The Myth of Large-Batch Production
Manufacturers of everything from cakes to computer chips have many ways of organizing production to increase efficiency. One of these methods is called batch production, or batch processing. In this approach, instead of manufacturing items individually or continuously, manufacturing moves in groups or batches. Each of the steps in the production process is applied at the same time to an entire batch of items, and that batch does not move onto the next stage of the production process until the whole batch is done.
For some situations and products, batch production is the only realistic method. At a local sandwich shop, they prepare the cookies for each day by dropping pieces of dough onto cookie sheets, and placing the sheets in an oven. A day’s supply of fresh cookies are available as a batch, in just a little while.
In this case, baking in small batches makes sense, because small quantities of fresh product are needed. If a company sells large quantities of boxed cookies with a long shelf life, batch processing may not be the most efficient option. Instead, a combination of batch and continuous processes might be preferred: the dough is mixed in batches, while cookies are formed, baked, and packaged in an ongoing, continuous process.
An example of a fully continuous process would be the generation of electricity. Fuel is continuously supplied to boilers, which generate the steam to turn the turbines and drive the generators. The generators run continuously, generating power as needed.
So the question is: what is the best process for your products, and how can that process be optimized?
The more you switch over equipment from making one kind of item to another, the longer equipment is idled, but producing in large batches to offset high setup and transfer costs solves the wrong problem. Instead, the question you should be asking is, ‘Why are setup and transfer costs so high in the first place?’
Advantages of Batch Production
There are a number of advantages to using batch production:
- It generally has lower capital costs.
- It has the flexibility to produce a variety of different product variations, or different products.
- It works well when small production runs are needed, such as individual sandwich shops baking only the cookies they need.
- It is ideal for custom or seasonal orders, or trial runs of a new product.
- It reduces inventory. This can be critical when spoilage or space are issues.
- It allows a single production system to be used for making different seasonal items.
- It makes sense when the demand for a product is not sufficient to keep a dedicated machine or production process operating continuously.
Disadvantages of Batch Production
There are three major drawbacks to batch production.
- Reconfiguring the production system to produce something different results in downtime. In lean manufacturing language, these are wasted resources.
- The production equipment uses a lot of space. When it's idle, this space is not being utilized to make money.
- Labor is required to move items from one stage of the batch process to another, in addition to the labor required for batch manufacturing.
There are some products that, to be practical, must be made continuously. In the example of electricity, people use it all the time, but it cannot be efficiently stored. There is no choice: electricity must be generated continuously.
In other cases, the equipment used for manufacturing the product requires continuous operation, to stay profitable. This is the case with paper making. Starting up a paper machine takes a lot of time and produces a lot of waste. Once the machine is running, though, it can continue to produce quality paper without downtime or excessive waste. As a result, paper machines nearly always run 24 hours a day, 7 days a week. If demand drops, they'll shut down the least efficient machine or a machine already scheduled for maintenance.
Continuous production is perfect for a product for which there is a high demand, or for products that are very similar and are made in a similar manner. Many plastic and resin products need to be produced in large quantities. This used to be done using batch production. However, newer technologies for injection molding have made continuous production possible. The result has been improved efficiency for producing plastic parts.
Optimizing Batch Production
The question asked in the opening quote is the key to efficient batch production in business: “Why are setup and transfer costs so high in the first place?” Minimizing the time lost to setup and change-over is the key. Lean manufacturing methods for this problem recommend completing as much of the change-over work as possible before the down-time. This is called Single Minute Exchange of Die (SMED).
Although the name implies that machine set-up can take place in just one minute, that usually is not realistic. The goal is to minimize the change-over time as much as possible, and then continue to find ways to decrease it further. For example, with Toyota's Production System it would take from 12 hours to three days to change the metal stamping dies used for making car bodies. This was reduced to just 90 minutes through the use of precision positioning equipment. That was a huge improvement. But they didn't stop there: further refinement reduced the change-over time to just ten minutes!
These metal stamping dies weigh several tons and require positioning within a tolerance of a millimeter; if the time for their change-over can be brought down from three days to just ten minutes, there are probably ways for you to reduce your change-over times, too.
Batch Production Examples:
- Baked goods
- Computer chips
- Computer software
- Die- or mold-making
- Electrical goods
- Flat-pack furniture
- Jet engine production
- Jig and fixture production
- Machine tool manufacturing
- Material coating
Small Batch Production: Reducing Costs, Increasing Profit
Batch production will not be as efficient as continuous production, ie assembly-line work. But there are ways for your business to take less of a hit when small batch production is necessary.
Reduce the possibilities
Is it really necessary to carry 16 types of cookies or 16 shades of shoe leather? Review which ones are moving the most product and focus on those, eliminating the less profitable varieties. If it's necessary to carry all options, consider extending the turnaround time for less popular choices so that you'll have more orders each time you process a batch. In other words, still offer purple but let customers know that it will take a week longer to receive product.
Move staff during die switches
If you have ten people producing a batch and it's time to change the setup for a different batch, move the other nine employees temporarily to other tasks so they're not standing around. Perhaps they could clean, pull tasks from a task board, or assist other workers until the machinery is ready to go again. Assign these tasks in advance so there's minimal down-time while switching roles.
Charge more for specialty
Particularly if you make a unique product, the market may support a higher cost for something very unique or custom. Consider adding a surcharge for specialty colors, shapes, flavors, etcetera. It may drive some of those purchases to your core products instead, but this means more time between specialty batches, which decreases your number of change-overs.
Lean manufacturing approaches are designed to reduce change-over times or otherwise create a more efficient, less wasteful process. Assess which lean processes could have the biggest impact on your manufacturing or production processes.