5 Ways to Reduce Your Manufacturing Inventory Costs

By | Business Transformation, Lean, Manufacturing

Do you feel constant pressure to reduce manufacturing inventory costs? You’re not alone! 

On one hand, if you don’t have enough of the right inventory on hand when it’s needed, you risk damaging customer relationships. Your customers are counting on you to have what they need on hand when they want it.  In a worst case scenario, low inventory levels can cripple your business. Without product to ship, you won’t have revenue coming in.  Without a good reputation for delivering on your promises, customers begin to disappear.

On the other hand, you don’t want to be carrying too much inventory either. Too much inventory brings the risks of obsolescence, damage, and additional storage/carrying costs. The problem is compounded for many US-based manufacturers because it is commonplace to now outsource most high-volume manufacturing overseas to China, Mexico and other countries with lower-cost manufacturing. That means, the inventory that you have on hand is all for the high-mix, low-volume work.

How do you lower inventory costs when you are charged with producing 5-10 pieces at a time instead of 1000s at a time? 

Here are 5 steps we recommend regularly for our high-mix, low-volume manufacturing clients:

1. Adopt a single piece flow mentality

Single piece flow eliminates waste by working on one product at a time. While not always practical (like when you have high change-over times), it is an ideal state of lean manufacturing to achieve single piece flow whenever possible.  Benefits include improved quality, lower defects, less inventory holding risks and improved manufacturing flexibility.

2. Find strategic suppliers

Reduce on-hand inventory by developing relationships with suppliers so you only get what you need for a given day.  Working closely with your key suppliers, you can reduce the amount of safety stock you carry as buffer against missed deliveries once they have proven to deliver consistently on time.  Then you can reduce the lot size on your orders.  You won’t then need so much warehouse space and your manufacturing environment overall will stay more organized and become more efficient.

3. Eliminate or reduce buffer inventories

When single piece flow isn’t possible, you may need to establish some buffer inventory in WIP so that your downstream processes can keep running.  However, you always want to keep looking for ways to eliminate or reduce these buffer inventory stock levels.  Reducing downtime, yield loss and change-over times allows you to reduce your buffer inventory.  Calculate this using EPEI to get quantitative insight. If you have to use buffer stock, set up the inventory pulling process to automatically trigger the buffer stock replenishment process.  “Take one, make one” is a great motto, but again, not always possible for the same reasons that single flow processes aren’t always feasible.

4. Get rid of expensive equipment

If you have equipment that’s expensive to own, expensive to run and or expensive to maintain, ask yourself, “Can you get rid of it?” Look for how you might outsource that process to reduce your expenses and eliminate any manufacturing bottleneck for creating downstream or finished good inventory.

5. Connect sales orders to manufacturing

When the sales order processing system and the manufacturing resource management system are disconnected, you risk running into all sorts of issues.  Sales may think that materials are on-hand, but in reality they’ve been committed to another customer order.  Linking Sales Orders with Manufacturing  eliminates duplication of effort and makes it clear what is available-to-promise. Orders can be broken into digestible chunks for production. Inventory levels stay balanced.

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Author: Doug Bulla, VP Business Development

Bridging the Gap Between Current Processes & Future State Lean Models

By | ERP, Lean, Manufacturing

When we work with clients to implement lean manufacturing principles, we typically use a software tool called LeanCONNECT (formerly called Areteium). With this tool, we can use existing manufacturing production data from any ERP system to identify existing plant floor inefficiencies. Running a variety of scenarios, we can create sophisticated future state lean models.

How do you build a bridge to the future state of lean manufacturing?

Step 1: Lean principles begin with leadership

The first and most important element of any transformation is to get executive buy-in. Lean manufacturing is an ongoing commitment and requires perseverance and adherence to the concepts and principles for the long-term. Lean manufacturing is less of a process, and more of a mindset. Nothing will derail a lean project faster than lack of leadership.

Step 2: Document the current value streams

Step two is to document your current processes, which in lean manufacturing are called Value Streams. You want to look at each process from beginning to end. Document how long each step takes. Note inefficiencies and areas of waste. Document the impact on customers, as well as your company. In lean, we often talk about takt time – how long it takes for a product to be produced. To calculate takt time, you’ll need to know:

  • The production schedule – how much time is spent in operation.
  • How much time is required for equipment maintenance, breaks, shift changes, and clean up.
  • How much customer demand/product is produced within that time span. Many businesses have cyclical demands, by time of day or seasonality, and this factors into your value stream calculations.

The goal of building to takt time is to eliminate non-value adding time and balance the workload of the operators and equipment. In addition to defining how long production takes, you must also account for things like:

  • Product defect percentages
  • Fluctuations in raw material costs
  • Inventory carrying costs
  • Reasons for downtime – changeovers, maintenance, etc.

Ideally, you’ll want to gather these metrics from data gathered over a significant duration in time. We use LeanCONNECT to pull in information from your ERP system, but you can use other business analytics tools as well.

Step 3: Start asking “what if”?

With so much information available, it can be easy to get overwhelmed. Pick an area that stands out as particularly in need of improvement and consider your options:

  • What if we reduced customer defects? Could we charge more? How much would this impact our costs and profitability?
  • What if we added more capacity in this plant – or more resources to this shift?

Quantify the benefit you would obtain by achieving this future state lean model.

Step 4: Pick one area of focus.

Using your “what if” analysis, isolate one area of improvement. This quick win will help get the entire team on board with your lean manufacturing initiatives. Be sure to communicate your successes and the impact across the organization.

Step 5: Look long-term

Lean manufacturing is a never-ending journey of continuous improvement. Make sure your team is prepared for a marathon, not a quick sprint. Those small corrections over time add up to big savings for your company and added value to your customers. The key is to have cohesion and commitment to lean principles across the organization. From sales to production to shipping, each department must work in coordination with the rest of the organization.

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Author: Phil Coy, Managing Director, Manufacturing Excellence

5 Ways to Increase Quality Without Increasing Production Cost

By | ERP, Lean, Manufacturing

Razor thin margins leave little room for production errors. Because product recalls and customer refunds are so expensive, you want to be able to consistently deliver quality products, but without adding to your production costs.

1. Define what product quality means.

How are your customers using this product? How do they measure the quality of your product? You can avoid over-engineering your product by understanding the quality standards of your customers. They may be willing to pay less for lower quality – or you may be able to charge more by increasing quality.

2. Create, document and follow established processes.

Create discipline around your business processes. Consistent routines deliver consistent results. One of the reasons most manufacturers have MRP and ERP systems is to enforce standardization. However, these manufacturing systems must be flexible enough to change as your business processes change. If people start working around the system, the software will not reflect the reality of the shop floor.

3. Hire good people and train them.

With your processes established, you need people who will follow the guidelines you set. You also need competent people to manage others and perform skilled labor jobs. If you can’t find people with enough experience, find people with a good attitude and give them opportunities to learn from your more seasoned employees.

4. Maintain your equipment.

Equipment problems can degrade the quality of your output. Preventative maintenance is the key to avoiding down time and lowered production quality.  Conduct regular checks and replace worn components before they break down. Many manufacturers are starting to use IoT sensors to detect issues early, by monitoring usage, heat variations and other deviations from baseline settings. Part of your maintenance plans should include having critical and frequently replaced spare component parts on hand. You’ll also want to make sure you have multiple people who know how to fix your equipment.

5. Create a clean, organized work environment.

Many manufacturing processes create residue – paint, oil, sawdust, metal filings, etc. This production “dust” can clog machines and get stuck to finished product.  Maintaining a clean production line can improve quality with little effort. Product can also get damaged by mishandling, being stored improperly, and in the shipping process.  Having an organized work environment can lower your risk of delivering damaged product.

What else would you add to this list? Have you found ways to increase production quality without adding to your production costs?

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Author: Phil Coy, Managing Director – Manufacturing Excellence

When Lean Manufacturing isn’t Worth the Effort

By | Lean, Manufacturing

As a company who has been doing manufacturing ERP implementations and has been evangelizing lean manufacturing principles for a long time, we believe in lean principles, and believe they can be applied to industries outside of manufacturing.

People ask us, “Is there ever a time when lean manufacturing is not worth the effort?” The answer is yes.

1. When you just want to cut costs. Yes, lean is about eliminating waste, but the primary directive of lean is to increase the value to the customer. Lean is more about increasing the top line (increasing sales) than decreasing the bottom line (cutting cost). If you use lean as a headcount reduction tool, you may lose loyal, valuable employees in the process. If you instead assign those employees more meaningful work, you can bet customers will pay you more. You will either have more capacity to produce more of the same product at the lowered cost basis – or you will be able to increase your prices due to the added value.

2. When you don’t have executive buy-in. Lean manufacturing is more than a process, it is a philosophy, a way of operating a business. Lean is about adding customer value through every touchpoint across all business processes and departments. If only one department is embracing lean and cannot get leadership on board, the results will be minimal. For example, if you build more value into every product, but accounting and sales don’t increase the price, your effort has been wasted.

3. When every job is a custom job, with dynamic changes. Lean depends on having a stable business process that can be improved over time. If every job is different, and it changes as you get into the project, you’re not ready or right for lean. Start by focusing on process improvements and creating standardization.

Interested in learning more about Lean Manufacturing?

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Author: Doug Bulla, VP- Business Development

Life After Moving to a Modern ERP System

By | ERP, Lean, Manufacturing

Anytime you switch out your ERP system, you can expect a certain amount of grumbling. Change doesn’t come easy to most people! But if you are moving off an older system that hasn’t been upgraded in a significant amount of time, you are likely to see employees quickly get excited about the possibilities, especially if you’ve been communicating the changes and providing training on the new ERP system throughout the implementation process.

Here is a detailed list of what you can expect:

  1. You’ll hear lots of suggestions! While some people may be trying to figure out how to do things the old way with the new ERP system, most people will be filled with ideas on what ELSE they could do to make their job easier. Build a process for evaluating input from employees. Sometimes there really is a better way.
  2. You’ll see fewer spreadsheets and hold fewer meetings.  Less meetings?! What will you do instead? Be productive! When company information isn’t centrally stored and easily accessed, organizations see a proliferation of emails, spreadsheets, access databases, and meetings – lots of meetings. Having a modern ERP system will enable you to reclaim your time, and be more productive.
  3. You’ll discover new KPI’s. With a modern ERP system that can synthesize data from across the organization, you’ll have one version of the truth, and improve your ability to uncover the root causes of issues. With better insight, you’ll be able to produce even better results.
  4. You may need to re-distribute your resources. If you choose a modern cloud-based ERP system like Dynamics 365, you won’t need those same resources to manage the hardware, software and servers. Instead, those IT administrators may be re-deployed to other projects or to handle software configuration and security.
  5. You’ll want everything to integrate. Once you see how much sense it makes to have procurement, engineering, scheduling, production, shipping, sales, etc. all in one integrated system, you’ll start looking for ways to bring in the pieces that weren’t identified in the initial project scope. You’ll experience how workflow, automation and predictive analytics makes your system more “human-proof”, reducing errors, improving collaboration and accelerating innovation.

Success with your new ERP system won’t come overnight. Implementations take a concerted effort over a significant period of time, but perseverance pays off.

Decide which Modern ERP System is Best For You

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Author: Doug Bulla, VP-ERP Business Development

Starting your Lean Manufacturing Journey

By | Business Transformation, Lean, Manufacturing

Every journey begins with a first step. And the first step is deciding, “Where do I want to go?”

Lean Manufacturing is a process that is designed to take your manufacturing production from supplier to customer with no wasted effort or steps:

  • Perfect flow
  • Zero safety incidents
  • Zero product defects
  • Zero waste

In an ideal lean manufacturing scenario, you deliver exactly what the customer wants, exactly how they want it, and exactly when they need it.


That’s the halting sound of reality. While the utopian dream of constructing a perfect lean manufacturing system may remain eternally elusive, that doesn’t mean that the effort is futile.

As defined by the Lean Enterprise Institute, lean manufacturing is the principle of “maximizing customer value while minimizing waste.”

Step 1: Pinpoint your destination

Like every journey, we begin with the end in mind. For a lean manufacturing journey, we begin by asking these two questions:

  1. Where can we maximize customer value?
  2. Where can we minimize waste?

Some organizations have clear priorities. Others may have to do some discovery work to figure out where they should prioritize their efforts. If you’ve never embarked on a lean journey before, it’s wise to hire a “lean Sherpa” or as we more commonly call it, a consultant to help guide your way. Pick a few key priorities where you believe you have the most to gain.

Step 2: Decide if the lean journey is work the risk, time and effort

Can you forecast a high enough ROI (return on investment) to take on this project? We use a tool called ManufacturingCONNECT for Lean to visualize various “what if” scenarios. Other companies use complex Excel spreadsheets to forecast potential costs and savings.

Step 3: Build Your Lean Team

Lean is more than tools and takt time. It’s a mindset. For lean to be successful, lean principles must permeate throughout the company culture. The Lean Leaders you select should have time to devote to the project, be passionate about the company, and willing to embrace change. As the Lean Team builds the Lean Project Plans, they also need to create a communication and change management strategy to help the entire company learn and embrace Lean Manufacturing.

Step 4: Set Bold Goals

Make them visible. Build a vision for each area about why change is needed and what the expected results may look like. These goals must have buy-in from Executive Leadership.

Step 5: Build Your Lean Project Plan

Identify all the resources you need to execute your lean manufacturing plan. Your manufacturing systems may need to be upgraded, changed or replaced to support your lean manufacturing initiatives. Develop a reasonable timeline, but one that gets you into action as soon as possible, creating visible results. Start small and expand scope as you build momentum.

One final piece of advice is that we recommend you begin evangelizing Lean Principles as early as you can. Develop a strong communications plan. Develop training programs to get lean into the hands of your supervisors and engineers. Our “Learning Lean with Legos” training program is one of the most popular and fun ways we’ve taught lean concepts.

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Author: Phil Coy, Managing Director – Manufacturing Excellence

Value Stream Mapping: Do your materials move by magic?

By | Business Transformation, Lean, Manufacturing

Does your lean manufacturing value stream map include movement of materials between processes?

Value stream mapping is one of the most common and powerful tools used in lean manufacturing . As the name implies, the map visualizes the sequence of processes that create customer value in an enterprise. For manufacturing companies, customer value is predominantly built into the capabilities and features of the product itself. As a result, value stream mapping most often shows the physical processes like machining, painting, assembly, and shipping. What value stream mapping often misses is how those materials move between processes.

Creating a manufacturing value stream map

Value stream maps typically are created from walking the shop floor, interviewing operators and capturing results using sticky notes on a wall. This allows for the flexibility needed, especially when different products have different paths through the manufacturing processes. Lean manufacturing literature is full of examples of value stream maps. The problem is that they are all wrong.

Well, maybe not exactly wrong, but I have yet to see value stream maps that include the level of detail that defines material movement. In talking with operators, the focus is on their process, and justifiably so, but it’s as if the components needed by a process just magically show up when needed and the products produced by the process are magically removed and off to their next step. Occasionally you’ll see a kanban board symbol…but a picking list, never!

Photo credit: mannewaar

Visualizing a complete production system

A complete production system includes:

  • How component parts are ordered
  • How component parts are received
  • How component parts are moved from their stocking location to the actual point of use on the shop floor
  • How defective components are removed and returned or scrapped
  • How defective products are reprocessed for correction
  • How defective products are torn down if components can be reclaimed
  • How good products are moved along to the next process
  • How good products are put away in inventory

Some people would argue that the point of a value stream map is only to surface waste in order to focus on kaizen activities. That’s true and is definitely the top benefit of a value stream map. However, value stream maps are an excellent way to document your processes in very specific detail.

Importance of understanding material movements

Let’s look at just one example of the material movements that could come into play for a typical machining process. The process uses 2 components that are machined and then bolted together into a single unit.  The first component is high value and is controlled in restricted inventory. Only when that part is used is the specific quantity released from the stockroom to the point of use location in the work cell. That’s done with a picking list.

The second component is lower value and is shipped shrink-wrapped on full pallets. It’s high volume so when a pallet is emptied, a new pallet is moved by forklift from the stockroom to an inventory location near the work cell and then individual units of the component are loaded into workcell flow racks at true point of use.

In this case, we have a two-step movement to get components from stores to point of use. Control of this movement could be via a picking list, a kanban, a fixed card, or managed by a warehouse management system (WMS).

The third component are the bolts which are not managed in stock at all but expensed to WIP on receipt and then held in buckets at the work cell locations. A material handler lets a planner know when the bucket is getting low – visually.

In this simple example, we have 3 different approaches to move materials and options from fully automated to entirely visual with no transactions.

Do your value stream maps distinguish how the parts move or is it magic?

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Author: Phil Coy

Getting to the Aha Moment Faster

By | Business Transformation, Lean, Manufacturing

The Way Things Work Around Here

Most manufacturing employees are comfortable in their routines. They are used to what they do and have become as productive as they can with what they have.  Any change in operations can be perceived as a threat to their continuing productivity and at odds with “the way things work around here.”

In our work, the new practices we introduce are not obvious or easy. Employees must learn:

  • Lean Manufacturing principles, like pull and flow
  • How to use the new Microsoft Dynamics AX ERP system, and find where all the functions are hidden
  • An entirely new vocabulary of terms, “What the heck is takt time or operator balance or kanban? Or with Dynamics AX, what’s a throughput ratio or a kanban rule?”

Implementation teams can struggle mightily to learn Microsoft Dynamics AX Lean Manufacturing functions.  With so much to learn all at once, it can take a couple of weeks to train people in all the various parameters and setup data from production flows to kanban rules and workcells.  By then, people are often frustrated!

A Better Way to Learn Lean Manufacturing

The typical manufacturing employee is very linear, hands-on, and concrete in their thinking. Learning lean manufacturing principles through simulation games is a natural fit, and provides a better experience than teaching through a series of lectures and hand-outs.

To setup a simulation game takes time, creativity, plastic bins, a map of the shop floor – and lots of Legos®! Plus, you’ll also need to have Microsoft Dynamics AX running on laptops, and bring in the scanners and bar-code printers you’ll use later in your production environment.

Once the simulation is setup and you are ready to run Lean Manufacturing in Microsoft Dynamics AX, the simulation game itself actually quite easy, visual, and simple.

Our First Experience Using Legos to Learn Lean

Since our customer was planning to roll out lean and AX in every plant with a wide range of products, we decided that the simulated “products” we would build with Legos would be very simple but representative of their world. 

Multiple products would go down the same production processes. Two levels of a bill of material (BOM) for multiple subassembly operations fed into a final assembly operation.  Inventory would
be drawn from supplier-owned inventory, purchased inventory, and a pick-to-ship process.  We designed mats that we could print on a plotter to layout the “shop floor” on tables and got some plastic bins for inventory locations.

In Microsoft Dynamics AX, we defined the items, bills, production flows, workcells for our representative operation.  We used as many lean features as we expected they would use in their operation including event kanbans, scheduled kanbans from MRP, and traditional circulating kanban cards.

Finally, we wrote scripts for each round of simulation with instructions on how to build the Lego products, where to put them, what to scan or update in AX.  Each job role (the operators, material handlers and warehouse workers) had their own specific script.

Our simulation included all aspects of the lean operating environment, and gave the users a chance to try out the actual software and hardware that would be available in production.

Faster & More Fun Than Traditional Training   

Every audience within the company loved the simulation games.

  • The implementation team could trace material movement and try new ideas out.
  • The operators found the system easy to use & understood their part in the overall process. Plus – they were having fun as they learned.
  • The executives could see how lean would function in their business.
  • The operational excellence people decided they would use the simulation going forward as a way to train new employees in lean thinking.

Setting up a lean simulation took some time and care, but not a lot of money. The results have been well worth it! We see everyone getting to their own “aha” moment earlier than ever.

Recently, we hosted an event, “Learning Lean Simulation Using Legos” where I shared more about our process:

Written By:  Phil Coy

Lean Production Scheduling in Dynamics AX

By | Business Transformation, Lean, Manufacturing

]Let’s look in some detail at production scheduling for lean manufacturing in Dynamics AX.  If you haven’t read my blog series on production scheduling supporting lean principles, I encourage you to read it first.  Building on that knowledge base, we’ll take a look at how Microsoft Dynamics AX supports these seven guidelines for designing a future state with a special emphasis on production scheduling.

The seven lean manufacturing guidelines for the design of a future state value stream are:

1. Produce to your takt time.
2. Develop continuous flow wherever possible.
3. Use supermarkets to control production where continuous flow does not extend upstream.
4. Try to limit the customer schedule to only one production process.
5. Level the production mix by distributing the production of different products evenly over time at the pacemaker process.
6. Level the production volume by releasing small, consistent increments of work at the pacemaker.
7. Develop the ability to make “every part every day” (then every shift, then every hour, or pallet or pitch) upstream of the pacemaker process.

From Lean Enterprise Institute “Learning to See” workshop version 1.2, 1999

  1. How Microsoft Dynamics AX Can Produce to Takt Time

The truest method to produce to takt time is to make to order.  Microsoft Dynamics AX provides “event kanbans” that are driven from sales orders.  When a sales order is taken, a kanban is generated automatically, matching the quantity and due date.  That works nicely for final assembly.  An “event kanban” can also include a kanban line event so that when a kanban is created for a downstream production flow, a kanban to matching the quantity and due date is generated automatically for the subassembly required by the downstream production.  In this way, make-to-order manufacturing (MTO) is supported through multiple levels of the bill of materials (BOMs).


  1. How Microsoft Dynamics AX Can Develop Flow

A lean value stream is defined in Microsoft Dynamics AX as a production flow with multiple activities.  Each activity corresponds to a lean process.  AX allows you to build a product through multiple activities and record the product as semi-finished along the way without either having to have a level of the bill of material or receive the product into inventory.

This flexibility allows you to define your flow of multiple processes together.  You may decide to setup a U-shaped cell with multiple operator stations or create flow line with multiple work stations.  Kanbans set up for these flow situations show on the operator board as pegged requirements, allowing the operator to see the status of work coming from upstream activities.

NOTE: You must design your material flow first to support your visual factory, and only then configure AX to match that physical flow.  All of this is done by configuring standard software without any need for the IT Department to be involved.


  1. How Microsoft Dynamics AX Works With Supermarkets

Upstream from where you can flow, you must plan for intermediate inventory buffers. (In lean, we call these supermarkets.) These supermarkets ensure that downstream processes always have inventory available when needed to support customer orders.

As materials are withdrawn from the supermarket, pull signals or kanbans can be generated to build enough to replenish the supermarket to targeted stock levels.  This make-to-stock manufacturing (MTS) scenario is supported by two methods in Dynamics AX.

  1. Classic fixed kanban cards can be used to automatically replenish when inventory falls below a reorder point. Kanban cards can be pre-numbered for cards that cycle out and back quickly or can be one-time use kanban cards where a new kanban ID is assigned for each cycle to replenish.  Microsoft Dynamics AX includes kanban calculations to calculate the number of fixed cards needed based on transaction history and forecasted demand.
  2. Scheduled kanbans can be generated from MRP in a very complete integration supporting all the planning and aggregation capabilities of a full-featured MRP. Scheduled kanbans can be automatically generated to replenish stock to targeted levels.  This is more dynamic and flexible than fixed cards since kanbans are generated with the specific quantity needed.


  1. How Microsoft Dynamics AX Does Pull Scheduling at One Point

The lean principle is to schedule customer orders at one point and allow the rest of the value stream to respond with flow downstream and pull upstream.  This scheduling process can be easily designed to be implemented by Dynamics AX.  With the flow example above, the customer order generates the kanban at the first of the flow processes down the value stream.   That kanban can automatically generate subassembly kanbans for feeder areas to produce and can automatically generate withdrawal kanbans to move component inventory from stockroom to lineside locations.

A complete collection of kanbans for moving material and multiple subassemblies for feeder area production can be generated from a single customer order all automatically and all pegged to the original order.  For more complex situations where there are multiple production lines that must be balanced, mcaConnect offers a Fixed Interval Scheduling add-on for load balancing, substitutions, and configuration management.


  1. How to Level the Mix with Microsoft Dynamics AX

Leveling the mix involves distributing the work to produce different orders evenly over time.  Leveling can be done by the workers at a workcell using visual displays in Dynamics AX to see the overall loading of a workcell for the upcoming week.  Operators can then shift orders and sort like products together in order to group work together over their planning cycle.  For example, if a paint line has 3 days visibility of orders, the team leader can group work together as needed to minimize changeovers and smooth spikes and dips without compromising on-time delivery.


  1. How to Level the Volume with Microsoft Dynamics AX

Leveling the volume is to release a small increment of work on a regular schedule and monitor completion of each increment.  This is the lean concept of pitch.  As an add-on to standard Dynamics AX, mcaConnect offers a Fixed Interval Scheduling solution that supports this concept to level the volume and manage operations in short increments.  Each schedule is confirmed for both material and capacity before release.  Component substitutions are supported and as-built configurations captured.  Automatic load balancing across multiple lines supports leveling both mix and volume together for complete control of your total operations.  This supports ship-complete as well as partial shipments.

  1. How to Use EPEI to Size Upstream Supermarkets

Microsoft Dynamics AX allows you to set targeted inventory levels including safety stock by item at every location.  The MRP system will then plan to replenish to those stock levels automatically providing action messages or planned orders to help the planner identify situations where action is needed.

EPEI calculation is not done formally by Dynamics AX but the results of your EPEI are used in establishing production lead times.  mcaConnect offers the Areteium lean transformation toolkit, which has very complete calculations for EPEI for a wide range of complex manufacturing processes.  The results of the EPEI calculation from Areteium can be updated automatically back into Dynamics AX.

Obviously, there’s much more that could be said.  As you can see, Microsoft Dynamics AX as a top tier ERP solution provides a very comprehensive and solid enterprise business platform to support truly lean operations.

Learn how to address the challenges of high mix, low-volume manufacturing.

Want to learn more about Areteium or mcaConnect’s Fixed Interval Scheduling solution?

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Written By:  Phil Coy

Production Scheduling – Level the Volume

By | Business Transformation, Lean, Manufacturing

This post is part of our series discussing the 7 lean manufacturing guidelines. In this post we’ll discuss supermarkets as a way to design a lean future state.

Post 1: The 7 Lean Manufacturing Guidelines
Post 2: Building to Takt Time
Post 3: Developing Flow
Post 4: Supermarkets & Pull
Post 5: The Pacemaker Process
Post 6: Leveling the Mix

This post will discuss the sixth of the seven guidelines for designing a lean future state, which is to level the production volume by releasing and withdrawing small, consistent increments of work at the pacemaker.

With this guideline we get to perhaps the least known of lean principles – pitch. Our goal is to release work to the pacemaker processes in small increments and to then manage each schedule to ensure completion.

Understanding the Pitch Process

Pitch is the lean term for the consistent increment of work released to production. The pitch period is the length of time that the increment of work covers. The value of pitch is to set the timeframe for management feedback and reporting. If you release work with a pitch period of a week, you’ll only know at the end of the week whether you achieved your week’s production. If you release work daily, you’ll know day by day but not more frequently than that. If you release by shift, each shift can know if they are ahead or behind. Or better, if you release with 4-hour, 2-hour, or even hourly pitch, you can know if you are ahead or behind much more frequently. The more frequently that you can monitor your production progress, the shorter your time to respond to issues that may impact your delivery to customers.

The broader concept is called fixed interval scheduling. With fixed interval scheduling, work is released to all operations in a consistent rhythm with all work linked to each schedule to track start and end time. Schedules produced for each pitch period must be confirmed to have available capacity and available material. With short pitch periods, scheduling can be very dynamic.

Working with Limited Staging Space

Fixed interval scheduling is an effective mechanism when there is a limited amount of space to hold products coming off production before shipping. In some very high volume plants, there may not be physical space to hold and stage products for shipping for more than a couple of hours of production. In these situations, the fixed interval scheduling process must also observe any requirements for shipping complete orders. That maybe especially challenging with products for a single order may be produced across multiple production lines. It’s in these situations of very high volume manufacturing that production scheduling must be highly controlled.

Fixed interval scheduling must be planned at least as far ahead as the lead time of make-to-order (MTO) sub-assemblies plus final assembly. In doing so, true MTO flow can be supported from feeder areas into final assembly. When feeder areas are not in flow, supermarkets provide an intermediate buffer to isolate upstream operations.

The future state design of your value streams across all operations must identify the pitch period and other requirements for fixed interval scheduling. Once in place, continuous improvement efforts should focus on the obstacles to reducing pitch to shorter and shorter intervals. The pitch period will be limited by the batching that remains necessary despite our best efforts to eliminate or reduce it.

Our final installment in the series is to use EPEI to calculate and then continuously reduce batch size.

Written By:  Phil Coy