Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

7.1 Logistics Characteristics of a Product Variety Concept

Intended learning outcomes: Differentiate between high-variety and low-variety manufacturing. Describe different variant-oriented techniques, and the final assembly schedule.

Flexibility to fulfill customer demands varies in degree. In the fashion industry, for example, there are “off-the-rack” products, prêt-à-porter (ready-to-wear) products, and haute couture, or creations made for individual customers. In gastronomy, there are standard dinner menus, à la carte concepts, and even customer-specific menu creations. Other industries, including service industries distinguish similar levels of adapting to customer demands using their own terminology. In a first attempt, we distinguish high-variety manufacturing from low-variety manufacturing. For each characteristic, the main values of certain features of planning & control, taken from Section 4.4, are shown in black. Frequent values are shown in gray.

7.1.1 High-Variety and Low-Variety Manufacturing

Figure shows the characteristics of high-variety manufacturing, in the extreme case manufacturing according to (pure) customer specification.

Fig.        Values of characteristic features for high-variety manufacturing.

Customer tolerance time is usually long enough to manufacture all production structure levels according to customer order. Thus, products are manufactured in almost the entire supply chain according to demand, with no stockkeeping. Exceptions are general-use raw materials and purchased parts. Here, inventory is replenished as it is consumed.

In long- and medium-term planning, we can revise the generalized presentation in Figure to make it more specialized. Not all tasks are equally important or pronounced. Figure shows this revised form.

Fig.        Long- and medium-term planning for manufacturing according to customer specification or of product families with many variants.

  • In long-term planning, a master plan does not make sense. At best, forecasts can be made for raw materials or purchased parts families.
  • Forecasts for capacity are necessary, however. Blanket orders for capacity at all production structure levels of the supply chain result in improved planning power.
  • An order must first be translated into a process plan for the planning of capacity, raw materials, or purchased parts families. This is usually a process network plan, such as is commonly used in project management.
  • Medium-term planning is at most a fine-tuning of the long-term planning network plans for the orders.

In short-term planning & control, the tasks in Figure are — for high-variety manufacturing — rather complex.

  • For order configuration according to customer specification, first the process network plan must be refined (see, for example, Section 14.4). Raw materials or purchased parts must be made available.
  • Detailed resource requirements calculation should happen quickly. Rule-based product and process configurators are used here. Generally, a multilevel order must be calculated with all its production documents, often including the drawing.
  • Order coordination is required for all part orders over the supply chain, that is, over all orders for components or processes at a lower level and over several production structure levels. Generally, there is no flexibility with regard to start and completion date for part orders. Any small disturbances on the user side or in the production infrastructure of a partner have rapid repercussions within the entire supply chain

Figure shows the characteristics of low-variety manufacturing. Customer tolerance time allows usually to produce some of the highest structure levels according to customer order. Ideally, variants arise only at these structure levels, e.g., assembly. The characteristic of low-variety manufacturing is somewhere between the two characteristics of standard product manufacturing (Figures,, and and high-variety manufacturing.

Fig.       Values of the characteristic features for low-variety manufacturing.

  • Products downstream from the (customer) order penetration point (OPP) are preferably manufactured according to the batch size of the customer order, sometimes with small batch production to stock. Here, there is production with infrequent order repetition, as there are only a limited number of variants.
  • Upstream from or at the (customer) order penetration point (OPP), products are manufactured and stored prior to customer demand. Here, order processing has the character of standard products manufacturing. If variants are produced down-stream from the order penetration point, production upstream from the order penetration point is production with frequent order repetition. Otherwise, it is production with infrequent order repetition.
  • Reason for order release and type of long-term orders: For goods downstream from the order penetration point, we find the character of high-variety manu-facturing. Upstream from or at the order penetration point, order processing has the character of standard products manufacturing. Forecast and blanket orders refer here to product families.

Quiz Characteristics of a Product Variety Concept.

7.1.2 Different Variant-Oriented Techniques, and the Final Assembly Schedule

Variant-oriented techniques are techniques for the planning & control of a product variety concept with low or high variety.

The subsequent Sections will present different variant-oriented techniques. They can best be grouped in two classes.

Adaptive techniques entail two steps. The first step determines a suitable “parent version” from the existing variants. Secondly, this parent version is adapted, or specified in detail, according to the actual requirements.

Adaptive techniques are expensive in terms of administrative cost and effort. For use of these techniques to be economically feasible, the value added must be high. The techniques are implemented in the product variety concepts standard product with options and product family. See Section 7.2.

Generative techniques are variant-oriented techniques that configure the process plan for each product variant during order processing from a number of possible components and operations. Generative techniques use rules that already exist in an information system.

With generative techniques, order administration is quick and inexpensive, so that the product variety concept product families with many variants, even when value added is often low, can be handled efficiently in terms of operations. See Section 7.3. Products according to (changing) customer specification require additive and generative techniques to a different extent. Here see Section 7.4. Adaptive and generative techniques are clo­se­ly associated with the product variety concepts. For further details, also see [Schi01]. Figure summarizes four sets of characteristics that are typically and commonly found together with a particular product variety concept.

Fig.        Typical sets of characteristics and production types that arise frequently with the four product variety concepts.
Each set of characteristics has a production type and values for the featu­res frequency of order repetition and production en­viron­ment (which, according to Figure and Figure, are closely associated with the product variety concept) as well as order batch size.

A final assembly schedule (FAS) is a schedule of end items to finish the product for specific customers’ orders in a make-to-order or assemble-to-order environment. It is also referred to as the finishing schedule because it may involve operations other than the final assembly. Also, it may not involve assembly (e.g. final mixing, cutting, packaging). Cf. [APIC16]. [note 701] 

The type of FAS depends on the selection of items to be part of the master production schedule (MPS; see Section 5.2.3) and the production environment, as follows:

  • Make-to-stock: The MPS comprises end products. In effect, the FAS is the same as the MPS.
  • Assemble-to-order, or package-to-order: The MPS comprises (sub‑) assemblies. The FAS assembles the end product (a variant of a product family) according to customer order specification.
  • Make-to-order: The MPS includes raw materials or components. The FAS fabricates the parts or subassemblies and assembles the end product according to customer order specifications.

In general, the MPS tends to concern the highest structure level still having a small number of different items. If this level corresponds to the (customer) order penetration point (OPP), only a minimum number of different items have to be stocked, and ideally — that is thanks to standardization — each item has a high degree of commonality. This corresponds to the concept of late customization (see Section 1.3.3) — a desired effect. Figure shows this situation together with the corresponding FAS and MPS levels.

Fig.        The MPS concerns the highest structure level still having a small number of different items.

Figure shows typical different patterns of MPS / FAS level and order penetration point in dependency on the product variety concept, or the four different classes of variant-oriented techniques: These patterns correspond to the different pattern of the T analysis within the VAT analysis.

Fig.        FAS / MPS / OPP patterns in dependency on the product variety concept and their relation to the patterns of the T analysis. The FAS level is at the right of each pattern.

In the case of products according to (changing) customer specification, an engineer-to-order production type may mean that no MPS can be established. The planning activities then address capacities (personnel hours) rather than parts or material (compare Figure

Exercise Concept of Variety of Products.

Quiz variant-oriented techniques.

Course sections and their intended learning outcomes

  • Course 7 – The Concept for Product Families and One-of-a-Kind Production

    Intended learning outcomes: Produce logistics characteristics of a product variety concept. Explain adaptive and generative techniques in detail. Describe the use of generative and adaptive techniques for engineer-to-order. Differentiate various ways of cooperation between R&D and Engineering in ETO Companies.

  • 7.1 Logistics Characteristics of a Product Variety Concept

    Intended learning outcomes: Differentiate between high-variety and low-variety manufacturing. Describe different variant-oriented techniques, and the final assembly schedule.

  • 7.2 Adaptive Techniques

    Intended learning outcomes: Explain techniques for standard products with few variants as well as techniques for product families.

  • 7.3 Generative Techniques

    Intended learning outcomes: Disclose the combinatorial aspect and the problem of redundant data. Present variants in bills of material and routing sheets as production rules of a knowledge-based system. Explain the use of production rules in order processing.

  • 7.8 Scenarios and Exercises

    Intended learning outcomes: Apply adaptive techniques for product families. Disclose the use of production rules in order processing. Elaborate the setting the parameters of a product family.

  • 7.9 References


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