Assemble-To-Order describes a production environment in which a good or service can be assembled after receipt of a customer’s order. The key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.
Synonyms for Assemble-To-Order include Finish-To-Order and Make-To-Order.
Reference: Supply Chain Insights - Assemble to Order
Little's law was named after Mr. John Little who was a professor at MIT's Sloan School of Management. The law states that by reducing work in progress and maintaining a processes average completion rate the lead time will be reduced too. On the same note, according to little's law increasing the average completion rate while maintaining the same level of work in progress will reduce also reduce the lead time.
How to calculate?
Little's law can is expressed with the following equation:
- Lead time = Amount of work in progress / Average completion rate
Does your company make goods only after receiving an order? Do they make goods before and then stock them? These two questions can help clarify how your organization plans and schedules the production or execution of goods and services. There are many different methods that companies may use, some examples are: Make to stock, Make to order and Assemble to order. Whichever strategy a company selects will have a varying degree on the amount of inventory a company holds, how they will produce and how resources are spread through the organization. The biggest impact is the amount of inventory the company carries which as you may know already is cash availability.
The chase strategy is one method organizations use to maintain a level inventory while producing at varying rates in order to support demand. The chase strategy is sometimes referred to as demand matching because the strategy varies production to meet demand.
The main benefits associated with a chase strategy are:
When you go to a restaurant for food and place an order the staff will normally pull supplies from a "stable inventory" level and make the order, or in other words "chase the demand."
Like many other areas that lean is applied to a company's supply chain or "extended value stream" is a tightly linked set of processes. These processes extend beyond one's organization and connect the entire system together. The Apics dictionary ©2015 defines the term supply chain as the global network used to deliver products and services from raw materials to end customers through and engineered flow of information, physical distribution and cash. This includes everything from purchasing, manufacturing, moving, storing and selling.
Lean principles and concepts can be applied to this global network just like it can be applied to our door to door value streams. Some benefits of applying lean principles to the supply chain are:
The standard deviation is a statistic that tells you how tight or loose the range/spread of data is in relation to the mean or average of the data. Typically when a data range is clustered tightly the "bell curve" will be tall/steep. When the data is range is spread far apart the "bell" will appear flat or short and wide.
Overall equipment effectiveness is a metric that helps measure and track the performance of finite resources and can help companies highlight opportunities for improvements. The results are stated in a generic form which allows comparison between manufacturing units in differing industries. It is not however an absolute measure and is best used to identify scope for process performance improvement, and how to get the improvement. If for example the cycle time is reduced, the OEE will increase i.e. more product is produced for less resource. Another example is if one enterprise serves a high volume, low variety market, and another enterprise serves a low volume, high variety market. More changeovers (set-ups) will lower the OEE in comparison, but if the product is sold at a premium, there could be more margin with a lower OEE.OEE measurement is also commonly used as a key performance indicator (KPI) in conjunction with lean manufacturing efforts to provide an indicator of success. OEE can be illustrated by a brief discussion of the six metrics that comprise the system. The hierarchy consists of two top-level measures and four underlying measures.
Reference - Wikipedia : Overall equipment effectiveness
A make to order production environment is one in which manufacturing or in the case of a service, service, starts only after receiving a customer's order.
A make to stock production strategy is used mostly in forecasting environments. The Apics dictionary 14'th edition defines Make to Stock as a production environment where products can be and usually are finished before receipt of a customer order. Customer orders are typically filled from existing stocks and production orders are used to replenish stocks.
Learning a new term can be hard when there are so many different terms available in Lean and Six Sigma. The one definition we can all agree upon that matters is the voice of the customer. Formally defined the voice of the customer is a process by which we can collect requirements, needs, wants and expectations or feedback from our customers. Collecting this type of information can reveal new insights and form trusting bonds between customers and vendors.
Along with the voice of the customer another great way to gather information is through a community. As many of you probably know already you can search a term and most likely one of the top search results will be none other than Wikipedia. A wiki is a website that provides a collaborative and interactive community where professors, experts, practitioners and even casual readers can go to share knowledge with one another. It's like Yokoten on a global environment. There are a few wonderful ideals about this approach that standout:
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