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Objectives and Principles of Plant Layout

Objectives and Principles of Plant Layout
Info on Objectives and #Principles of Plant Layout: Plant layout refers to the physical arrangement of production facilities. It is the configuration of departments, work centres and equipment in the conversion process. It is a floor plan of the physical facilities, which are used in production. A plant layout study is an engineering study used to analyze different physical configurations for a manufacturing plant. It is also known as Facilities Planning and Layout. Some Precise Definitions for Plant Layout: According to Moore “Plant layout is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipment and all other supporting services along with the design of best structure to contain all these facilities”. “Plant layout is the #arrangement of machines, work areas and service areas within a factory”. —George R. Terry “Plant layout involves the development of physical relationship among building, equipment and production operations, which will enable the manufacturing process to be carried on efficiently”. —Morris E. Hurley “Plant layout can be defined as a technique of locating machines, processes and plant services within the factory so as to achieve the greatest possible output of high quality at the lowest possible total cost of manufacturing”. —Sprigal and Lansburg “Plant layout ideally involves the allocation of space and the arrangement of equipment in such a manner that overall operations cost can be minimised.” —J. Lundy From these definitions it is clear that plant layout is arrangement and optimum utilisation of available resources in such a manner so as to ensure maximum output with minimum input. Objectives of Plant Layout: The primary goal of the plant layout is to maximise the profit by arrangement of all the plant facilities to the best advantage of total manufacturing of the product. The objectives of plant layout are: Streamline the #flow of materials through the plant. Facilitate the manufacturing process. Maintain high turnover of in-process inventory. Minimise materials handling and cost. Effective utilisation of men, equipment and space. Make effective utilisation of cubic space. Flexibility of manufacturing operations and arrangements. Provide for employee convenience, #safety and comfort. Minimize investment in equipment. Minimize overall production time. Maintain flexibility of arrangement and operation. Facilitate the #organizational structure. Principles of Plant Layout: Principle of integration: A good layout is one that integrates men, materials, machines and supporting services and others in order to get the optimum utilisation of resources and maximum effectiveness. Principle of minimum distance: This principle is concerned with the minimum travel (or movement) of man and materials. The facilities should be arranged such that, the total distance travelled by the men and materials should be minimum and as far as possible straight line movement should be preferred. Principle of cubic space utilisation: The good layout is one that utilise both horizontal and vertical space. It is not only enough if only the floor space is utilised optimally but the third dimension, i.e., the height is also to be utilised effectively. Principle of flow: A good layout is one that makes the materials to move in forward direction towards the completion stage, i.e., there should not be any backtracking. Principle of maximum flexibility: The good layout is one that can be altered without much cost and time, i.e., future requirements should be taken into account while designing the present layout. Principle of safety, #security and satisfaction: A good layout is one that gives due consideration to workers safety and satisfaction and safeguards the plant and machinery against fire, theft, etc. Principle of minimum handling: A good layout is one that reduces the material handling to the...
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How to Pep-Up Productivity?

How to Pep-Up Productivity?
Productivity Analysis: Productivity is defined in terms of utilization of resources, like material and labor or it is the ratio of output to input. For example, productivity of labor can be measured as units produced per labor hour worked. It is closely associated with quality, technology and profitability. Now you will be able to understand why there is a strong emphasis on productivity improvement in a competitive business environment. It can be calculated at firm level, at industry level, at national level and at international level. That is what we call as GDP, NDP, and PPP. Gross Domestic Product – ‘GDP’: The monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. Net Domestic Product – ‘NDP’:  An annual measure of the economic output of a nation that is adjusted to account for depreciation, calculated by subtracting depreciation from the gross domestic product (GDP). Purchasing Power Parity – ‘PPP’:  An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency’s purchasing power. Efficiency can be improved by (a) Controlling inputs, (b) Improving process so that the same input yields higher output, and (c) By improvement of technology. Factor Productivity: When it is measured individually for each input resource to the production process it is called factor or partial productivity. Total Productivity: When it is measured for all the factors of production together, it is called total factor productivity. What are the types of Productivity Analysis? 1. Trend analysis: Studying productivity changes for the firm over a period of time. 2. Horizontal analysis: Studying efficiency in comparison with other firms of same size and involved in similar business. 3. Vertical analysis: Studying output in comparison with other industries and other firms of different sizes in the same industry. 4. Budgetary analysis: Setting up a norm for productivity for a future period as budget and planning strategies to achieve it. FACTORS AFFECTING PRODUCTIVITY 1. Capital/labor ratio: It is a measure of whether enough investment is being made in plant, machinery, and tools to make effective use of labor hours. 2. Scarcity of some resources: Resources such as energy, water and number of metals will create problems. 3. Work-force changes: Change in work-force affect productivity to a larger extent, because of the labor turnover. 4. Innovations and technology: This is the major cause of increasing productivity problems. 5. Regulatory effects: These impose substantial limitations on some firms. 6. Bargaining power: Bargaining power of organized labor to command wage has a detrimental effect. 7. Managerial factors: The planning and strategic skills of a manager play a big role in boosting the productivity of an organization. 8. Quality of work life: It is a term that describes the organizational culture, and the extent to which it motivates and satisfies employees. Here are the top 10 productivity killers in the workplace you’ll want to watch out for: 1. Cell phone/texting 2. Gossip 3. The internet 4. Social media 5. Snack breaks or smoke breaks 6. Noisy coworkers 7. Meetings 8. Email 9. Coworkers dropping by 10. Coworkers putting calls on speakerphone See Also – Top Productivity Killers in an...
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Inventory Control – An Introduction

Inventory Control – An Introduction
Inventory Control Learning Objective: To know the meaning, types and functions of inventories Meaning of Inventory: The word inventory refers to any kind of resource having economic value and is maintained to fulfil the present and future needs of an organization. Fred Hansman has defined Inventory as “An idle resource of any kind provided such a resource has economic value”. Such resources may be classified into three categories: A. Physical resources such as raw materials, semi-finished goods, finished goods, spare parts, lubricants etc. B. Human resources such as unused labor (man power) and C. Finance resources such as working capital etc. Inventory of resources is held to provide desirable service to customers and to achieve sales turnover target. At the same time holding big inventory severely affects the cash flow and working capital of an organization if the production vs demand cycle is not stream-lined. Because inventory often represents more than 25% of total assets and therefore it becomes very essential to maintain an optimal level of inventory in each resource so that the total inventory cost is near its minimum. Functions of Inventory: Inventory serves several important functions that add flexibility to the operations of a firm. Provides stock of goods to meet the anticipated demand of customers. In the case of consumer goods with a seasonal demand, the establishment of inventories in distribution and production warehouses also ensures that production can run continuously at full capacity despite swings in seasonal demand. De-Coupling function: The down time in one manufacturing stage should not affect the whole manufacturing process and this vital purpose is solved by holding inventory which acts as a buffer between successful stages of production. Quantity Discounts: Many suppliers offer QD’s for large orders of inventory. Procurement warehouses can result from a company’s desire to get volume discounts from a supplier or more favorable conditions from a carrier. Price speculation – Inventory also helps to hedge against inflation and price changes. Inventories of procurement and distribution warehouses are increased if the price of a good is expected to rise. In such a situation, the purchasing company aims to amass the good at the current low price. The supplier may speculate that supply shortages will drive the prices higher, and he uses the warehouse to store the good. Shortages can occur regularly due to irregular supply of raw materials, weather, quality problems or improper deliveries. Inventory shall act as “safety stock’ – extra goods on hand which reduce the risk of stock-outs. Helps to permit operations to continue smoothly with the use of “work in process” inventory. This is because it takes time to make goods and because a pipeline inventory is stocked through-out the process. JUST IN TIME MANUFACTURING CONCEPT Types of Inventory: Inventory can be classified according to the basis of type of material maintained in the firms and also on the basis of the functions they tend to perform in an organization. On the basis of type of material, the firms maintain four types of inventories: Raw material inventory Work in process inventory Maintenance/operating supply (MRO) inventory and Finished goods inventory Raw material inventory is the one which has been purchased and yet to be processed. The work in process material has undergone some change but is not completed. Work in process exists because of the time it takes for a product to be made which is called the “CYCLE TIME.” MRO inventory is devoted to maintenance/repair/operating supplies. They exist because the need and timing for maintenance and repair of some equipment are unknown. Products completed and waiting for shipment are called finished goods inventory. Finished goods may be inventoried because customer demand for...
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A Small Intro to Supply Chain Management

A Small Intro to Supply Chain Management
What is Supply Chain #Management? Investopedia: Supply chain management is the streamlining of a business’ supply-side activities to maximize customer value and to gain a competitive advantage in the marketplace. Supply chain management (SCM) represents an effort by #suppliers to develop and implement supply chains that are as efficient and economical as possible. THE INTEGRATED MARKETING FRAMEWORK Wikipedia: Supply chain management (SCM) is “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term #performance of the individual companies and the supply chain as a whole.” Business Dictionary: Management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost. Supply chain management requires the commitment of supply chain partners to work closely to coordinate order generation, #order taking, and order fulfillment. They thereby create an extended enterprise spreading far beyond the producer’s location. Supply Chain More Environmentally Friendly   Supply Chain Management in Simpler Terms: The EFFECTIVE movement and management of materials and information as they flow from their source to the end customer. Supply Chain encompasses #purchasing, #manufacturing, warehousing, transportation, customer service, demand planning and supply planning. Supply Chain management is a daunting task and calls for proper planning and execution. OBJECTIVES OF FORECASTING Supply chain management(SCM) is the control of the supply chain as a process from supplier to manufacturer to #wholesaler to #retailer to #consumer. Supply chain management does not  only comprise  the passage of a physical product  through the chain but also any data that goes along with the product (such as order status information, payment schedules, and ownership titles) and the actual entities that handle the product from stage to stage of the supply chain. There are essentially three goals of SCM: To reduce inventory To increase the speed of transactions with real-time data exchange and To increase revenue by satisfying customer demands more efficiently. When you think of the world’s most efficient and successful performance and supply chains, what comes to mind? For me it is not Wal-mart  or Pepsi but #Mumbai Dabbawalas. The Success of Supply Chain of Dabbawalas in Mumbai –Said to be Six Sigma Compliant No over-reliance on technology, all manual operations Create an integrated performance chain, the chief, team leaders and delivery men. Acute visibility Keep it simple. Real simple with a color coding to identify where the food has to be delivered and to whom. Timely Delivery as the shelf life of food is 4-5 hours. Why is it so important for companies to get products to their customers quickly? Faster product availability is significant  to increasing sales and there’s a sizeable profit advantage for the extra time that you are in the market and your competitor is not. The earlier and faster you are in the market, the more orders and market share you enjoy. The ability to deliver a product faster also can make or break a sale. If two competitive products appear to be equal and one is immediately available and the other will be available in a week, which would you choose? Supply Chain Management is all about moving goods more quickly to their destination in a strategic and tactical manner. Supply Chain Management Tomorrow: The future for Supply Chain Management looks very bright. Two major trends are benefiting Supply Chain Management operations- Customer service focus and  Information technology. Successful organisations must excel in both of these areas, the fundamental objective being to “ADD VALUE.” Which Companies Impress You When You Think of Effective SCM in India?...
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Forecasting Part 1

Forecasting Part 1
Objectives of Forecasting The objective of this post is to impart some light on the uses and importance of forecasting and to get you acquainted with various forecasting techniques. And also to know how these techniques are used in decision making process. Nature of Forecast: A forecast is an estimate of an event which will happen in future – be it, demand of a product, rainfall at a particular place, population of a country, or growth of a technology. It is estimated based on the past data related to a particular event and hence it is not a deterministic quantity. In any industrial enterprise, forecasting is the first level decision activity before consolidating other decision problems like, materials planning, scheduling, type of production system. Forecasting provides a basis for co-ordination of plans for activities in various units of a company. All the functional managers in any organization will base their decision on the forecast value. So, it provides vital information for that organization. Classification of forecasts: Technology forecasts Economic forecasts Demand forecasts Technology Forecast Technology is a combination of hardware and software. Hardware is any physical product while software is the know-how, technique or procedure. Technology forecast deals with certain characteristics like level of technical performance, rate of technological advances. It is a prediction of the future characteristics of useful machines, products, process, procedures or techniques. TIFAC – Technology Information Forecasting and Assessment Council is an autonomous organization set up in 1988 under the Department of Science & Technology. In 1993, TIFAC embarked upon the major task of formulating a Technology Vision for the country in various emerging technology areas. Economic Forecast Government agencies and other organizations involve in collecting data and prediction of estimate on the general business environment. This involves the application of statistical models utilizing variables sometimes called indicators. Some of the most well-known economic indicators include inflation and interest rates, GDP growth/decline, retail sales and unemployment rates. This is used to predict future tax revenues, level of business growth, level of employment, level of inflation etc. Also, these will be useful to business circles to plan their future activities based on the level of business growth. Demand Forecast This gives the expected level of demand for goods or services. This is the basic input for business planning and control. Hence, the decisions for all the functions of any corporate house are influenced by demand forecast. Factors affecting demand forecast Business cycle Random variation Customer’s plan Product’s life cycle Competitor’s efforts and prices Customer’s confidence and attitude Quality Credit policy Design of goods or services Reputation for service Sales effort Advertising Hurry up! We are running short of...
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