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:

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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.

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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?

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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.

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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.

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How Much to Adjust the Pull Inventory Limit

In my last post I looked at the behavior of the supermarket inventory for different kanban systems. In this post I will use this information to estimate how much the material availability of a system changes if you increase or decrease the inventory limit of your pull system (i.e., number of kanban).

Parts of this blog post are loosely based on chapter 13.2 of my new book All About Pull Production: Designing, Implementing, and Maintaining Kanban, CONWIP, and other Pull Systems in Lean Production.

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Behavior of a Kanban Supermarket

Setting up a kanban system is tricky, especially determining the number of kanban. The kanban formula is at best a rough estimate. It is usually advisable to adjust the number of kanban as the system is running. In general, if you have too much inventory, reduce the number of kanban. If you run out of material – and the cause is a lack of kanban – then increase the number of kanban. However, this general recommendation can be refined a bit by looking at the supermarket inventory. Let me show you how to improve your kanban system by analyzing your supermarket inventory.

This blog post is loosely based on chapter 13.2 of my new book All About Pull Production: Designing, Implementing, and Maintaining Kanban, CONWIP, and other Pull Systems in Lean Production.

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Performance Comparison of Job Shop and Flow Shop

Buckau Lathe DepartmentJob shops are, in their nature, much more chaotic than flow shops. Previously, I have written a lot on this topic. In this post I would like to take a deeper and quantitative look at this effect. Using simulations, we take two systems and try to make them as identical as possible – except that one is a flow shop and the other is a job shop. This blog post is based on a thesis by my student Daniel Ballach.

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