Learning Objectives
After studying this chapter, you should be able to:
8-1Describe four layout patterns and when they should be used.
8-2Explain how to design product layouts using assembly-line balancing.
8-3Explain the concepts of process layout.
8-4Describe issues related to workplace design.
8-5Describe the human issues related to workplace design.
Vytec (www.vytec.com) is a leading manufacturer of vinyl siding for homes and businesses. Vytec makes 50 different product lines (called profiles) of siding, soffits, and accessories. Each profile is typically produced in 15 colors, creating 750 stock-keeping units. The finished siding is packaged in a carton that holds 20 pieces that are usually 12 feet long. The cartons are stacked in steel racks (called beds). Each bed holds 30 to 60 cartons, depending on the bed’s location in the warehouse. Vytec’s main warehouse is more than 200,000 square feet.
Over time, demand for each siding profile changes; some are added and others discontinued. One problem the warehouse faces periodically is the need to redo the location and capacity of beds in the warehouse. Using basic layout principles, high-demand siding profiles are located closest to the shipping dock to minimize travel and order-picking time. Although management would like to find a permanent solution to this stock placement problem in the warehouse, continuous changes in demand and product mix necessitate a new warehouse design every few years.
What Do You Think?
Think of a facility in which you have conducted business—for instance, a restaurant, bank, or automobile dealership. How did the physical environment and layout enhance or degrade your customer experience?
Once processes are selected and designed, organizations must design the infrastructure to implement these processes. This is accomplished through the design of the physical facilities and work tasks that must be performed. The physical design of a factory needs to support operations as efficiently as possible, as we can see in the Vytec example. Facility and work design are important elements of an organization’s infrastructure and key strategic decisions that affect cost, productivity, responsiveness, and agility.
A good layout should support the ability of operations to accomplish its mission.
In both goods-producing and service-providing organizations, facility layout and work design influence the ability to meet customer wants and needs, enhance sustainability, and provide value. A poorly designed facility can lock management into a noncompetitive situation and be very costly to correct. For many service organizations, the physical facility and workplace are vital parts of service design (see the box, Facility Layouts in Fitness Centers). It can also play a significant role in creating a satisfying customer experience, particularly when customer contact is high. Facility design must be integrated with and support job and process design.
Facility Layouts in Fitness Centers
Many readers belong to a fitness center, or perhaps have one at their schools. Fitness centers use different layouts, similar to what we might see in manufacturing. Typically, you will see a process layout that groups free weights, stretching areas, cardio equipment, and strength machines in common areas. If strength machines are arranged in a logical fashion for “circuit training” (where you typically exercise big muscles first), then we have elements of a product layout. We might also see a cellular layout—for instance, when all leg machines, all chest and shoulder machines, and so on are grouped together within a process layout. Cybex, a manufacturer of fitness equipment, offers a “gym planner” application by which one can drag and drop Cybex equipment, furniture, and accessories to design a personal training studio or fitness center (http://www.cybexintl.com/solutions/gymplanner.aspx).
8-2Designing Product Layouts
Product layouts in flow shops generally consist of a fixed sequence of workstations. Workstations are generally separated by buffers (queues of work-in-process) to store work waiting for processing, and are often linked by gravity conveyors (which cause parts to simply roll to the end and stop) to allow easy transfer of work. An example is shown in Exhibit 8.6. Such product layouts, however, can suffer from two sources of delay: flow-blocking delay and lack-of-work delay. Flow-blocking delay (or blocking delay) occurs when a work center completes a unit but cannot release it because the in-process storage at the next stage is full. The worker must remain idle until storage space becomes available. Lack-of-work delay occurs whenever one stage completes work and no units from the previous stage are awaiting processing. Lack-of-work delay is often described as “starving” the immediate successor workstation. Such delays cause bottlenecks, which we defined in Chapter 7, limiting the throughput of the entire process. It is important to identify any bottlenecks if process improvements are to be made.
These sources of delay can be minimized by attempting to “balance” the process by designing the appropriate level of capacity at each workstation. This is often done by adding additional workstations in parallel. Product layouts might have workstations in series, in parallel, or in a combination of both. Thus, many different configurations of workstations and buffers are possible, and it is a challenge to design the right one.
An important type of product layout is an assembly line. An assembly line is a product layout dedicated to combining the components of a good or service that has been created previously. Assembly lines were pioneered by Henry Ford and are vital to economic prosperity and are the backbone of many industries such as automobiles and appliances; their efficiencies lower costs and make goods and services affordable to mass markets. Assembly lines are also important in many service operations such as processing laundry, insurance policies, mail, and financial transactions.
8-2aAssembly-Line Balancing
Assembly-line balancing focuses on organizing work efficiently in flow shops.
The sequence of tasks required to assemble a product is generally dictated by its physical design. Clearly, you cannot put the cap on a ballpoint pen until the ink has been inserted. However, for many assemblies that consist of a large number of tasks, there are many ways to group tasks together into individual workstations while still ensuring the proper sequence of work. Assembly-line balancing is a technique to group tasks among workstations so that each workstation has—in the ideal case—the same amount of work. Assembly-line balancing focuses on organizing work efficiently in flow shops.
For example, if it took 90 seconds per unit to assemble an alarm clock, and the work was divided evenly among three workstations, then each workstation would be assigned 30 seconds of work content per unit. Here, there is no idle time per workstation, and the output of the first workstation immediately becomes the input to the next workstation. Technically, there is no bottleneck workstation, and the flow of clocks through the assembly line is constant and continuous. In reality, this is seldom possible, so the objective is to minimize the imbalance among workstations while trying to achieve a desired output rate. A good balance results in achieving throughput necessary to meet sales commitments and minimize the cost of operations. Typically, one either minimizes the number of workstations for a given production rate or maximizes the production rate for a given number of workstations.
To begin, we need to know three types of information:
The set of tasks to be performed and the time required to perform each task.
The precedence relations among the tasks—that is, the sequence in which tasks must be performed.
The desired output rate or forecast of demand for the assembly line.
The first two can be obtained from an analysis of the design specifications of a good or service. The third is primarily a management policy issue, because management must decide whether to produce exactly to the forecast, overproduce and hold inventory, subcontract, and so on.
To illustrate the issues associated with assembly-line balancing, let us consider an activity consisting of three tasks, as shown in Exhibit 8.7. Task A is first, takes 0.5 minute, and must be completed before task B can be performed. After task B, which takes 0.3 minute, is finished, task C can be performed; it takes 0.2 minute. Because all three tasks must be performed to complete one part, the total time required to complete one part is 0.5 + 0.3 + 0.2 = 1.0 minute.
Suppose that one worker performs all three tasks in sequence. In an 8-hour day, he or she could produce (1 part / 1.0 min) (60 min per hour) (8 hours per day) = 480 parts /day. Hence, the capacity of the process is 480 parts/day.
Alternatively, suppose that three workers are assigned to the line, each performing one of the three tasks. The first operator can produce 120 parts per hour, as his or her task time is 0.5 minute. Thus, a total of (1 part/0.5 min) (60 min per hour) (8 hours per day) = 960 parts / day could be sent to operator 2. Because the time operator 2 needs for his or her operation is only 0.3 minute, he or she could produce (1 part/0.3 min) (60 minutes per hour) (8 hours per day) = 1,600 parts/day. However, operator 2 cannot do so because the first operator has a lower production rate. The second operator will be idle some of the time waiting on components to arrive. Even though the third operator can produce (1 part/0.2 min) (60 minutes per hour) (8 hours per day) = 2,400 parts/day, we see that the maximum output of this three operator assembly line is 960 parts per day. That is, workstation 1 performing task A is the bottleneck in the process.
A third alternative is to use two workstations. The first operator could perform operation A while the second performs operations B and C. Because each operator needs 0.5 minute to perform the assigned duties, the line is in perfect balance, and 960 parts per day can be produced. We can achieve the same output rate with two operators as we can with three, thus saving labor costs. How work tasks and activities are grouped into workstations is important in terms of process capacity (through-put), cost, and time to do the work.
An important concept in assembly-line balancing is the cycle time. Cycle time is the interval between successive outputs coming off the assembly line. These could be manufactured goods or service-related outcomes. In the three-operation example shown in Exhibit 8.7, if we use only one workstation, the cycle time is 1 minute/unit; that is, one completed assembly is produced every minute. If two workstations are used, as just described, the cycle time is 0.5 minute/unit. Finally, if three workstations are used, the cycle time is still 0.5 minute/unit, because task A is the bottleneck, or slowest operation. The line can produce only one assembly every 0.5 minute.
The cycle time (CT) cannot be smaller than the largest operation time, nor can it be larger than the sum of all operation times. Thus,
Where A = available time to produce the output. R is normally the demand forecast. Thus, if we specify a required output (demand forecast), we can calculate the maximum cycle time needed to achieve it. Note that if the required cycle time is smaller than the largest task time, then the work content must be redefined by splitting some tasks into smaller elements.
For a given cycle time, we may also compute the theoretical minimum number of workstations required:
When this number is a fraction, the theoretical minimum number of workstations should be rounded up to the next highest integer. For example, for a cycle time of 0.5, we would need at least 1.0/0.5 = 2 workstations.
The following equations provide additional information about the performance of an assembly line:
The total time available computed by Equation 8.4 represents the total productive capacity that management pays for. Idle time is the difference between total time available and the sum of the actual times for productive tasks as given by Equation 8.5. Assembly-line efficiency, computed by Equation 8.6, specifies the fraction of available productive capacity that is used. One minus efficiency represents the amount of idle time that results from imbalance among workstations and is called the balance delay, as given by Equation 8.7
In Solved Problem 8.1, suppose that we use seven workstations. The total time available is 7 (1.5) = 10.5 minutes; the total idle time is 10.5 – 8 = 2.5 minutes; and the line efficiency is reduced to 8/10.5 = 0.76. One objective of assembly-line balancing is to maximize the line efficiency. Note that if we use only six workstations, the total time available is 5 91.5) = 7.5 minutes. Because this is less than the sum of the task times, it would be impossible to achieve the desired output rate of 300 reels per day.
Solved Problem 8.1
Bass Fishing Inc. assembles fishing reels in an assembly line using six workstations. Management wants an output rate of 300 reels per day (with a 7.5 hour workday). The sum of the task times is 8 minutes/reel.
What is the cycle time?
What is the assembly-line efficiency?
What is total idle time?
Management is paying for 8 minutes of work and 1 minute of idle time per reel.
8-2bLine-Balancing Approaches
Balancing the three-task example in the previous section was quite easy to do by inspection. With a large number of tasks, the number of possible workstation configurations can be very large, making the balancing problem very complex. Decision rules, or heuristics, are used to assign tasks to workstations. Because heuristics cannot guarantee the best solution, one often applies a variety of different rules in an attempt to find a very good solution among several alternatives. For large line-balancing problems, such decision rules are incorporated into computerized algorithms and simulation models.
To illustrate a simple, yet effective, approach to balancing an assembly line, suppose that we are producing an in-line skate, as shown in Exhibit 8.8. The target output rate is 360 units per week. The effective workday (assuming one shift) is 7.2 hours, considering breaks and lunch periods. We will assume that the facility operates five days per week.
Eight tasks are required to assemble the individual parts. These, along with task times, are
Assemble wheels, bearings, and axle hardware (2.0 min).
Assemble brake housing and pad (0.2 min).
Complete wheel assembly (1.5 min).
Inspect wheel assembly (0.5 min).
Assemble boot (3.5 min).
Join boot and wheel subassemblies (1.0 min).
Add line and final assembly (0.2 min).
Perform final inspection (0.5 min).
If we use only one workstation for the entire assembly and assign all tasks to it, the cycle time is 9.4 minutes. Alternatively, if each task is assigned to a unique workstation, the cycle time is 3.5, the largest task time. Thus, feasible cycle times must be between 3.5 and 9.4 minutes. Given the target output rate of 360 units per week and operating one shift per day for five days per week, we can use Equation 8.2 to find the appropriate cycle time:
The eight tasks need not be performed in this exact order; however, it is important to ensure that certain precedence restrictions are met. For example, you cannot perform the wheel assembly (task 3) until both tasks 1 and 2 have been completed, but it does not matter whether task 1 or task 2 is performed first because they are independent of each other. These types of relationships are usually developed through an engineering analysis of the product. We can represent them by an arrow diagram, shown in Exhibit 8.8. The arrows indicate what tasks must precede others. Thus, the arrow pointing from tasks 1 and 2 to task 3 indicate that tasks 1 and 2 must be completed before task 3 is performed; similarly, task 3 must precede task 4. The numbers next to each task represent the task times.
This precedence network helps visually determine whether a workstation assignment is feasible—that is, meets the precedence restrictions. For example, in Exhibit 8.9 we might assign tasks 1, 2, 3, and 4 to one workstation, and tasks 5, 6, 7, and 8 to a second workstation, as illustrated by the shading. This is feasible because all tasks assigned to workstation 1 are completed before those assigned to workstation 2. However, we could not assign tasks 1, 2, 3, 4, and 6 to workstation, 1, and tasks 5, 7, and 8 to workstation 2, because operation 5 must precede operation 6.
The problem is to assign the eight work activities to workstations without violating precedence or exceeding the cycle time of 6.0. Different rules may be used to assign tasks to workstations. For example, one line-balancing decision rule example is to assign the task with the longest task time first to a workstation if the cycle time would not be exceeded. The longest-task-time-first decision rule assigns tasks with long task times first, because shorter task times are easier to fit in the line balance later in the procedure. Another rule might be to assign the shortest task first. These rules attempt to minimize the amount of idle time at workstations, but they are heuristics and do not guarantee optimal solutions.
Cycle Times and Economic Cycles
When the global economic crisis hit a few years ago, demand for automobiles fell dramatically. As a result, automobile manufacturers needed to reduce production. One way they did so was to change the cycle time for their auto assembly plants. For example, General Motors announced that the factory making the Chevrolet Silverado and GMC Sierra pickup trucks would operate only one shift and change its line speed from 55 to 24 trucks per hour. “We don’t need excess inventory out there,” GM spokesman Chris Lee said. He also said, “We adjust up and down to the market.”
The longest-task-time rule can be formalized as follows:
Choose a set of “assignable tasks”—those for which all immediate predecessors have already been assigned.
Assign the assignable task with the longest task time first. Break ties by choosing the lowest task number.
Construct a new set of assignable candidates. If no further tasks can be assigned, move on to the next workstation. Continue in this way until all tasks have been assigned.
Let us illustrate this with an example. We will call the first workstation “A” and determine which tasks can be assigned. In this case, tasks 1, 2, and 5 are candidates, as they have no immediate predecessors. Using the decision rule—choose the activity with the longest task time first—we therefore assign task 5 to workstation A.
Next, we determine a new set of tasks that may be considered for assignment. At this point, we may only choose among tasks 1 and 2 (even though task 5 has been assigned, we cannot consider task 6 as a candidate because task 4 has not yet been assigned to a workstation). Note that we can assign both tasks 1 and 2 to workstation A without violating the cycle time restriction.
At this point, task 3 becomes the only candidate for assignment. Because the total time for tasks 5, 1, and 2 is 5.7 minutes, we cannot assign task 3 to workstation A without violating the cycle time restriction of 6.0 minutes. In this case, we move on to workstation B.
At workstation B, the only candidate we can assign next is task 3. Continuing, we can assign tasks 4, 6, 7, and 8 in that order and still be within the cycle time limit. Because all tasks have been assigned to a workstation, we are finished. This assembly-line balance is summarized as follows:
In this example, efficiency is not very high because the precedence relationships constrained the possible line-balancing solutions. The target efficiency for most assembly lines is 80 to 90 percent, but this is highly dependent on things like the degree of automation, inspection stations, workforce skills, complexity of the assembly, and so on. One option is to redefine the work content for the assembly task in more detail if this is possible, by breaking down the tasks into smaller elements with smaller task times and rebalancing the line, hoping to achieve a higher efficiency.
In the real world, assembly-line balancing is quite complicated because of the size of practical problems as well as constraints that mechanization or tooling place on work tasks. Also, in today’s manufacturing plants, there is virtually no such thing as a single-model assembly line. In the automotive industry, many model combinations and work assignments exist. Such mixed-model assembly-line-balancing problems are considerably more difficult to solve. Simulation modeling is frequently used to obtain a “best set” of assembly-line-balancing solutions and then engineers, operations managers, and suppliers evaluate and critique these solutions to find the best design.
8-3Designing Process Layouts
In designing process layouts, we are concerned with the arrangement of departments or work centers relative to each other. Two major approaches are commonly used. The first focuses on the costs associated with moving materials or the inconvenience that customers might experience in moving between physical locations. This approach is widely used in manufacturing. In general, work centers with a large number of moves between them should be located close to one another. This approach usually starts with an initial layout and data on the historical or forecasted volume between departments and the materials-handling costs. The centroid of each department, which is the geometric center of the shape, is used to compute distances and materials-handling costs for a particular layout. In an effort to improve the current solution, exchanges between the locations of two or three departments at a time are made, and the new total cost is calculated. If the total cost has been reduced, then this solution is used to examine other location changes in an effort to reduce the total cost.
The second approach is used when it is difficult to obtain data on costs or volumes moved between departments. This approach is useful in many service applications such as offices, laboratories, retail stores, and so on. Rather than using materials-handling costs as the primary criterion, the user constructs a preference table that specifies how important it is for two departments to be close to one another. An example of such “closeness ratings” follows:
A
Absolutely necessary
B
Especially important
C
Important
D
Ordinary closeness okay
E
Unimportant
F
Undesirable.
Using these ratings, the approach attempts to optimize the total closeness rating of the layout.
Computer graphics and design software are providing a major advance in layout planning. They allow interactive design of layouts in real time and can eliminate some of the disadvantages, such as irregularly shaped departments, that often result from manual design on a block grid. Despite the capabilities of the computer, no layout program will provide optimal solutions for large, realistic problems. Like many practical solution procedures in management science, they are heuristic; that is, they can help the user to find a very good, but not necessarily the optimal, solution.
8-4Workplace and Job Design
Not only is it important to effectively design the overall facility layout, but it is equally important to focus on the design of individual workstations and the jobs performed by the workforce. A well-designed workplace should allow for maximum efficiency and effectiveness as the work task or activity is performed, and may also need to facilitate service management skills, particularly in high-contact, front-office environments.
8-4aWorkplace Design
Key questions that must be addressed in designing the workplace include:
Who will use the workplace? Will the workstation be shared? How much space is required? Workplace designs must take into account different physical characteristics of individuals, such as differences in size, arm length, strength, and dexterity. For offices, layouts range from open formats to encourage collaboration and relationship building to isolated cubicles and offices with walls and few windows. As described in Chapter 5, defining the office servicescape and service-encounter design are also important.
How will the work be performed? What tasks are required? How much time does each task take? How much time is required to set up for the workday or for a particular job? How might the tasks be grouped into work activities most effectively? This includes knowing what information, equipment, items, and procedures are required for each task, work activity, and job.
What technology is needed? Employees may need to use a computer or have access to customer records and files, special equipment, intercoms, tablets, and other forms of technology.
What must the employee be able to see? Employees might need special fixtures for blueprints, test procedures, sorting paper, antiglare computer screens, and so on.
What must the employee be able to hear? Employees may need to communicate with others, wear a telephone headset all day, be able to listen for certain sounds during product and laboratory testing, or be able to hear warning sounds.
What environmental and safety issues need to be addressed? What protective clothing or gear should the employee wear? What is an acceptable noise level? Are all employees trained on emergency evacuation procedures and plans?
To illustrate some of these issues, let us consider the design of the pizza-preparation table for a pizza restaurant. The objective of a design is to maximize throughput—that is, the number of pizzas that can be made—minimize errors in fulfilling customer orders; and minimize total flow time and customer waiting and delivery time. In slow-demand periods, one or two employees may make the entire pizza. During periods of high demand, such as weekends and holidays, more employees may be needed. The workplace design would need to accommodate this.
An example of a pizza-preparation workstation is shown in Exhibit 8.10. Ingredients should be put on the pizzas in the following order: sauce, vegetables (mushrooms, peppers, onions, etc.), cheese, and, finally, meat. Because cheese and meat are the highest-cost items and also greatly affect taste and customer satisfaction, the manager requires that those items be weighed to ensure that the proper amounts are included. All items are arranged in the order of assembly within easy reach of the employee and, as the front view illustrates, order tickets are hung at eye level, with the most recent orders on the left to ensure that pizzas are prepared on a first-come-first-served basis.
In office cubicles, e-mails, telephone calls, cell phones, pagers, and the like interrupt office workers so much that some companies have established “information-free zones” within the office. If you work in one of these zones, all of these interruption devices are turned off or blocked from operating so employees can focus on their work. Companies think information-free zones improve employee attention spans and productivity.
8-4bJob Design
The physical design of a facility and the workplace can influence significantly how workers perform their jobs as well as their psychological well-being. Thus, operations managers who design jobs for individual workers need to understand how the physical environment can affect people. A job is the set of tasks an individual performs. Job design involves determining the specific job tasks and responsibilities, the work environment, and the methods by which the tasks will be carried out to meet the goals of operations.
Two broad objectives must be satisfied in job design. One is to meet the firm’s competitive priorities—cost, efficiency, flexibility, quality, and so on; the other is to make the job safe, satisfying, and motivating for the worker. Resolving conflicts between the need for technical and economic efficiency and the need for employee satisfaction is the challenge that faces operations managers in designing jobs. Clearly, efficiency improvements are needed to keep a firm competitive. However, it is also clear that any organization with a large percentage of dissatisfied employees cannot be competitive.
What is sought is a job design that provides for high levels of performance and at the same time a satisfying job and work environment. This is true for manufacturing jobs such as working on an assembly line, as well as for service jobs such as working in a lawyer’s office or medical clinic.
The relationships between the technology of operations and the social/psychological aspects of work has been understood since the 1950s. It is known as the sociotechnical approach to job design and provides useful ideas for operations managers. Sociotechnical approaches to work design provide opportunities for continual learning and personal growth for all employees. Job enlargement is the horizontal expansion of the job to give the worker more variety—although not necessarily more responsibility. Job enlargement might be accomplished, for example, by giving a production-line worker the task of building an entire product rather than a small subassembly, or by job rotation, such as rotating nurses among hospital wards or flight crews on different airline routes.
Job enrichment is vertical expansion of job duties to give the worker more responsibility. For instance, an assembly worker may be given the added responsibility of testing a completed assembly, so that he or she acts also as a quality inspector. A highly effective approach to job enrichment is to use teams. Some of the more common ones are:
natural work teams, which perform entire jobs, rather than specialized, assembly-line work;
virtual teams, in which members communicate by computer, take turns as leaders, and join and leave the team as necessary; and
self-managed teams (SMTs), which are empowered work teams that also assume many traditional management responsibilities.
Virtual teams, in particular, have taken on increased importance in today’s business world. Information technology provides the ability to assemble virtual teams of people located in different geographic locations. For example, product designers and engineers in the United States can work with counterparts in Japan, transferring files at the end of each work shift to provide an almost continuous product development effort.
Teams not only enrich jobs; they also provide numerous benefits for quality and productivity. For example, it has been noted that medical errors are reduced when doctors and other health care professionals work together in teams. Honda reorganized its product development organization so that sales, manufacturing, research and development, and purchasing associates work together as a team to improve decisions and make them more quickly.
8-4cSafety, Ergonomics, and the Work Environment
Safety is one of the most important aspects of workplace design, particularly in today’s society. To provide safe and healthful working conditions and reduce hazards in the work environment, the Occupational Safety and Health Act (OSHA) was passed in 1970. It requires employers to furnish to each of their employees a place of employment free from recognized hazards that cause or are likely to cause death or serious physical harm. Business and industry must abide by OSHA guidelines or face potential fines and penalties.
Safety is one of the most important aspects of workplace design, particularly in today’s society.
Safety is a function of the job, the person performing the job, and the surrounding environment. The job should be designed so that it will be highly unlikely that a worker can injure him- or herself. At the same time, the worker must be educated in the proper use of equipment and the methods designed for performing the job. Finally, the surrounding environment must be conducive to safety. This might include nonslip surfaces, warning signs, buzzers, mirrors, and clearly marked exit signs.
Ergonomics is concerned with improving productivity and safety by designing workplaces, equipment, instruments, computers, workstations, and so on that take into account the physical capabilities of people. The objective of ergonomics is to reduce fatigue, the cost of training, human errors, the cost of doing the job, and energy requirements while increasing accuracy, speed, reliability, and flexibility.
Finally, it is important to pay serious attention to the work environment, not only in factories but in every facility where work is performed, such as offices, restaurants, hospitals, and retail stores. A Gallup study showed that the less satisfied workers are with the physical aspects of their work environment, such as temperature, noise, or visual surroundings, the more likely they are to be dissatisfied with their jobs. The study also found that workers who can personalize their workspaces to make it feel like their own were more productive and engaged in their work. Research has shown that bringing the outdoor environment into the workplace lowers stress, and that sunlight improves creativity. The famed architect Frank Gehry used these ideas in Facebook’s headquarters, incorporating skylights and a rooftop garden in designing the facility.
8-4dWorkforce Ethics and Global Supply Chains
Global supply chains bring a host of new issues related to the design of work. Workers in many countries are bullied, and forced to work excessive hours, for wages on which they can barely survive. Some suppliers have been known to falsify records or substitute inferior materials. Many firms now take ethical work practices much more seriously than before, particularly after many embarrassing revelations of poor working conditions in supply chains were highly publicized.
Ethical trade means that retailers, brands, and their suppliers take responsibility for improving the working conditions of the people who make the products they sell. Most of these workers are employed by supplier companies around the world, many of them based in poor countries where laws designed to protect workers’ rights are inadequate or not enforced.
Doing so is simply good business. A study conducted by Software Advice found that, on average, consumers said they would pay 27 percent more for a product normally priced at $100 if it was produced under auspicious (favorable) working conditions. What’s more, when asked which of three ethical initiatives would make them more likely to purchase a product, consumers were nearly evenly split among improved working conditions (34 percent), reduced environmental impact (32 percent), and more involvement in the community (31 percent).
The Ethical Trading Initiative (ETI) is a leading alliance of companies, trade unions, and nongovernmental organizations that promotes respect for workers’ rights around the globe. Their vision is a world where all workers are free from exploitation and discrimination, and enjoy conditions of freedom, security, and equity. ETI seeks to ensure the following:
Employment is freely chosen.
Freedom of association and the right to collective bargaining are respected.
Working conditions are safe and hygienic.
Child labor shall not be used.
Living wages are paid.
Working hours are not excessive.
No discrimination is practiced.
Regular employment is provided.
No harsh or inhumane treatment is allowed.
These workplace conditions support social sustainability, as described in Exhibit 1.12. Companies must keep track of where their products are being made, and of the working conditions of the people who make them. This is typically done by audits, often by global sourcing managers. Many companies such as Apple and Nike are identifying new buying practices that support rather than undermine suppliers’ ability to provide decent pay and conditions for their workers.