Layout

Recently, concern was expressed over the rising production costs at the Scottsdale factory. Team A has analyzed several layouts in an effort to increase productivity and efficiency of the factory while reducing down time and money spent on machine maintenance. Per our meeting, the following issues are addressed:

ISSUE 1. How are the immediate production requirements versus future needs

for the facility balanced given the significant downtime and relocation costs?

The immediate needs of the organization must be met so that business is not lost. One way is, if possible, to produce a surplus so that when the downtime occurs for the layout improvements, systems will be available for shipment and no business will be lost if downtime is kept to a minimal.

However, if any business wishes to be successful in today global economy, it must be able to expand and grow and the business climate dictates. Be it revising and improving on an existing product, or developing a complete new product line, it is impetrative that this future needs be considered and long range plan in place before you start to relocate and/or reconfigure your existing layout.

In the event that expansion is required, the long-range plan stated above will already have taken this under advisement and be prepared for this growth when it occurs. Resources and space will already have been allocated to accommodate these needs while not wasting other resources in the interim. The wise thing to do is to always prepare for the unexpected.

ISSUE 2. It is understood that the "cost of delay" is an important cost to consider when redesigning a process. In addition, per our meeting, there is uncertainty in identifying future requirements and new processes that the space will need to

accommodate. Please see the recommendations concerning how to make room for future and unknown processes as well as the "cost of delay" for repositioning the process layout now.

In general, the cost of delay is a variable that indicates how much profit may be expected to be lost when production is delayed for a certain amount of time. Redesigning or repositioning a process or a process layout means one must consider the “cost of delay” that may result from a slowed down production cycle. This cost include expenditures related to extended general conditions, increased equipment, labor, and material, company overhead for the delay period, and lost productivity or inefficiency. Expanding products and services requires that the operations manager conduct careful analysis of the market, evaluate market share for the anticipated product, and compare cost of delay to expected profits.

ISSUE 3. Reasons that achieving the minimum LD score does not produce the optimum solution.

It is important to look at the amount of capital that is invested in the project rather than trying to lower the LD Score. For change to occur, there is going to be a certain level of capital that will go into the project and by anticipating this change, it should be possible