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

6.2.1 Lead-Time Reduction through Setup Time Reduction and Batch Size Reduction: Heijunka, Modular Product Concept, and SMED (Single Minutes Exchange of Dies)

Intended learning outcomes: Identify the simplest formula for operation time. Produce an overview on setup-friendly production facilities. Present in detail cyclic production planning and leveling of the production (“heijunka”). Describe harmonizing the product range through a modular product concept. Explain single-minute exchange of dies (SMED).


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 6.2.1.1. This definition appeared in Figure 1.2.3.1, but here the figure shows commonly used abbreviations that will be useful later on.

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Fig. 6.2.1.1        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 shows how setup-time reduction can be achieved.


The following exercise helps to illustrate the need to find a balance - for any operation - betweenshort 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.

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).

2. Cyclic planning:

Cyclic planning attempts to sequence the products to be manufactured by a machine in such a way as to keep total setup time at a minimum.[note 607]

Cyclic planning is an example of sequencing, the planning of optimum sequences. Cyclic planning yields a basic cycle, as Figure 6.2.1.2 shows.

Fig. 6.2.1.2        Cyclic production planning.

In a cyclic manner, batches of parts A, B, E, D, and C are manufactured. It is simple to introduce variations in order quantities; additional batches are planned for a part at the same point that has been planned for that part in the basic cycle. Varying the quantity according to current requirements could also result in a cycle of A, E, E, D, and again A.


Exercise: Try to find a sequence of parts A, B, C and D with a minimum setup time. For creating a sequence, drag parts to the empty circles. The result is called a basic cycle.


Reducing the setup time allows for reducing the lot size. Therefore, instead of producing a big lot of each product (e.g., 1000 A, 4000 E), several cycles of smaller lots can be produced (e.g., 4 * 250 A, 4 * 1000 E). This leads to the principle of leveling of the production.

Leveling of the production (Japanese “heijunka”) is an approach to level highly discontinu­ous production orders throughout the supply chain to match the planned rate of more continuous customer demand. It is an important tool for reducing “mura.”

“Ideally,” a product should be produced on the day it will be shipped.

3. Harmonizing the product range through a modular product concept:

Harmonizing the product range is reducing the number of different compo­nents and process variants required to manufacture a range of products, at times involving the reduction of the product range itself.

Harmonizing the product range thus means reduction of variants. The cost advantage is a reduction in overhead (see Section 16.4). Moreover, it simplifies logistics, because it leads to a more balanced flow of goods. A reduction in product variants results, namely, in goods production in sequences of similar operations. With identical goods, this reduction will even result in production with frequent order repetition. Each of these allows successive orders to be processed without major change in equipment, such as machines, for example. Setup times in the system decrease. In addition, because of fewer different processes, setup tasks become easier, because they repeat themselves and can be better automated. Also, frequent order repetition entails a more continuous demand of components, and thus a reduction of “mura,” as well as more simple techniques of materials management (see Figure 5.3.2.1).

Conversely, a modular product concept (here see Section 1.3.3) allows offering larger product families without increasing the number of components and operations. By standardization of interfaces between the (families of) components and the product family, variants of one component family can be combined with variants of another component family on a bigger scale.

4. Reducing idle time of production facilities:

The term single-minute exchange of dies (SMED) refers to methods aimed at reducing idle time of production facilities, according to Figure 6.2.1.3.

Fig. 6.2.1.3 Concepts of reducing setup time. (Source: [Wild89]).

These methods were developed primarily in Japanese industry (see [Shin85] or [Shin89]). In principle, there are two kinds of setup operations:

  • Internal setup (time) or inside exchange of dies (IED) takes place when the workstation is stopped or shut down.
  • External setup (time) or outside exchange of dies (OED) takes place while the workstation is still working on another order.

SMED is composed of the entire setup process, including insertion and removal of special setup devices, or dies. SMED reduces idle time of the system by means of shifting portions of IED to OED. This method is comparable to a pit stop during a formula-one race. SMED encompasses measures for reducing all 3Ms. (Example: Pit stop at Sauber (Text in German followed by the corresponding text in English))



Course section 6.2: Subsections and their intended learning outcomes

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