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

6.2.2 Further Concepts of Lead Time Reduction: Segmentation, One-Piece Flow, Standardization of Infrastructure and Processes

Intended learning outcomes: Produce an overview on production or manufacturing segmentation. Explain cellular manufacturing, one-piece flow, and the formula for lead-time calculation with cellular manufacturing. Describe structuring assembly processes and complete processing. Identify point-of-use inventory and point-of-use delivery.


In addition to batch size reduction, there are further approaches to reduction of lead time. They all require adaptation of the production infrastructure. The first three approaches reduce wait times, the fourth approach reduces operation time, the fifth reduces lead time for several operations, and the sixth reduces transport time.

1. Production or manufacturing segmentation:

Production or manufacturing segmentation is the formation of organiza­tional units according to product families instead of job shop production.

Segmentation can lead to goods-flow-oriented areas and allow autonomous respon­sibility for products to arise (similar to line production when organizational boundaries interrupting flow are eliminated). Figure 6.2.2.1 shows:

  • In the upper section, an example of a process layout: Operations of a similar nature or function are grouped together, based on process specialty (for example, saw, lathe, mill).
  • In the lower section, an example of a product layout: For each product (here with the exception of painting and galvanizing) there is a separate production line, or manufacturing group, but no longer any central job shop for each task.

There are cost factors that restrict the splitting of certain areas (such as galvanizing, painting, tempering), but an appropriate total layout and capacity reserves will ensure rapid throughput. Small- and medium-sized companies are often faced with the problem of special treatments for which they must rely on external refining and finishing companies. Because of the recent weight placed on setup time, however, ever more new facilities for such areas are being offered, such as paint shops that set up lacquer colors in a matter of minutes.

Fig. 6.2.2.1        Production or manufacturing segmentation. (Example taken from [Wild89]).

Applying production or manufacturing segmentation consistently leads to a set of focused factories.

A focused factory is a plant established to focus on a limited set of products or product families, technologies, and markets, precisely defined by the company’s competitive strategy and economics (see [APIC16]).

Quiz Lead time Reduction - not yet available

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Exercise: Try to find a production segmentation that minimizes transport distances:


2. Cellular manufacturing:

A further consistent application of production or manufacturing segmentation leads to cellular manufacturing.

A cell is, according to [APIC16], a manufacturing or service unit consisting of a number of workstations, and the materials transport mechanisms and storage buffers that interconnect them. 

A work cell is, according to [APIC16], a physical arrangement where dissimilar machines are grouped together into a production unit to produce a family of parts having similar routings.

The process of cellular manufacturing is closely linked with work cells.

In cellular manufacturing, or near-to-line production, workstations required for successive operations are placed one after the other in succession, usually in an L-shaped line or U-shaped line configuration. Preferably, the individual units of a batch go through the cell according to the one-piece-flow concept. 

One-piece flow is a concept that processes items directly from one step to the next, one unit at the time, that is, without having to wait for the other units of the batch between any two operations.

Figure 6.2.2.2 illustrates this concept, showing the change from job shop production to cellular manufacturing.

Fig. 6.2.2.2        Changeover to cellular manufacturing.

As cellular manufacturing may require multiple machines, it is not unusual to find older machines, retrieved from the “cellar” so to speak, in these lines. While this is specialized machinery that has a dedicated capacity,[note 608] it is inexpensive enough, for generally it has already been depreciated.

Efforts to identify business processes and reorganize them (business process reengineering) can also lead to the distributing of machines in lines that correspond to the new business processes. Cellular manufacturing is, moreover, significantly easier to control than job shop-type production. And, in many cases, less area is required for the machines.

Cellular manufacturing and one-piece flow can achieve a lasting reduction of lead time, and thereby also of work-in-process and many other forms of “muda.” On the one hand, inter­operation times can be reduced to zero. On the other hand, cellular manufacturing allows overlapping operations (Section 13.4.2), as shown in the following.

Using the definition in Figure 6.2.1.1, the lead time of an order — assuming a sequence of operations and omitting inter­operation times and administration times — is the sum of all n operation times, as shown in Figure 6.2.2.3 (for details, see Section 13.3.2).

Fig. 6.2.2.3        Formula for lead time with a sequence of operations.

With cellular manufacturing, the estimate in Figure 6.2.2.4 is calculated:

Fig. 6.2.2.4        Formula for lead time with cellular manufacturing.

The following is a possible routing sheet for shaft production. Look at the difference between the lead time for job-shop production and the lead time with cellular production. Also, look at the difference between the theoretical minimum lead time in this particular case and the maximum lead time for cellular manufacturing, as well as at the difference between the actual minimum lead time and the lead time that entails the minimum load (or miminum allocated time for the operation, that is operation time plus wait time between the units of the batch) at the workplaces. By modifying setup and run times of the operations, change the cell driver. Try to find a situation where the value for minimum total lead time tends towards the theoretical maximum lead time for cellular manufacturing.

To understand this formula intuitively, consider the following: The longest operation, the so-called cell driver, provides the minimum lead time. The other operations overlap. Lead time then increases at most by setup and one run time per unit of all other operations. In concrete cases, lead time will fall at some point between the minimum and the maximum.



3. Standardizing the production infrastructure, (quantitatively) flexible capacity,and increasing the flexible capability of capacities:

Close-to-maximum capacity utilization results in a strong increase in wait time.[note 609] Over­capacity brings load variation under control and allows short lead times. If capacity is costly, however, over­capacity must be carefully reviewed.[note 610] First, the following measures should be examined:

  • Can we standardize the machinery, tools, and devices — either through greater ver­satility or by means of standardizing operations? This would allow broader imple­mentation of personnel, which would result in fewer workstations and simpler plan­ning. Airlines, for example, strive toward identical cockpits in their fleets of planes.
  • Can the flexible capability of the workforce be increased through training and broader qualifications? If so, employees can be implemented in a more balanced fashion along the time axis, because if there is underload at their own work centers, they can be moved to overloaded work centers.
  • Can we increase the availability of production facilities, particularly tools? The employees at a work center can also be trained to do their own repairs and maintenance jobs, as the necessity arises.

4. Structuring assembly processes:

In the assembly process, staggered supply of components reduces lead times, as shown in Figure 6.2.2.5. This is a well-known measure, especially in connection with customer order production.

The inbound deliveries in Figure 6.2.2.5 may be preassemblies or assemblies. Preassembly made parallel to assembly reduces the number of storage levels. If quality control is integrated into assembly, lead time can be reduced even further.

Fig. 6.2.2.5        Assembly-oriented providing of components.


5. Complete processing:

Complete processing is the execution of several different operations at a stretch — if possible, all the way up to completion of the product.

The newer tool machines often allow complete processing. With computer numerical control (CNC, DNC), they are versatile in implementation. Moreover, they are more independent in terms of cost as well as output and quality of employee performance.


There are fewer stations to run through with complete processing, so that there are no inter­operation times. Reduced lead times should result. But for this to have a true advantage over the segmentation in approaches 1 and 2, the complete processing duration must be significantly shorter than the sum of operation times with a sequence of machines. Other­wise, the result would be simply that several shorter wait times would be replaced with one single wait time. This time would be just as long as the sum of the shorter times, however.

For complex workpieces, a firm could investigate the possibilities of automation of produc­tion with flexible manufacturing systems (FMS) and automation of transport and handling. Modern technological machines are designed to reduce setup time and achieve greater variant flexibility. Automated processes also reduce the problems of 24-hour shift work.


6. Organizing supply and buffer storage to support the flow of goods:

The point of use is in the focus of delivery and storage.

  • Point-of-use inventory: Buffer storage is placed directly at the spot where the components will be used (inbound stockpoint). Each container of components has its own specified physical location. On the assembly line, for example, it will stand at the location where the components will be installed.
  • Point-of-use delivery: Fast connections are set up between suppliers and users. Components are delivered right to the buffer storage at the user workstation. The workstation can transmit its needs via electronic mail.

Quiz - not yet available
Find the correct answers to the following questions:
1.Which concepts of lead time aim to a reduction of waiting time ? 2. Which propositions of production are true ? 3. What causes the introduction of a complete processing ?

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Course section 6.2: Subsections and their intended learning outcomes

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