The old way of viewing production and Operations Management was based on the concept of economies of scale.
Picture Henry Ford's large assembly line. By pumping out larger batches of product, Ford would gain cost savings and efficiencies.
However, as Operations Management has developed as a discipline over time, the "large batch, long run" philosophy is becoming more and more obsolete.
In its place, we are finding that smaller batches can increase a company's flexibility and ability to meet varying customer demand.
In order to produce in small runs, you need to be efficient at to changing-over your line from one product set-up to another. For example, if you are producing a batch of red cars, you would need to clean the equipment and various parts in order to produce a batch of blue cars.
By reducing the time it takes to switch from one product to another, a company can produce a variety of products in close to the same amount of time that they could produce large batches of individual products.
In today's world, customer behavior is fickle. Consumers are no longer satisfied with just one option and they expect to receive their product or service in a shorter time period.
As a result, a business which hopes to succeed must set-up their production operation to meet this volatile demand. Large batches do not meet today's customer's needs. As a result, any business, large or small needs to move in the direction of a flexible work force.
In order to meet this objective, the first step is to collect and/or analyze time-study data. How long does each step of your process take? Where are the bottlenecks? How much time does your crew spend setting up and changing over a production process? Once these questions are answered, you can better determine how you can increase your product flexibility.
In this instance, the primary piece of data to study is the set-up and change-over time. These times prevent businesses from producing in small batches and encourage the conventional large batch system. These are the areas that you want to target and seek to minimize. If you can cut into these procedures, you can greatly improve your operation.
I consulted for a company that was stuck in the "large batch, long run" way of thinking. They ran long production runs and had excessive inventories. If new product was demanded or there were shortages, the production team did not have the flexibility to change or alter the schedule. In addition, if there was a problem with a batch, there were large amounts of waste.
I presented a goal to change the company's view of production and create a new system. Prior to the new system, the company produced three to four different products a day.
In between batches, certain parts of the machines had to be washed; the whole procedure took about fifteen minutes. After studying the operation with the production team, we realized that if we purchased duplicates of those parts, the set-up time would be less than five minutes. By making this simple change we were able to reduce the set-up time by 66% and increase of daily production to eight to ten products per day.
Get creative when you are examining ways to reduce your set-up and change-over times. It is important to incorporate your employees in this process. Chances are they'll have some great ideas. In addition, map your process on paper, you can make decisions and experiment without having to make any major changes or investments.