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1) The setup or layout of an organization helps an organization gain a competitive advantage, efficiency, effectiveness, use of capacity, flexibility, and processes (Heizer, Render & Munson, 2020). When a layout is done properly, an organization can save time, money, resources, and increase productivity. In a long-term sense, the companys current decisions can impact changes in future demands. A company needs to be flexible to change, that impacts customer satisfaction.

My current employer recently outsourced a large piece of the organization to an offshore billing company. I think their previous decision to restructure the departments had a negative effect in which led to the decision to outsource. Five years ago, the company changed the layout of the billing, coding, accounts receivable, and payment posting teams. The departments were at proximity to each other, just a few steps away. There was an open floor plan so that employees could discuss billing questions/issues. Management thought production would increase if the departments were isolated, and verbal communication eliminated. Ultimately this resulted in delayed billing, loss of production, decreased morale, and longer turnaround time.

The culture of the organization changed as did the attitudes of employees. They felt as they were not trusted, and needed to be micromanaged. The morale went into turmoil. The departments greatly depend on each other for accurate billing of claims. Without being able to communicate timely, claims were on delayed. Because morale was down, production went down as well. The new layout was not efficient and effective for the goal of the organization.

Sabrina

2) Facility layout and design is an important component of a business’s overall operations, both in terms of maximizing the effectiveness of the production process and meeting the needs of employees. The basic objective of layout is to ensure a smooth flow of work, material, and information through a system. (Inc. Editorial, 2020) The decision on how to layout the plant/office/business should encompass the ease of future expansion, flow of movement, material handling, space utilization, and safety among other things. (Inc. Editorial, 2020) These decisions can directly affect the future profitability of the organization. The ease of ability to expand can often be a cost saver over having to open a new plant or office. A layout that allows for the efficient flow of movement and materials can help prevent bottlenecks and increase efficiency and utilization. Space utilization is important, as an organization needs to maximize its space utilization in order to prevent paying extra for unused space. All these factors (and more) can assist in a companys long-term profitability goals by allowing for growth and free-flow of movement, materials, and information.

Kenneth,

3)There are many key factors that impact location decisions. Costs, proximity to markets, and proximity to suppliers are a few key factors that can determine whether a location can help the company be successful or not.

There are tangible and intangible costs that need to be taken into account when considering a location for a company. Tangible costs are costs that can easily be measured. In a fast-food chain or a software company, these tangible costs are labor and materials, for example. Intangible costs are costs that cannot be measured with ease. Some of these costs could be the attitude of the employees or the or the quality of an employee’s experience or education.

Proximity to markets is more important to service organizations. It would be much more important for a fast-food chain to find a location where people are near, so they can increase their sales. However, for a software company, this will not be so important because they are creating software which is not tangible, and not bought at a place where the general public can come in and buy it.

Proximity to suppliers is another key factors. A fast-food chain would want to be in close proximity to its suppliers so the food being delivered to the restaurant is still in the best condition because food is perishable. As for a software company, there are no perishable items that are delivered, but instead, the transportation costs might be high for their materials. The closer the company is to its supplier, the lower the cost. 

Amanda,