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

6.2.1 Setup-Friendly Production Facilities — Lead Time Reduction through Setup Time Reduction and Batch Size Reduction

Intended learning outcomes: Identify the simplest formula for operation time. Produce an overview on setup-friendly production facilities.

Most simply reckoned, lead time is the sum of operation times and inter­operation times plus administration time. In job shop production, operation time determines in part queue time at a work center, which makes up a significant portion of inter­operation time. Reducing opera­tion time, therefore, has both a direct and indirect effect. The simplest definition of operation time can be expressed as the formula in Figure This definition appeared in Figure, but here the figure shows commonly used abbreviations that will be useful later on.

Fig.        The simplest formula for operation time. [note 605]

The simplest way to reduce operation time is through reduction of batch or lot size. A company can even aim at batch sizes that fulfill only the demand of a day or a few days. Then, the same order is repeated at short intervals, which leads to processes that can be better automated.[note 606] Smaller batch size, however, does result in more setup (if producing the same overall quantity) and thus greater capacity utilization. In case of high utilization, this increases lead time (here see Section 10.2.3). Increased setup also causes higher costs. Conversely, a significant reduction in setup time allows — with keeping utilization constant — to reduce lot size, thus operation time and finally also lead time.

The following exercise helps to illustrate the need to find a balance - for any operation - between short lead time and

  1. low cost.These two factors are determined by setup time and batch size. Find the effect of setup time and batch size on the operation time, which is a measure ot the lead time of the order
  2. the time per unit (that is run time plus the setup time divided equally to each unit), which is a measure of the cost of the operation, and therefore of the cost of the production or procurement order.

The following shows how setup-time reduction can be achieved.

1. Setup-friendly production facilities:

The construction of specific devices (such as gauges or dies) for setup sometimes allows drastic reduction in setup time even where there are existing specialized machines. Another possibility is to use the machines by means of programmable systems such as computer numerical control (CNC) machines, industrial robots, or flexible manufacturing systems (FMS).

Continuation in next subsection (6.2.1b).

Course section 6.2: Subsections and their intended learning outcomes