"Lot-Size" means to produce a single product for an order, the opposite of mass production. Today, most manufacturing operations follow the “largest possible” batch size rule to lower the unit cost of production. But doing so also creates huge inventory costs for those products that are stored in different locations throughout the supply chain. In this "traditional" model there is also a lack of flexibility and an inability to meet customer needs.
Small batch production (ideally one piece) is an important component of many Lean Manufacturing strategies. The size of the lot has a direct effect on the inventory, planning and costs thereof. Other effects are less obvious but equally important. Small batches reduce variability in the system and level production, while also improving quality.
Small batch effects differ between Make to Order (MTO) and Make to Stock (MTS), but are important in both situations. In MTO environments, the ability to make smaller batches makes it cost-effective to accept smaller orders. This can open up new market segments or eliminate intermediaries in the supply chain.
In an MTS environment, small batches translate directly into smaller inventories. Transportation and inventory costs are significantly reduced. Small batches often allow for conversion from MTS to MTO.
|The Kanban card of the empty container gets inserted in the box of the different production lots.||When the production lot has all the Kanbans, the production box is inserted into the production queue||The production queue highlights the amount of time to complete the required production.|