Grouping Production Batches Saves on Cost Per Unit

Different manufacturing organizations use different strategies when it comes to scheduling their productions runs. One strategy that manufacturers often use is “manufacturing to order” instead of grouping production batches. Many organizations will choose this method to meet unforeseen demand. In these conditions, the placement of an individual order triggers each separate batch. It is often thought of as a cost saver because it eliminates overages or excess stock.

 

grouping production batches

However, this approach can actually dramatically increase the cost per unit. It is important for a manufacturer to consider the total cost of production for each and every run to know his cost per unit. In a make-to-order environment with small batch sizes, it is particularly important to track set up and clean up times. Comparing theoretical times to actual times will help management determine the true cost of an order.

Companies can increase profitability by grouping production batches and manufacturing them simultaneously, therefore:

  • decreasing machine set-up frequency
  • minimizing machine clean-up time
  • reducing overall production downtime

If you, the manufacturer, are able to look forward and review your overall demand, there could be opportunities to save both time and money by grouping production batches together. Without much effort, you can adjust your scheduled production runs and make larger batches, or group them, to reduce set up and clean up times. By becoming more efficient in your scheduling, you can help reduce the cost of production both in total and per unit.

How Can We Help?

Vicinity’s flexible process manufacturing software is a powerful tool for your business. It allows you to see your production into the future, take action on the schedule and take advantage of economies of scale. This will provide you with the opportunity to save money and drive down your cost per unit. And that will benefit your company’s bottom line.

Watch our video blog on this topic: