Why
Small Lots?
Small
lot production (ideally one piece) is an important component of many Lean Manufacturing
strategies. Lot size directly affects
inventory and scheduling. Other effects are less obvious but equally
important. Small lots reduce variability in the system and smooth
production. Small lots also enhance quality in many
ways.
The
Lean Manufacturing literature gives little guidance on lot sizing
other than statements such as: "the lot size should be
one" or "lot sizing is irrelevant."
This
series of papers examines the lot sizing problem in Lean
Manufacturing.
It offers a rational alternative to the slogans and edicts.
The
effects of small lots differ somewhat between Make To Order (MTO)
and Make To Stock (MTS) environments but they are important
in either situation.
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In
MTO environments, the ability to make smaller lots economically
makes it practical to accept smaller orders. This can open new
market segments or eliminate middlemen from the logistics
chain.
One
of our former clients restructured the entire vinyl siding industry
when they achieved reliable delivery of small lots directly to
retail outlets.
In
an MTS environment, small lots translate directly to smaller
inventories. Inventory carrying costs are significant and are
discussed further below. In fast-changing fashion or technology
markets, obsolete inventory may make the difference between profit
and loss. Smaller lots often enable conversion from MTS to MTO.
Many
factories that deliver to their customers in MTO operate
intermediate processes in MTS. The MTS discussion applies to those
intermediate and upstream operations.
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