Levelled Production: Where to Start

Levelled production was originally called “patterned production” and it creates a phenomenon called “economies of repetition.” As a lean coach, I tell people that economies of repetition make way for three positive human behaviour traits: a faster learning curve, routine, and stability. These in turn lead to increased performance, better problem solving, and the easier application of standards.

A fixed repeating pattern in production that involves more frequent short runs seems ridiculous and impossible to achieve. How do you start? You could use an analysis tool I’ve created that I call the “Glenday Sieve”.

This separates products (SKUs) into groups based on sales volume (or value if this is more appropriate). The results shown below are typical. Note: this does not just apply to products as the same results have been shown in hospitals looking at types of presenting conditions and the number of patients. Many people insist that it is impossible for 6% of the products, or patients, to account for 50% of the volume. Yet when we do the analysis, we find this be the case.

The Glenday sieve analysis

It is not too difficult to develop a fixed sequenced and volumes cycle for just 6% of the products. You can then value stream map these “green” items to help unravel the “spaghetti” pathways one usually finds. The result is a “green stream” for these few high volume products, or patients, with shorter throughput times, better flows, less activities due to routines, and much lower inventories possible for the green SKUs and associated materials.

The yellow SKUs are where you want to direct your capability improvement efforts. Change over reduction exercises and smaller batch sizes are what make it easier to introduce these products into the fixed green cycle. This typically results in a staggering 95% of the total volume, yet only 50% of the product range now runs in a fixed sequence “every product every cycle” schedule.

There is no number associated with the blues. These are not SKUs, but complexity issues that inevitably exist. These are factors consumers either do not recognize or do not care about as they do not add value, only cost. Think: what opportunities are there to harmonize the raw materials and packaging so the final product appears different to customers but makes these SKUs easier to include in the cycle?

For instance, you might have different color bottles but with the same shape so making changeovers is easier and faster. You might have labelled rather than printed cartons to reduce the number of different cartons one needs to plan and hold inventory for. These may sound like simple things but they can make big differences in getting your products into the cycle, making them flow, and reducing overall costs without impacting what consumers value in your product.

The red SKUs will need to be carefully reviewed to determine their real cost to the business. The impact of these products to the total supply chain and overall company costs, including overheads, must be understood to be certain that the benefits of selling them genuinely outweigh the costs. It is not uncommon for companies to recognize through this analysis that they actually have two distinct businesses. One is high volume products (the greens) for which the plant, business processes, and performance measurement systems were designed. The other is a low volume operation (the reds) which are often more difficult to plan and produce. The same equipment, processes, systems, and KPIs are being used for both green and red SKUs, to the detriment of customer responsiveness, efficiencies, inventory levels, and profit margins. Is it really a sensible business practice to continue running small volume red items on equipment that was originally designed for high volume green SKUs?

For some people having a fixed sequenced and volume cycle for just 6% of their products still seems impossible due to demand variability. The question you want to think about is this: how might you have a fixed stable plan at the same time as having variability in demand? And you want to remind yourself the benefits of doing so.