of 78 /78
Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D. www.supplychaindocs.com

Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Embed Size (px)

Citation preview

Page 1: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

The Supply Chain Doctors

Supply ChainManagement

Kimball Bullington, Ph.D.www.supplychaindocs.com

Page 2: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors 18

SCM Fundamentals• Introduction

• Planning

• Sourcing

• Making

• Warehousing

• Transporting

• Sharpening the Saw

Page 3: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Terminology

• Inventory Item – Goods that are tracked as part of the financial accounting system. Will have a SKU assigned to it

• Non-Inventory Item – Goods that are not part of the financial inventory record (expense items, factory supplies, office supplies). May or may not have a SKU assigned to it

Page 4: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Terminology• Unit of Measure - – The measurement

used to buy, stock, and sale a specific item. Common units are each, pieces, box, carton, pounds, feet, rolls, packs, etc.– Common source of Inventory errors

Page 5: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Terminology

• Inventory Adjustment – An increase or decrease made to the system inventory level of an item to make it consistent with the physical quantity on hand. The adjustment may represent a gain or a loss of inventory.– Physical Inventory– Cycle Counts

Page 6: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

History of Warehousing

…And during the seven years of plenty, when the earth bore ample crops, he (Joseph) collected all the produce of the rich years over Egypt and stored the grain within the towns

…There was a famine in every country, but there was food everywhere in Egypt. And when all Egypt itself grew famished…Joseph opened all the granaries and sold grain.

Genesis

Page 7: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors 18

Warehousing• Costs• Receiving• Inventory Locations• Shipping Containers• Tools of the Trade• Inventory Management• Inventory Performance Measures• Picking Strategies• Lean Warehouse• Warehouse Management

Page 8: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Warehouse Costs

Fixed Costs• Building rent• Long-term equipment

leases• Some utilities• Some insurance• Depreciation• Sales, General, and

Administrative salaries (SG&A)

Variable Costs• Direct labor• Shipping supplies• Freight in• Freight out• Some utilities

Page 9: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

• A third party warehousing provider is a firm that provides outsourced or “third party” pick and pack, warehouse storage, and distribution services. Major services also include:– IT support, including product tracking– Transportation booking– Reverse logistics– Program management

Third Party Warehousing

Page 10: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Traditional Cost Accounting

• Overhead costs are charged proportionally to direct labor costs, not the actual resources consumed

• True costs for a project are not known

• Individual customer money makers and money losers are not known

• Economic break-even point is difficult to determine

Page 11: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Activity Based Costing

• Customers are charged based on the amount of resources they consume

• Requires detailed financial tracking

• Converts many overhead costs into direct costs

Page 12: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Activity Based Costing

• Good when overhead is high

• Good when products/services are diverse (consume different amounts of overhead costs)

• Good when competition is tight

Page 13: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Space Utilization Rate

• Charges based on the number of cubic feet consumed by a customer’s product

• Space utilization rate may include factors for:– Value of the space used– Value of the product housed (insurance)– Taxes– Loss & damage– Obsolescence– Material handling– Labor (upkeep)

Page 14: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors 18

Warehousing• Costs• Receiving• Inventory Locations• Shipping Containers• Tools of the Trade• Inventory Management• Inventory Performance Measures• Picking Strategies• Lean Warehouse• Warehouse Management

Page 15: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Receiving

• Obtain Purchase Order

• Schedule delivery

• Determine stocking locations

• Obtain shippers Packing List

Page 16: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Receiving

• Match Packing List to Purchase Order(s)

– May not be one for one

• Unload material into staging area

• Verify product & count against Packing List

Page 17: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Receiving

• Record short & damage notes on Packing List

• Allow staging area for product inspection• Acknowledge receipt of product (receiver

in software or hardcopy) Proof of Delivery• Stock in inventory locations as planned• Payment of supplier may require 3-way

match of documents (Purchase Order, Invoice, Receiver)

Page 18: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Receiving

• Receiving is the initial record of inventory management

• Errors at the Receiving stage will carry forward– The gift that keeps giving

• Receiving errors create– Backorders– Overpayment– Inventory loss

Page 19: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Receiving Errors

• Sources of confusion/errors– Inconsistent Unit of Measure between

Purchase Order, Packing List, and Inventory Records

– Different SKU numbers used between vendor, customer and SOS inventory records

– Purchasing Tolerances• Purchase Order requires 100 pieces• 10% Receiving tolerance• Packing List indicates 110 pieces• Conflicting records

Page 20: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Receiving Errors

– Multiple purchase orders for the same SKU• Partial shipments leaving small quantities open on

a PO• One shipment covering quantity for 2 purchase

orders

– Multiple packages to represent one unit• One gondola may be shipped in 3 separate boxes

Page 21: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Cross Dock Operations

• Unloading material from an inbound trailer and immediately loading onto an outbound trailer.– Eliminate the need for storage– Eliminate the additional handling of put away

and picking items– Requires synchronization between inbound

deliveries and outbound shipments

Page 22: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors 18

Warehousing• Costs• Receiving• Inventory Locations• Shipping Containers• Tools of the Trade• Inventory Management• Inventory Performance Measures• Picking Strategies• Lean Warehouse• Warehouse Management

Page 23: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Inventory Locations

• Fixed Location– Dedicated inventory slots

• Random Location– Floating inventory slots

Page 24: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Fixed Location Storage

• Each inventory location is dedicated to a specific part number.

• Simple & easy to use

• Reduces errors

• Employees memorize locations for common items

Page 25: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Fixed Location Storage

• The location stays empty or partially filled until additional quantity of it’s designated part number is stocked

• Results in poor space utilization – wasted space

• Space is often “reserved” for unstored product

Page 26: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Fixed Location StorageSpace Utilization

Delivery

Day before delivery

Time

Inve

ntor

y Le

vel

Page 27: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Fixed Location StorageSpace Utilization

Max Inv Level

Avg Inv Level

Delivery

Day before delivery

Must Allow This Much Space

Page 28: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Random Location Storage

• Product is assigned to any available inventory location

• Products may be grouped into logical families (not totally random)– Customer based (Petco, Best Buy, Eckerds)– Volume based (slow movers, fast movers)– Commodity based (shelves, standards,

slotwall)– Material based (metal, wood, plastic)

Page 29: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Random Location Storage

• Requires precise inventory accuracy

• Works best when inventory move transactions are made on a real-time basis

• Results in much higher space utilization

Page 30: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Underutilized Inventory Locations

Page 31: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors 18

Warehousing• Costs• Receiving• Inventory Locations• Shipping Containers• Tools of the Trade• Inventory Management• Inventory Performance Measures• Picking Strategies• Lean Warehouse• Warehouse Management

Page 32: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Shipping Container

• Sealed metal box of standard dimensions used for intermodal freight transportation

• Can be loaded onto trucks, container ships, rail cars, and planes

• Capable of being stacked multiple levels high

Page 33: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Container Sizes

• TEU – Twenty-foot equivalent units– 20’ (length) x 8’ (width) x 8’-6” (height)

• Common Container Lengths– 20 ft – 40 ft – 45 ft– 48 ft– 53 ft

Page 34: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Container – No PalletsEfficient space utilization.Inefficient unloading process

Page 35: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Container - PalletizedInefficient space utilization.Efficient unloading process

Page 36: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors 18

Warehousing• Costs• Receiving• Inventory Locations• Shipping Containers• Tools of the Trade• Inventory Management• Inventory Performance Measures• Picking Strategies• Lean Warehouse• Warehouse Management

Page 37: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Pallet Jack

• Hand-propelled, wheeled platform equipped with a lifting device for moving pallets

Page 38: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Powered Pallet Jack

• Battery powered, wheeled platform equipped with a lifting device for moving pallets

Page 39: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Forklifts

Electric Forklift LP-Gas Forklift

Page 40: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Racks

• Space utilization

• Handling efficiency

• Damage minimization

Page 41: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Racks

• Pallet Racks • Cantilever Racks –

Arms supported at one end only

• Bin Rack – similar design to pallet rack, but smaller (<30” deep, <7’tall)

Page 42: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Racks

• Flow Rack – Bin rack on an incline.

– Loaded from the back– Picking from the front– Conveyor rollers move

product from back to front of rack

– Efficient order picking

Page 43: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Racks

• Rollaway Rack

– Movable racks that travel on wheels and rails

Page 44: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Double Face Pallet

• A pallet with top and bottom decks. Can be accessed from 2 opposite sides.

Page 45: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Four-Way Pallet

• Pallet which can be accessed from all 4 sides

Page 46: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Block Pallet

• Pallet where blocks, rather than solid stringers separate the top and bottom deck

Page 47: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Reversible Pallet

• A pallet with the same construction for the top and bottom deck. Can be used with either side facing up.

Page 48: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Skid

• A pallet with no bottom deck

Page 49: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Fumigated Pallet

• ISPM 15 – Requires all solid wood packaging materials to be either heat treated or chemically fumigated to provide pest control (stamp required)

• Plastic pallets are an alternative to fumigated wood pallets

Page 50: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors 18

Warehousing• Costs• Receiving• Inventory Locations• Shipping Containers• Tools of the Trade• Inventory Management• Inventory Performance Measures• Picking Strategies• Lean Warehouse• Warehouse Management

Page 51: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Functions of Inventory

• Meet anticipated demand

• Smooth production requirements

• Decouple components (areas) of the production-distribution

Page 52: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Functions of Inventory

• Protect against stock-outs

• Take advantage of order cycles

• Help hedge against price increases or to take advantage of quantity discounts

• Permit operations (operation lead time)

Page 53: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Objective of Inventory Control

• To achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds

– Level of customer service

– Costs of ordering and carrying inventory

Page 54: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Types of Inventories

• Raw materials & purchased parts

• Partially completed goods called work in progress

• Finished-goods inventories – (manufacturing firms) or merchandise

(retail stores)

Page 55: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Types of Inventories (Cont’d)• Replacement parts, tools, & supplies

• Goods-in-transit to warehouses or customers

Page 56: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Requirements forEffective Inventory Management

• A system to keep track of the inventory on hand and on order

• A classification system for inventory items

• A reliable forecast of demand

Page 57: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Requirements forEffective Inventory Management

• Reasonable estimates of inventory holding costs, ordering costs, and shortage costs

• Knowledge of lead times and lead time variability

Page 58: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Unit of Measure• Unit of Measure – The measurement used

to buy, stock, and sale a specific item. Common units are each, pieces, box, carton, pounds, feet, rolls, packs, etc.– Common source of Inventory errors

Page 59: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

On Hand Inventory

On Hand Inventory BalanceIncreases:

Purchase Receipts

Store Returns

Work Order Completions

Positive Adjustments

Decreases:

Shipments

Scrap

Bill of Material Backflush

Bill of Material Issues

Negative Adjustments

+ + + + +- - - - - -

Page 60: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Inventory Allocation

• Inventory transaction where product is promised (allocated) to an upcoming sales order

• Inventory may be categorized as “committed” once allocated

• Allocated inventory is no longer available for new sales orders

• Allocating helps to define the available to ship inventory on hand

Page 61: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Inventory Allocation

• If a new order arrives with an earlier due date, the system may indicate no inventory is available.

• The previously allocated inventory must be uncommitted to free it up for use on the new order

Page 62: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Inventory Counting Systems

• Perpetual Inventory (Continual) System– Keeps track of removals from

and receipts into inventory continuously

• Cycle counting - taking physical counts of items and reconciling with records on a continual rotating basis

Page 63: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Physical Inventory

• Perpetual Freeze Qty

• Physical Count– WIP– Packed not shipped– Returned not stocked

• Recounts

• Audits

Page 64: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Physical Inventory

• Accuracy Measures– Net $ Gain/Loss– Net % Gain/Loss– Absolute Value $ Gain/Loss– Absolute Value % Gain/Loss– Piece Count Gain/Loss– Piece % Gain/Loss– Accuracy by location

Page 65: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

The Supply Chain Doctors

Inventory Counting Systems

When an error is found in an annual physical inventory, when did it occur?

Page 66: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Inventory Counting Systems

When an error is found in a monthly cycle count, when did it occur?

Finding and correcting the cause of errors is one of the most important

advantages of cycle counting.

Page 67: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

ABC Classification SystemClassifying inventory according to some measure of importance and allocating control efforts accordingly

AA - very important

BB - mod. important

CC - least important

What principle does this look like?

Annual $ volume of items

AA

BB

CC

High

Low

Few ManyNumber of Items

Page 68: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Obsolete Inventory

• Inventory that is no longer usable for it’s intended purpose– Loss of purchase cost– Loss of freight in– Loss of handling and storage cost– Loss of disposal cost– May have some salvage value to offset above

costs

Page 69: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

FIFO Inventory Policy

• First In First Out

• Rapidly moving inventory– Ensures minimal obsolescence– Ensures minimal deterioration or damage– Often costly to accomplish

Page 70: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

LIFO Inventory Policy

• Last In First Out

• Slow moving inventory– Can result in increased obsolescence – Results in the eventual use of older product– Can result in increased deterioration– Lack of visibility, loss

Page 71: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

FISH Inventory Policy

• First In Still Here• Slow moving inventory

– Until inventory is identified as obsolete, it can be justified as “good” inventory. Remember, Inventory Reserve is subjective

– Reluctance to dispose of inventory• Financial Loss• Visibility (5S)

– Lack of understanding of Inventory Holding Cost

Page 72: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

• Too much inventory– Tends to hide problems– Easier to live with problems than to

eliminate them– Costly to maintain

• Wise strategy– Reduce lot sizes– Reduce safety stock

Inventory Strategy

Page 73: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Inventory Carrying Cost

• Interest• Space• Insurance• Taxes• Loss & damage• Obsolescence• Material handling• Labor (upkeep)

Page 74: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Inventory Carrying Cost

• Expressed as a $ amount per unit per year

• Expressed as a % of the Cost of the item– Examples– The inventory carrying cost for a 24” shelf is

$2.00 per shelf per year.– The inventory carrying cost for a cash counter

is 8% of the purchase cost.• Purchase cost = $1200• Inventory carrying cost = 1200 * .08 = $96/year

Page 75: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Total Cost

Annualcarryingcost

Annualorderingcost

Total cost = +

TC = Q2

H DQ

S+

Q = 2DS

H =

2(Annual Demand)(Order or Setup Cost)

Annual Holding CostOPT

Page 76: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Process Design for JIT

• Quality improvement

• Production flexibility

• Balanced system

• Little inventory storage

Page 77: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Process Design for JIT

• Small lot sizes

• Setup time reduction

• Manufacturing cells

• Limited work in process

Page 78: Supply Chain Doctors The Supply Chain Doctors Supply Chain Management Kimball Bullington, Ph.D

Supply Chain Doctors

Reduced inventoryLess reworkLess storage spaceProblems are more apparentIncreases flexibilityEasier to balance operations

Benefits of Small Lot Sizes