Many small and medium-sized enterprises engage in high-mix low-volume production, and demand continues to grow daily. High-mix low-volume production involves diverse production quantities and delivery dates, with various specifications. In recent years, as companies shift from low-mix high-volume production to high-mix low-volume production, the variety of components has been increasing, making component inventory management an increasingly difficult task. To solve this challenge, it is necessary to implement systems appropriate for modern times.
In this fourth installment of our general theory series on inventory management and order management, we will introduce the characteristics, advantages and disadvantages of high-mix low-volume production, production methods, insights from high-mix low-volume production, and systems that should be implemented.
・Production Format 1 (Classification by Timing)
・Production Format 2 (Classification by Product Flow Method)
・What is High-Mix Low-Volume Production?
・Insights from High-Mix Low-Volume Production
・Summary
Production Format 1 (Classification by Timing)
In manufacturing sites, production timing is extremely important. There are two types of production formats: make-to-order production and make-to-stock production. Let's begin by explaining the content of these two production formats.
Make-to-Order Production
According to JIS, make-to-order production is defined as "a format in which the producer manufactures products with specifications determined by the customer." Orders are received according to customer requirements, and production is carried out. In this format, it is necessary to perform production management based on orders. Product design is conducted after receiving an order, and once the design receives customer approval, materials are procured and production begins.
Make-to-Stock Production
According to JIS, make-to-stock production is "a format in which the producer manufactures products planned and designed in anticipation of market demand and ships products to the market for unspecified customers." Production is carried out by predicting markets such as electrical appliances and estimating quality and standards to meet market needs. In this production method, products are planned by predicting items likely to be bestsellers based on market sales and past information. In actual production sites, production plans are established based on predicted sales volumes, and materials are procured accordingly.
Production Format 2 (Classification by Product Flow Method)
To understand high-mix low-volume production, it is necessary to grasp other production formats such as job production, lot production, and continuous production. By understanding the relationships with other production formats, you can deepen your understanding of high-mix low-volume production. Here, we will also touch on low-mix high-volume production.
Job Production
Job production refers to a method of producing only once each time in response to individual orders. The antonym is continuous production. While job production allows manufacturing products according to customer specifications, it can result in longer lead times because estimating delivery dates and costs is difficult.
Lot Production
Lot production refers to a method of alternately producing several products by product type. This is a format in which two or more types of products are manufactured on one production line, and it is a production method positioned between job production and continuous production. In this production method, when manufacturing multiple product types, production is carried out in batches of several lot sizes.
Additionally, equipment settings are changed according to the specifications of the products being manufactured. This is called changeover, and during changeover, smooth execution without delays is required. It is sometimes called model changeover.
Continuous Production
Continuous production refers to a method of continuously producing the same product over a certain period in anticipation of constant demand. This production method can be said to be appropriate for securing a certain level of demand and for make-to-stock type product manufacturing. To maintain product inventory, it is also necessary to build production schedules based on accurate demand forecasting.
High-Mix Low-Volume Production
High-mix low-volume production refers to a production method that manufactures many types of products in small quantities. It is a method of manufacturing small quantities of products with low similarity in design and specifications in response to customer needs. As the speed of product lifecycles accelerates, the number of companies adopting high-mix low-volume production as a way to respond to customer needs is increasing daily.
Low-Mix High-Volume Production
Low-mix high-volume production refers to a method of producing large quantities of a small variety of products. Since this production method involves few product types and manufactures large quantities of the same items, movements at production sites tend to be smooth. Compared to high-mix low-volume production, it can be difficult to maintain motivation for work because simple tasks continue over long periods.
What is High-Mix Low-Volume Production?
While low-mix high-volume production was mainstream in traditional production lines, in recent years, due to diversification of customer needs such as seasonal trends, region, age, and gender, many companies are now transitioning to high-mix low-volume production. We will explain the characteristics of high-mix low-volume production, the background for its selection, and its advantages and disadvantages.
Characteristics of High-Mix Low-Volume Production
The main characteristics of high-mix low-volume production include a wide variety of product types and variations in quantities and delivery dates. Due to changes in quantities, specifications, and delivery dates caused by order fluctuations, component delivery delays, variations in processing sequences, and complex material movements tend to occur, making it easy for equipment capacity to become excessive or insufficient. Therefore, production lines are required to be flexible and agile. To solve these challenges, implementing an inventory management system such as the Smart Reel Rack (described later) is the best shortcut to problem resolution.
Background for Selecting High-Mix Low-Volume Production
Customer requirements are becoming increasingly diverse. High-mix low-volume production is selected to meet these various customer needs. Among the IoT-based promotion policies advanced by the German government is Industry 4.0. In Japan, this is called the Fourth Industrial Revolution. Common to both Industry 4.0 and the Fourth Industrial Revolution is mass customization, which companies aim to realize. Mass customization refers to creating products and services that meet individual customer needs while maintaining productivity close to mass production.
Advantages of High-Mix Low-Volume Production
It can respond to various demands and meet customer needs with short delivery times, leading to increased customer satisfaction. Additionally, not only can it provide products suitable for changing trend products and customer preferences, but because it manufactures only what is needed in the quantities needed, there is no issue of overproduction.
Disadvantages of High-Mix Low-Volume Production
When changing product specifications for manufacturing, increased costs due to increased materials are cited as disadvantages. Additionally, when processes and manufacturing lines must also be changed due to specification changes, decreased production efficiency can also be a disadvantage.
It is necessary to respond to frequent changeovers, formulate production plans with appropriate understanding of equipment capacity, properly manage manufacturing status, and above all, manage many types of materials. Therefore, component commonization and standardization, as well as improvement of production methods, become necessary.
Insights from High-Mix Low-Volume Production
In high-mix low-volume production, the important point is how to improve production efficiency while avoiding excessive component inventory. It is also important not to cause human errors on production lines. To prevent these troubles, implementing a system capable of inventory management is effective.
Summary
Improved Efficiency and Labor Reduction Are Key
As mentioned earlier, improving production efficiency and preventing human errors are very important in high-mix low-volume production. To enhance productivity and achieve labor reduction, implementing a system like the Smart Reel Rack is essential.
This product is an intelligent rack system that digitizes and informatizes electronic component reel storage shelves used in mounting machines. It can improve overall production efficiency in assembly processes, achieve labor reduction, and enable cost reduction.