiting for the next process step
   to commence
6. Inventory Accumulations of unprocessed, partially processed or
   finished products
7. Defects Process steps that result in scrap, rework, or reprocessing
8. Talent Not using the greatest resource at your disposal – the knowledge and talent of your people
   
   

As you can see adopting LEAN principles in arriving at or modifying a layout can have a dramatic impact - Reduced cost, Reduced lead time, Improved customer service, Improved visibility, Reduced stock – to name a few.

Good luck and if you would like to know more then just click the contacts tab above.