Factory layout refers to how a business designs its factory settings so as to make the best use of its resources. For example, deciding where to place machines and workstations so as to smooth the workflow is part of the layout decision. Factory layout is a key factor that can help improve productivity. Two major layout types are product layout and process layout.
The product layout approach involves setting up the production facilities around the steps involved in manufacturing the product. The product goes from one step to another as it is manufactured. This is the typical assembly line approach. For example, in the manufacturing process of a car, the car body goes from one stage of production to the next. Workers at each stage work on the car, and then pass it on to the next stage.
In a process layout, management groups together machines that perform similar functions. For example, it may put all of the lathes together in one part of the factory. The part that is being manufactured goes from one process area to another process area as it is manufactured. Hospitals typically follow a process layout. For example, the maternity ward is in an area where the hospital attends to all aspects of the maternity process. Similarly, the cardiac unit attends to all aspects of cardiac care.
Businesses producing a variety of different products that have to go through a similar manufacturing process find it more convenient to adopt a process layout. For instance, if a business makes different types of wood-based products, it might adopt a process layout. On the other hand, a business that manufactures primarily one product, such as shoes, would benefit from a product layout that flows the product through the production process most efficiently.
The workflow through a process layout system is variable. A variety of products flow through the system and the shop floor personnel have to move around the material that goes into the products. This happens as the products move from one process to another. With a product layout, the shop floor workers don't have to move around the materials and the workflow is more uniform. The factory locates the materials for each stage of production at the place where the workers use them. This makes for more efficiency.