3 Continuous Production
When running the production for ten badges only, the advantages of one-piece flow over batching are obvious. However, in the long run—assuming we have a continuously running production system—we should omit the waiting times of the workstations because each of them is fed constantly. Regardless of the feeding method (one-piece flow or batching), there will not be any waiting in a perfect system because the stations are provided with items constantly coming from preceding steps. Waiting time occurs only at the beginning of the production and will become ignorable in the long run (e.g., production of a million badges). Let’s visualize the continuous production with batching to see how processes do not wait for parts.
Simulation Part 3 – Batching: Large Orders
In this simulation, we illustrate a simplified production line for manufacturing badges. We have received an order to produce ten thousand badges. As you will see, workstations keep processing items in batches of ten without any waiting time.
Credit: Batching: Large Orders by Fatih Yegul and Conestoga College, CC-BY-NC-SA 4.0
Key Performance Indicators – Large Order: Batching
Key Performance Indicators – Large Order: One-Piece Flow
It is interesting to note that batching has a better cycle time in the long run, thanks to the theoretical savings in moving time. However, production lead time and WIP inventory numbers are troubling in batch production.
So why does Lean favour one-piece flow over batching? Because batching creates huge amounts of WIP inventory (ten times more in our example) and dramatically higher lead times (7.2 times more in our example). Therefore, parts spend a lot more time in the system. Only a tiny fraction of this time is actual processing; the remaining is time waiting to be processed. From a customer’s perspective, processing is the only value-added task; other steps, including waiting, are non-value-added tasks.
From a financial standpoint, the concept of inventory has mixed connotations. On the one hand, inventory is listed under assets on the balance sheet, in a way equivalent to cash. But inventory also has a holding/carrying cost, consisting of items such as material handling, space, insurance, and lost opportunity costs (i.e., the opportunity to earn income if the cash tied to inventory was invested in a financial instrument).
Lean’s take on inventory is more operational than financial. In lean, inventory is a nuisance that hides operational problems and an obstacle preventing the organization from adopting a continuous improvement culture.
Continue to Part 4. How Inventory Hides Problems
