A Process-Oriented Layout can simultaneously handle a variety of products and services. This is the traditional way to support a product differentiation strategy. It is most efficient when making products with different requirements or when handling customers, patients, or clients with different needs. A process oriented layout is typically the low-volume, high-variety strategy. In a job-shop environment, each product or small order is produced by moving it from one department to another in the sequence required for the product. A good example of the process-oriented layout is a hospital or a clinic. As the inflow of patients, each with his or her own needs requires routing through admissions, laboratories, operating rooms, radiology, pharmacies nursing beds and so on. Equipment, skills, and supervision are organized around these processes.
A big advantage of process oriented layout is its flexibility in equipment and labor assignments. The breakdown of one machine, for example, need not halt an entire process, work can be transferred to other machines in the department. Process oriented layout is also especially good for handling the manufacture of parts in small batches or job lots, and for the production of a wide variety of parts in different sizes or forms.
The disadvantages of process oriented layout come from general purpose use of the equipment. Orders take more time to move through the system because of difficult scheduling, high labor skills and work in process inventories are higher because of imbalances in the production process. High labor skill needs also increase the required level of training and experience and high work in process levels increases capital investment.
When designing a process layout, the most common tactic is to arrange departments or work centers so as to minimize the costs of material handling. In other words, departments with large flows of parts or people between them should be placed next to one another. Material handling department costs in this approach depend on (1) the number of loads to be moved between two departments during some period of time and (2) the distance-related costs of moving loads between departments. Cost is assumed to be a function of the distance between departments.
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