Lean in High-Mix Low-Volume (HMLV) Manufacturing -- Does it Work?

Lean thinking and methodology have resulted in many organizations instituting powerful initiatives and gaining major improvements, but most still associate Lean principles with low-mix high-volume (LMHV) manufacturers. There are, however, a gamut of high-mix low-volume (HMLV) manufacturers that wonder if the power of Lean is really applicable to them given their very different factors regarding volume, variety, and scheduling.

I recently spoke with Shahrukh Irani – who actually just published a book entitled Job Shop Lean:  An Industrial Engineering Approach to Implementing Lean in High-Mix Low-Volume Production Systems – and asked him the very specific question: “How is Lean applicable in High-Mix Low-Volume (HMLV) manufacturing?” Here is his detailed answer: 

Of all high-mix low-volume (HMLV) manufacturers, a job shop has the most complex production system.  The classification of different production systems that is shown in Figure 1 provides the simplest evidence that forcing a job shop to adopt a production system and tools that were designed to improve a repetitive assembly line’s performance is like fitting a square peg into a round hole. 

Figure 1: Comparison of an Assembly Plant and a Custom Fabrication Job Shop

Currently, nearly every job shop has failed to realize the full gains from Lean because they have stopped at implementing only the Lean tools listed in the left-hand column of Table 1.  In contrast, the Lean tools in the right-hand column of Table 1 are ineffective, often inapplicable, in any job shop.  So how does any Lean job shop reap additional benefits from Lean?  By implementing a new “Job Shop Lean Toolbox” in which the Lean tools in the right-hand column of Table 1 have been replaced with other tools that were developed for job shops!  

Table 1: A New “Job Shop Lean Toolbox” for High-Mix Low-Volume Manufacturers

Lean tools that will work in job shops also	Lean Tools that will not work in job shops
Strategic Planning	Pencil-and-Paper Problem Solving
Top-Down Leadership	Value Stream Mapping
Gemba Walks by Managers	Assembly Line Balancing
Employee Engagement	One-Piece Flow Cells
Workplace Design with 6S	Product-specific Kanbans
TPM (Total Productive Maintenance)	FIFO Sequencing of Orders
Setup Reduction (SMED)	Pacemaker Scheduling
Error-Proofing (Poka-Yoke)	Inventory Supermarkets
Quality At Source	Work Order Release based on Pitch
Visual Workplace	Production based on Level Loading
Product and Process Standardization	Mixed Model Production with Takt Time
Right-sized Flexible Machines	Right-sized Inflexible Machines
Standard Work	Pull-based Production Scheduling
Continuous Problem-Solving	Manual Scheduling with Whiteboards

 

If the Tool Works for High-Mix Low-Volume, Then Job Shop Lean Uses It!

In Table 1, the tools in the left-hand column will also work in HMLV production systems.  “Top-down Leadership” and “Employee Involvement” are essential.  “Standard Work Instructions” and “Setup Reduction” are needed to minimize variation in setup times on any machine (or manufacturing cell) due to different parts having varying setup sequences, tooling packages, material sizes, tolerances, etc.  “Quality at Source” empowers employees to reduce costs, take pride in their workmanship and have ownership for their work.   “Right-sized Machines” appears in both columns of Table 1 because simple machines are easy to learn to use, setup, operate and maintain.    

If the Tool Does Not Work for High-Mix Low-Volume, Then Job Shop Lean Replaces It!

In Table 1, the tools in the right-hand column will almost never work in HMLV production systems because those tools are simply not applicable to MTO (Make-To-Order) HMLV production systems that do not operate like assembly lines.  It is these tools that have been replaced by a more effective set of tools, often enabled by software, to successfully implement Job Shop Lean.

What do you think of Shahrukh's observations? What are the experiences of those who work in a HMLV environment and have been part of a Lean initiative?

The Toyota Production System and Job Shops

For this blog post, I’m turning the reigns over to Dr. Shahrukh Irani to explore how Lean initiatives can be successful in high-mix/low-volume environments and job shops. As an associate professor in the department of Integrated Systems Engineering at Ohio State University, his research at OSU produced JobshopLean.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Lean is Necessary for Every Manufacturer
The goal of any manufacturer is to reduce the total time that customers must wait from the time that they place their order to the time that they receive their order free of defects. The Seven Types of Waste are activities that add:
1. Delays to the time that customers must wait to receive their order.
2. Costs to the price that customers must pay to receive their order.

A High-Mix Low-Volume Manufacturer is not like Toyota 
Without question, the revolutionary Toyota Production System is the gold standard for how any business can pursue cost reduction through waste elimination without headcount reduction. But does a high-mix low-volume manufacturer implement Lean the same way as a low-mix high-volume manufacturer such as Toyota? No -- no Toyota facility makes refrigerators and bicycles on any of their automobile assembly lines. An assembly line that uses a conveyor to move a product (or product family) through a fixed sequence of work stations is inflexible. It could not make other products whose manufacturing routings, bills of materials, and processes used to make the final product are different from those used to make automobiles. Finally, every Toyota assembly line must be just flexible enough only to build a limited variety of automobiles whose annual demand provides sufficient return on investment to justify continued operation of that line.

How a Job Shop Differs from an Assembly Line 
An assembly line and a job shop are radically different manufacturing systems. An assembly line is a low-mix high-volume manufacturing system. A job shop is a high-mix low-volume manufacturing system. Some of the characteristics of a typical job shop that make its production system radically different from the Toyota Production System are:

• It fulfills orders for a diverse mix of hundreds (sometimes thousands) of different products.
• Manufacturing routings differ significantly in their equipment requirements, setup times, cycle times, and lot sizes.
• The facility has a functional layout (i.e. the facility is organized into departments --“process villages”) such that each department carries equipment with identical/similar process capabilities.
• Demand variability is high.
• Production schedules are driven by due dates.
• Due dates are subject to change.
• Production bottlenecks can shift over time.
• Finite capacity constraints limit how many orders can be completed on any given machine on any day. 
• Order quantities can range from low to high.
• Lead times quoted to customers must be adjusted based on knowledge of the production schedule.
• The diverse mix of equipment from different manufacturers makes operator training and maintenance more challenging than for an assembly line.
• It is a challenge to identify the part families in the product mix.
• Customer loyalty is not guaranteed.
• It is necessary to be able to serve different markets. In fact, a job shop must deal with the tendency for their product mix to alter as their customer base changes or they hire new sales and marketing staff who bring with them their past business contacts from new sectors of industry.
• It could be a challenge to recruit and retain talented employees with a strong work ethic, a desire to learn on the job and get cross-trained to operate different machines.
• There are limited resources for workforce training.
• It is hard to control the delivery schedule and quality of suppliers.
• It is hard to negotiate the due dates set by customers.
• Production control and scheduling is more complex.

What Do You Think?
If you are a high-mix low-volume manufacturer and have customized the implementation of Lean in your facility or you would like to know how, please send us your questions and comments.  Let’s get a conversation going! 

Thank you,  
Dr. Shahrukh Irani
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~