MERIT III Smaller and faster cash-flow cycles

A reduction in inventory and lead-time improves cash flow.

Achieving inventory reduction through high-mix variable-volume production.

High-mix production using mass production methods was once an established practice throughout the manufacturing industry. This method of supply-side production aimed to produce as many products as possible as well as manufacturing several different products while supplying orders from a large inventory. Therefore, we have seen inventory levels increase in proportion to the increase in the types of products produced. In the past, manufacturing more products meant that more products could be sold. Inventory was seen as an asset. However, those days are over. Carrying excess inventory is now a perceived risk which industry-wide management must take into consideration. The conventional method of high-mix production is no longer effective.

The Baby Kangaroo System shortens the fixture change time and enables the flexible control of product types and production volume. This organizes a system for producing only what is needed in the required volume depending on the order (a high-mix variable-volume production system). As multiple types of products are manufactured immediately upon receipt, inventory can be reduced significantly.

Shortening production lead-time through high-mix variable-volume production.

The lead-time for high-mix production using mass production methods from order receipt to shipment tends to be longer because of the many processes and the time to change particular product types. In addition, a large inventory is required to supply orders. As a result, it takes a longer amount of time to recoup the investment.

The Baby Kangaroo System achieves production that matches the circumstances of any order as well as cell production through the streamlining of processes. This also leads to a significant reduction in inventory. As a result, production lead-time is reduced significantly. This new flexibility in a production system now accelerates the cycle of recouping investment in materials and equipment at a faster recovery rate. This is how the Baby Kangaroo System has the potential to improve cash flow.

Reducing total investment through a high-mix production system.

A cost-effective production line decreases total investment costs. A production line equipped with the Baby Kangaroo System that allows the addition of product types for high-mix production minimizes investment costs for adding product types as well as achieves a cost-effective production system.

Handling multiple products without increasing inventory

To prevent losses due to changeover for high-mix production which use conventional methods, the frequency of set-up must be reduced by increasing inventory, or the production stop time from changeovers must be made up by increasing the number of machines and supply stock. The conventional wisdom is that an increase in product type causes an increase in the inventory of that product. The introduction of the Baby Kangaroo System for high-mix production enables immediate and accurate changeovers for product types according to production plans without increasing inventories.