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

4.4.5 Important Relationships between Characteristic Features

Intended learning outcomes: Identify links among facility layout, orientation of product structure, and (order) batch size. Disclose Links among the features product variety concept, production environment, and frequency of order repetition. Explain why the features frequency of customer demand and frequency of order repetition do not necessarily need to correspond.



In some cases, there is a relationship among characteristic features, which can even be a positive correlation. For example, the feature facility layout is — according to Figure 4.4.5.1 — closely related to other features.

Fig. 4.4.5.1        Links among facility layout, orientation of product structure, and (order) batch size.[note 410]

The figure shows that, in a first approximation, the different values of the features in the same columns appear together. For example:

  • Site production, job shop production, and single-item-oriented line production have a tendency to appear together with a convergent product structure and production or procurement of single items or small batches.
  • High-volume line production and continuous production tend to appear together with a combination of convergent product structure on upper levels and divergent product structure on lower levels, or a fully divergent product structure, and with large-batch or lotless production or procurement.

Both observations also hold in the reverse direction. This means that in all the following figures in Section 4.5, we can replace the feature facility layout with one of the two features orientation of product structure and (order) batch size. A further observation is that the product variety concept is — according to Figure 4.4.5.2 — closely related to other features:

Fig. 4.4.5.2        Links among the features product variety concept, production environment, and frequency of order repetition.

The figure shows that, in a first approximation, the different values of features in the same columns appear together. For example:

  • Product variety concept versus production environment: A product variety concept according to customer specification (such as the manufacturing of plant facilities) means that part of the customer order has to run through design prior to procurement or production. This is the exact meaning of engineer-to-order. Product families with many variants are generally produ­ced using raw materials (make-to-order). The variants in a product family concept with a restricted number of variants are normally produced during assembly (assemble-to-order). Standard products are stocked at the level of end products (make-to-stock).
  • Product variety concept versus frequency of order repetition: Production / procurement without order repetition is generally typical for a product variety concept according to customer specification or for product families with multiple variants. Production / procurement with infrequent order repetition is found with product families. Production / procurement with frequent order repetition is the rule with individual or standard products and with a small number of variants.

On the basis of these observations, we can see that, in all following figures in Section 4.5, the feature product variety concept can be replaced with either of the two features production environment or frequency of production or procurement order repetition. It is also interesting to compare the feature frequency of customer demand in Figure 4.4.2.1 (features related to user and product or product family) with the feature frequency of order repetition as shown in Figure 4.4.5.3. It is noteworthy that the values of the features in the same columns do not necessarily have to correspond.

Fig. 4.4.5.3        The features frequency of customer demand and frequency of order repetition do not necessarily need to correspond.

Indeed, procurement and production can be decoupled from demand on the basis of the type of stockpiling:

  • To a certain degree, storage can provide a buffer for discontinuous demand, so that there can be more frequent production. For example, a product can be manufactured throughout the year that will be in demand mainly at a holiday time like Christmas. Through this, capacities can be utilized more evenly. On the negative side, carrying costs are incurred.
  • On the other hand, if demand is continuous, delivery can also be made from storage, and usage can be replenished through less frequent orders in large batches. This course of action is sometimes unavoidable, due to both technical constraints (if, for example, such as in the process industry, certain production facilities allow production in specific batch sizes only) and economic reasons (if, for example, as is typical in procurement, the ordering of a small quantity makes no sense, because transport costs — or in production, setup costs — are too high in relation to the unit costs of the small quantity).

Usually, however, there is a connection between values of the features in the same columns: Unique demand occurs together with production or procurement without order repetition, discontinuous demand together with production or procurement with infrequent repetition, and continuous demand with production or procurement with frequent order repetition. Similarly, the choice of the planning & control concept (see Section 4.5.3) as well as methods and techniques for materials management (see Section 5.3.2) must first be made on the basis of the frequency of customer demand. If a number of concepts and techniques are possible, the choice is determined by the selected frequency of production or procurement order repetition.




Course section 4.4: Subsections and their intended learning outcomes

  • 4.4 Characteristic Features Relevant to Planning & Control in Supply Chains

    Intended learning outcomes: Produce an overview on principle and validity of characteristics in planning & control. Explain six features in reference to customer, and item or product or product family, five features in reference to logistics and production resources, as well as seven features in reference to the production or procurement order. Describe important relationships between characteristic features and features of transcorporate logistics in supply chains.

  • 4.4.1 Principle and Validity of Characteristics in Planning & Control

    Intended learning outcomes: Describe the characteristic in planning & control in a supply chain. Explain the use of the results of the analysis.

  • 4.4.2 Six Features in Reference to Customer, and Item or Product or Product Family

    Intended learning outcomes: Present important features and possible values referring to the user and the product or product family. Differentiate between a convergent product structure and a divergent product structure, between continuous demand and discontinuous demand. Explain the product variety concept. Describe unit cost and transportability of an item. Disclose the T analysis within the VAT analysis and its relation to the product variety concept.

  • 4.4.3 Five Features in Reference to Logistics and Production Resources

    Intended learning outcomes: Present important features and their possible values in reference to logistics and production resources. Differentiate between flexible capability of capacity and quantitatively flexible capacity. Explain the production environment: make-to-stock, assemble-to-order, make-to-order, and engineer-to-order. Describe site production, job shop production, as well as single-item-oriented, high-volume and continuous line production.

  • 4.4.4 Seven Features in Reference to the Production or Procurement Order

    Intended learning outcomes: Present important features and possible values in reference to production or procurement order. Differentiate between order release according to demand, prediction, and consumption. Differentiate between production (or procurement) without, with infrequent, and with frequent order repetition. Identify the features flexibility of the order due date and type of long-term order. Explain the concepts of lot size, lot traceability, and loops in the order structure.

  • 4.4.5 Important Relationships between Characteristic Features

    Intended learning outcomes: Identify links among facility layout, orientation of product structure, and (order) batch size. Disclose Links among the features product variety concept, production environment, and frequency of order repetition. Explain why the features frequency of customer demand and frequency of order repetition do not necessarily need to correspond.

  • 4.4.6 Features of Transcorporate Logistics in Supply Chains

    Intended learning outcomes: Present important features, possible values, and increasing complexity of supply chain collaboration, of supply chain coordination, and of the configuration of the supply chain.