Question

Discuss the strategic importance of layout decisions. How important as these decisions in terms of a company’s long-term profitability goals? What are some examples?

Answer 1

Strategic importance of layout decisions are:
•   It increases the overall quality and output of the manufacturing and production processes I.e. it optimises the production process.
•   It helps in ensuring that least amount of human effort produces maximum output and that reduced effort is utilised somewhere else to benefit the organisation.
•   Also it is ensured that the flow required to complete the operational process is as smooth as possible and least amount of wastage takes place.
Company’s long term profitability depends on this as it saves a lot of operational cost which decreases the net cost incurred in the manufacturing process, also manhours are saved which are utilised in other processes , wastage is least which means inventory cost and wastage cost is reduced and all this clubbed together ensures that the revenues for the organisation and the profitability for the company increases.
Example: Space optimisation in a warehouse ensures that in the same amount of space a lot of material is stored either vertically or horizontally and the movement channels are also sufficient.