One Piece Continuous Flow Tutorial
Reduced lot sizes go hand-in-hand with quick set-ups. The smaller the lot size, the better the flow through the process. Ideally the lot size is reduced to one.
Small lots can be passed continually between processes, allowing layout changes to link processes into cells, eliminating double-handling, and reducing inventory and the space it requires. Quality and processing problems are quickly exposed and problem resolution is forced because there is no buffer inventory to hide the inefficiencies.
Another problem with large batches is that all sense of Takt time is lost on the shop floor. There is no intuitive connection between the pace of production and the pace of demand.
Production of mixed models in small lots improves responsiveness to customers by shortening the average lead time and improving flexibility to respond to demand changes.
Common Platforms and Late Point Differentiation
One strategy employed to reduce lot sizes and increase product differentiation without increasing costs is the adoption of "common platforms" with "late point differentiation". This is a popular course of action in automobile, electronics, and other industries.
To use the automotive example, a "common platform" typically consists of a set floor pan, suspension, drive-train, and basic mechanical components - things that customers can't see. These are also components that have a high tooling cost. Differentiation between models is achieved by changing the things that a customer can see - outside sheet-metal and trim.
The process is similar in electronics, where families of products use the same basic framework, or "box", with differentiation by the type of component installed.
In the case of auto manufacturing, many plants build mixed models off the same platform, allowing much common tooling for body construction as well as chassis assembly. The product differentiation takes place as late as possible in the process so that all units up to that point are identical or very similar, thus minimizing or eliminating the need for changeovers.
In this way, the lot size can be one and variety can be very high without incurring huge tooling premiums and labor inefficiency.