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The PCB Norsemen: Lean Challenges—Standard vs. Non-Standard Products

This installment of The PCB Norsemen was written by Didrick Bech.

People tend to treat standard and non-standard products in the same way; however, they represent two parallel product segments and consequently different challenges for your Lean manufacturing process, especially in relation to production and logistical operations. When you fail to differentiate the processing of standard and non-standard products, not only is the Lean manufacturing process disrupted, but you also introduce a variety of production, financial and logistical challenges. Why take the risk when you don’t have to?

Supply Chain Programs

Supply chain programs are designed to decrease inventory, space requirements, lead time and potential quality defects. These programs focus on standardized products as their supply chain can be optimized to increase flexibility, theoretically reduce costs, and increase credit terms, or as some might argue, transfer credit risk to the supplier.

Literature states that these programs are specifically designed to address standardized products[1]. Non-standard products are described as articles, which are customer-unique and designed for a specific purpose[2] (e.g., PCBs and metal casing in the electronic industry).

A supply chain program designed to handle these parallel product segments will consequently fail, because you are trying to “open two locks with one key at the same time.” If the aim is to solve the challenges described, you should begin by understanding the  capability and goal of the supply chain program and consequently what it is not able to handle, which will be non-standardized products.

What program have you selected?
Let’s look at different supply chain programs and their methodological framework.

Lean Manufacturing
Lean manufacturing is focused on preserving value with less work. The focus is on reduction of the original Toyota seven wastes to improve overall customer value, but there are varying perspectives on how this is best achieved. Two aspects include:

• Reduction of time: Reducing the time it takes to finish an activity from start to finish is one of the most effective ways to eliminate waste and lower costs.
• Reduction of total costs: To minimize cost, a company must produce only to customer demand. Over-production increases a company’s inventory costs because of storage needs.

Just in Time
Just in Time (JIT) is a production strategy that strives to improve return on investment by reducing in-process inventory and associated carrying costs. To meet JIT objectives, the process relies on signals (Kanban) between different points that are involved in the process and tell production when to make the next part. JIT focuses on continuous improvement and can improve a manufacturing organization’s return on investment, quality, and efficiency. To achieve continuous improvement, key areas of focus could be flow, employee involvement, and quality.

Kanban
This is a method for managing knowledge with an emphasis on JIT delivery while not overloading the team members. In this approach, the process, from definition of a task, to delivery, to the customer, is displayed for participants to see as team members pull work from a queue.

Consignment Stock
With consignment stock, a supplier places its stock in the customer’s warehouse and the ownership of the consignment stock is passed to the customer when the stock is used (issued or sold in the case of a shop.) Unused stock in a warehouse may be returned to the supplier when it concerns standard manufactured products. With customer-specific items, agreements concerning returning products should be negotiated.

Continuous Replenishment Program (CRP)
CRP includes the same aspect as Lean manufacturing from the perspective of warehousing and handling.

Vendor Managed Inventory
With vendor-managed inventory, the buy-er of a product (business) provides information to a supplier (supply chain) regarding the sale of a product, and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer’s consumption location (e.g., a store).

Irrespective of the program selected, you are quickly presented with the same challenge: How can a rigid and homogeneous manufacturing process system address non-standardized products that are unique and customer-specific? If the systems are designed for optimization and volume production, does that imply they cannot handle non-standardized products?

To continue reading the full version of this article which originally appeared in the June 2018 issue of PCB007 Magazine, click here.