There have been drastic changes to manufacturing over the last twenty years. Globalisation has extended the supply chain, creating a need for optimised efficiency with a dual focus on business growth and cost reduction. Consumer needs, too, are evolving in line with technological and online advancements, activism, and changes in demography as new generations emerge into the consumer space.
How we evolve manufacturing in line with these changes is under continued scrutiny, as businesses seek hard for that Holy Grail of optimum processing. For decades, the answer has been a focus on keeping an inventory finished goods in stock ready for shipment, and by increasing the efficiency of distribution channels. Of course, having stock ready for shipment seems ideal. However, there is a downside.
A finished goods inventory system requires vast sums of working capital to establish. And even once established, the problems continue. Non-moving stock and obsolescence plague this system, and - combined with the costs of storage and logistics - leads to huge capital leakage which is almost impossible to stem. What’s more, even with a large inventory on hand and ready for consumers, there’s a real risk that that inventory doesn’t actually include products the consumer even wants. Wastage abounds, with impacts on both business costs and environment.
With so little going for the mass production model, businesses are fast turning to demand-driven flow manufacturing, which promises dramatic improvements to both cycle time and delivery. Flow manufacturing reduces inventory costs by its very nature, whilst also improving productivity. Its greatest benefit, however, is the strategic advantage that flow manufacturing offers.
Flow manufacturing offers revenue-building opportunities that are not available on the mass production model. Consumers respond positively to short cycle times and on-time delivery. This allows flow manufacturers to eliminate the need for finished goods, by providing shorter lead times and building products to order, not to mention a significant reduction in product defects.
In fact, studies have shown that businesses using the flow manufacturing model gained up to 50% improvement in order fulfilment time and a 90% reduction in inventory.
And this is where the mass customisation model, combined with flow manufacturing, creates vast new revenue streams for a business.
To understand why flow manufacturing is so beneficial to businesses, it helps to understand the specifics of what it involves. Essentially, parts are pulled through the manufacturing process on customer demand. The mass production model (also known as discrete manufacturing), conversely, pushes product through the manufacturing process, stockpiling inventory ready for order, in the hopes that it is ordered at all.
Clearly, the philosophy is quite different. Whilst discrete manufacturing relies on a batch production mode, the flow manufacturing model is based on a single-unit production philosophy.
Labour productivity can be calculated thus:
By eliminating waste, queue time, move time, wait time, and so on, this allows workers more time to spend on building better quality products, thus adding value to that product. They will be spending less time, too, on valueless work caused by reworks and delays.
Quite aside from the production benefits above, such a system is invaluable to job satisfaction for the workers themselves. They will be more actively involved in the production process, feeling the satisfaction gained from an efficient and simplified workflow.
Of course, the flow production method opens the doors to the capacity of a business to offer a much wider range of options to consumers. Where products are built to order, they can be modified in a variety of pre-defined ways to meet individual consumer needs.
Initiating such a system takes nothing away from the lean nature of the flow manufacturing model, as the pre-defined options are fed into the order directly, in a way that’s already set up on the factory floor. On the other end of the order, the consumer feels empowered by their ability to choose from options that customise the product to their personal requirements.
As we have covered in our ebook (which you can download from the bottom of this article), there is, in mass customisation, much opportunity to charge a price premium for such a service. There are, in addition, huge benefits from a brand marketing and positioning perspective.
There is no ‘cookie-cutter’ approach to the implementation of flow manufacturing, as this will depend very much upon the current processes employed by the business. Most crucially, however, is the need to plan the overhaul carefully and thoroughly. This is not a short term ‘fad’ that can be easily added and then taken away. It is an operational strategy, whose applicability must be analysed thoroughly, planned, and trialled over time.
In brief, these factors should be a key part of your plan:
The main reason why flow manufacturing projects fail is down to lack of conviction. Perform the following checks:
Rather than implementing a ‘big bang’ approach and completely overhauling the current system in one fell swoop, an incremental approach is often better:
Strong preparation will determine how smoothly the launch of the new process will be. Pay particular attention to the following flow-line characteristics:
There is little doubt that the many benefits offered by both flow manufacturing and mass customisation combined mean it is the future of production.
As consumer needs change, and businesses begin to recognise the vast wastage of both capital and material that discrete manufacturing is plagued with, a new path is necessary. The uptake of flow manufacturing is rapidly growing, becoming a competitive necessity for businesses seeking to future-proof their brand.