Make-to-Order vs Make-to-Stock: The ABC XYZ Analysis

In my last post I started to look at when to produce make-to-stock and when to produce make-to-order. There are quite a few factors that influence this decision (more on this in my next post), but the most important ones are the total sales or production volume as well as the fluctuations thereof. To understand these, you could use a Pareto analysis, an ABC analysis, or an ABC-XYZ analysis. I do like to include not only quantity but also fluctuations, but usually I need to divide this into only two groups, and the three groups of ABC or nine groups of ABC-XYZ is, in my view, a bit of an overkill. Anyway, let’s have a look:

Read more

When to Produce Make-to-Order, When Make-to-Stock?

One of the questions for any production system is if the product is produced on stock before the customer order (make-to-stock, MTS), or only on demand after the customer order (make-to-order, MTO). In many cases this is an easy decision. Custom-made items are always make-to-order, since you cannot start before you know what the product will be. Everything else does have exceptions. Let me dig deeper into the decision tree on deciding which items to produce on order, and which ones for stock. This is a short series of blog posts, and the first one looks at the key aspect (but not the only one) in deciding between make-to-order and make-to-stock.

Read more

Replenishment Time Stability for Changeover Sequencing

Older Couple Eating Ice CreamChangeover sequencing is simply creating a production sequence that reduces the changeover effort. For example, in injection molding, colors are often changed from light to dark to reduce the cleaning effort. However, like all production sequencing (like leveling, lot sizing, prioritization,….), it adds to the replenishment time. Especially if you are using pull production, a consistent replenishment time reduces fluctuations, whereas an inconsistent replenishment time increases fluctuations and hence waste. But how can we get a more consistent replenishment time?

Read more

How to Prioritize in Changeover Sequencing

Changeovers take away time from production, and often require larger lot sizes as well. The best response would be of course to reduce changeover times, but this is a lot of work and may not always be possible. Another frequent option is to sequence the changeovers to reduce the overall changeover time. This post looks at a way to sequence production while also being able to prioritize production.

Read more

Can You Plan Around Your Fluctuations?

Abstract Wave MoleculeBalancing the need of high material availability with low inventory is tricky. Pull systems are a very good way to achieve this. But sometimes people argue with me that planning can be better if you use all the available information to create a production plan which then outperforms a pull system. In theory, this could work, but in practice it rarely does. After all, that is what conventional push systems are trying to achieve, usually with mediocre results. Let’s have a look.

Read more

The Boss Knows Best … or Does He?

Businessman is pointing at himselfThis post is on a topic you probably all have had experience with at one point or another (or even all the time) in your career. A superior makes a decision, and you are internally wincing because you know right away that it is a really bad idea. In this post I would like to talk about uncertainty and decision making, and how to make better suggestions. If you are a regular reader of my posts, you probably already know the answer: Involve the employees! This post is a continuation of my previous post on military leadership.

Read more

Military Leadership and Disobedience

In a recent LinkedIn discussion, there was a disagreement on leadership favoring a much more authoritarian leadership style and stating “A general who asks his soldiers if they will fight, he is not yet ready for war.” I disagree with this view, both for military and especially for manufacturing. Yet, this discussion inspired me to write two posts on the difficult subject of leadership. This first post here looks in more detail at military leadership, and the occasional need of soldiers to refuse, ignore, or disobey an order. A second post will look at what this means for manufacturing.

Read more