The value stream approach is a lean manufacturing methodology that focuses on creating value for the customer by identifying and eliminating waste in the production process. One of the key principles of the value stream approach is to create smaller batch sizes to reduce the amount of work-in-progress inventory and improve flow.
While implementing smaller batch sizes can result in several benefits, such as reduced lead times, increased flexibility, and improved quality, there are also costs associated with this approach. Some of these costs include:
Setup costs: Setting up machines and equipment for each batch can be time-consuming and expensive. The more frequent the setups, the higher the setup costs.
Labor costs: Smaller batch sizes may require more frequent machine and equipment changes, which can increase labor costs.
Material costs: Ordering smaller quantities of materials may result in higher per-unit costs due to reduced economies of scale.
Transportation costs: Shipping smaller quantities of products more frequently can result in higher transportation costs.
Overhead costs: Smaller batch sizes may require more frequent quality checks and inspections, which can increase overhead costs.
In summary, while smaller batch sizes can result in several benefits, it is important to carefully evaluate the costs and benefits before implementing this approach in a manufacturing setting.