In order to meet diversifying needs, modern manufacturing requires high-mix, low-volume production. What measures are necessary to ensure profits in high-mix, low-volume production? We will introduce the advantages and disadvantages of high-mix, low-volume production, as well as measures to improve productivity.
Change in manufacturing system to high-mix, low-volume production
What are the characteristics of a production method called high-mix, low-volume production? Let's take a look at its characteristics and the background of why many companies have switched to high-mix, low-volume production.
Flexible production methods to meet your needs
High-mix, low-volume production is a production method used mainly in the manufacturing industry, classified from the perspective of "what and how much to make." It is a production method in which a company or production base has many production varieties and the production volume of each variety is low. The production varieties and quantities are often determined according to customer orders and made to order, so it can be said to be a flexible production method that adapts to customer needs.
Reasons and background for the increase in small-lot, multi-product production
During period of rapid economic growth, the mainstream approach is mass production of a small variety of similar products. High-quality manufacturing methods provide the market with products with long expected product life spans, and to improve them in response to customer requests. Manufacturing was based on the stance of "We want customers to use the same product or products from the same series for a long time."
However, in recent years, customer needs have changed quickly, and new needs often emerge before a product reaches the end of its life span, leading to shorter product cycles. In addition, technological advances have made it possible to realize a variety of functions, which has also encouraged diversification, and it has become rare for many people to use the same product.
In this way, the shorter cycles and diversification of needs have led to the subdivision of products that sell, and we have entered an era where small-volume production of a wide variety of products is the norm.
What changes with high-mix, low-volume production?
When comparing small-lot, multi-item production with mass production of a small variety of items, what are the advantages and disadvantages of each due to their respective characteristics?
Benefits of high-mix, low-volume production
High-mix, low-volume production has the following advantages:
- Narrowing down the target By segmenting
product varieties, it is possible to meet needs that could not be met with a single product type in the past. This allows you to narrow down the target demographic for which products to make and provide, leading to improved accuracy in demand forecasting. - Creating one-of-a-kind productsBy
diversifying the product lineup to meet customer needs and using ingenuity to create more optimal products, the potential for innovation increases. This accumulation of ingenuity and innovation leads to the creation of one-of-a-kind products that no other company has. - Reducing inventory:
By producing only what is needed in the quantity required to meet demand, the risk of carrying inventory is reduced. Reducing inventory leads to reduced storage space and management costs, as well as reduced losses due to unsold goods. - Spreading the risk of selling popular products
Even if one variety stops selling, you can avoid a significant drop in sales by increasing production of the variety that sells at the time, since there are many varieties to produce. In this way, there is also the effect of spreading out risk compared to having a small variety.
Disadvantages of high-mix, low-volume production
While there are advantages to producing a wide variety of products in small quantities, there are also disadvantages.
- Decreasing production efficiency
Producing a wide variety of products at one production site means that the time required for switching and setup of the production line increases. This reduces the operating rate in terms of the actual production time. In addition, since the number of people required for setup tends to be higher than when the production line is in operation, the production efficiency per person, including production assistants, will further decrease. - Dependence on production management capabilities
In high-mix, low-volume production, which is primarily made to order, strict control is required for adjusting production plans in order to repeatedly switch between different production models while meeting delivery deadlines. This requires high dependency on production management capabilities, not only for scheduling the production line, but also for ordering materials and arranging shipments. - Worker education
In high-mix, low-volume production, different products are made almost every day. Workers and quality checkers at each process must learn the work procedures for many different products. In addition, work procedure manuals and quality control standards are also required to match these. Worker education is also a challenge in high-mix, low-volume production. - Increase in equipment costs
In high-mix, low-volume production, it is expected that completely different products with little similarity will be produced. In that case, the tools and equipment used to make one type of product may not be usable for the production of another product, and new tools and equipment may have to be prepared. If equipment costs increase too much, there is a risk that profits will not be generated even if you are always making products that sell. - Increase in required management resources
As the number of varieties produced increases, the required amount of management resources, such as people, materials, money, information, and time, also increases. It is necessary to devise ways to optimize the use of management resources.
How to increase productivity in high-mix, low-volume production
Although the benefits of high-mix, low-volume production are obvious in terms of customer needs, the disadvantages are obvious in terms of costs. So, what kind of efforts should be made to increase productivity in high-mix, low-volume production?
To do this, it is important to make good use of the advantages of high-mix, low-volume production while minimizing the disadvantages.
Break down order frequency into smaller segments and change your approach
In order to minimize the disadvantages of small-lot, multi-production, flexible production management is necessary. Specifically, this involves dividing the frequency of orders and the lot size of each order into several stages and deciding how to handle each one.
If orders are received frequently for one product type, it is effective to consider setting up a permanent line dedicated to that product type and reduce setup time in order to improve production efficiency. Conversely, if orders are received infrequently, it is effective to handle the situation through made-to-order production.
Sometimes it's good to have inventory
When the frequency of orders is particularly short and frequent, it is necessary to reduce setup costs by holding inventory.
In principle, one of the benefits of high-mix, low-volume production is that it reduces inventory, but if the cost of setup increases in exchange for zero inventory, it could be counterproductive. For this reason, there are cases where it is optimal overall to determine the appropriate amount of inventory and hold a certain amount of inventory.
Continue to make improvements and streamline procedures
In high-mix, low-volume production, the biggest cause of increased costs is the frequency of setups. From this perspective, it becomes clear that improving setup efficiency is directly linked to production efficiency.
Specifically, there are methods to improve "internal setup," which is carried out by stopping machines and operations, and "external setup," which is carried out outside the production line while production continues. It is important to
constantly continue making improvements to make setups more efficient, such as improving the allocation of internal and external setups, making internal setups more efficient, and eliminating waste through work analysis.
Implementing a system to increase efficiency
In high-mix, low-volume production, careful and appropriate inventory management and process management are important. Therefore, there is a possibility that the situation could be improved by introducing an inventory management system or production management system. This is because the entire process, from ordering materials and ingredients to collecting the finished product, would become smoother and more efficient.
To do this, it is necessary to thoroughly consider the current issues and the effects of introducing a system, and select the necessary system that suits your company's operations.
ICT solutions for production efficiency
As high-mix, low-volume production increases and more efficient production methods are required, improvements have been made to production management through on-site setup improvements and system introduction. However, in addition to these, newer efficiency methods are attracting attention.
These are solutions using IoT and AI, which have already been introduced in many manufacturing sites and are attracting attention even in sites where they have not yet been introduced.
For example, there is an issue that human errors are likely to occur due to insufficient training of workers in high-mix, low-volume production. In response to this issue, there are cases where a work error prevention system that combines projection mapping and image sensors has successfully shortened training time and reduced the rate of defective products.
In addition, a case where AI is trained to learn defective product judgment rules and the efficiency of appearance inspection is improved is a good example of the use of ICT, which simultaneously achieves improved inspection accuracy and automation.
In improving management systems, there are cases where production efficiency is increased through optimal processes by using process management systems incorporating AI.
In the future, where high-mix, low-volume production is expected to continue, it may be soon that such solutions using ICT will become essential.
High-mix, low-volume production is expected to continue to grow
We have introduced the reasons for the increase in small-lot, multi-product production, its advantages and disadvantages, and future countermeasures.
As society becomes more affluent and needs diversify, small-lot, multi-product production is expected to continue to increase. If we do not continue to make efforts to improve productivity at this time, it may become difficult to secure profits due to increased setup time and rising equipment costs. In order to adapt to a society of small-lot, multi-product production, it may be necessary to consider new countermeasures that take into account the use of AI and IoT.
Related article:
What can be done to improve productivity? Introducing specific methods and examples in the manufacturing industry | Stratus Blog
The benefits of AI in production management - How to solve production management issues | Stratus Blog
