What is High Variety Manufacturing (HVM)

What is High Variety Manufacturing (HVM)? Why is it important to define it? High-variety manufacturing is more than just a description of manufacturing processes; HVM is a business model that offers significant opportunities, but it also presents significant challenges. In order to take advantage of the opportunities and solve the challenges, it is necessary to recognize what HVM is and how it is reflected in your company.

A potentially bewildering range of acronyms and descriptors are variously used to describe marketing and manufacturing models that have a high degree of variability, variation, and variety:

• Mass customization
• BTO, build-to-order
• CTO, configure-to-order
• ETO, engineer-to-order
• ATO, assemble-to-order,
• HMLV, high-mix low-volume,
• Job shop
• Etc.

There is a problem, however, with lack of precision and definition with these terms and a limitation to the extent of a company's value chains that are described by them. I use the term high-variety manufacturing as an umbrella concept to cover all of these marketing and manufacturing models, framed by the critical idea that HVM is a business model that encompasses all of a company's value chains.

HVM is best-defined as a set of characteristics of which a manufacturer may exhibit any one or all.

• The sales process is complex and includes customer-driven design and configuration decisions.
• The products are highly configurable and the number of options and the configuration combinations are such that the demands for specific manufacturing routings, tasks, and materials can not be forecasted. The specific product and its manufacturing demands are not known until the order is received.
• The production value chain includes non-manufacturing activities such as project engineering; unique manufacturing documentation, such as drawings, generation; unique BOM determination; etc.
• The company's "product" is competencies rather than specific products. Examples are job shops and short-run or low-volume suppliers to OEMs.
• The company is a pure custom or project-based manufacturer.

So we return to the question of why it is important to define HVM. One of the most critical keys to success for implementation of any type business and process improvement initiative is alignment. That is, at a strategic and tactic level all business activities, from sales and marketing to product development and management to finance to production, are aligned with the business's objectives (and that those business objectives exist, of course). If, for instance, an initiative such as lean manufacturing does not recognize that project engineering and BOM and manufacturing documentation generation are part of the production value chain in HVM, the degree of success for that initiative is diminished.

Self-knowledge of one's business model and process are necessary to "maximize variety (sales) and minimize variation (production)."

When Manufacturing Errors are not Manufacturing Problems

I had a recent conversation with an Industrial Engineer from a US-based HVAC company. He said that they had just completed an analysis of manufacturing errors. The result: 40% of errors came from design or manufacturing documentation problems. Let me repeat that:

The root cause of 40% of manufacturing errors was design or manufacturing/design documentation.

Many manufacturers are making significant investments in lean, continuous improvement, and quality programs to remain competitive. But what if those investments are returning only a portion of their potential because critical production activities and inputs, such as manufacturing documentation, are ignored? This situation is especially critical in high-variety manufacturing (HVM), such as build-to-order, engineer-to-order, configure-to-order, mass customization, job shop, and HMLV (high-mix low-volume).

I discussed this situation before in my post, Inputs, Process Control and High-Variety Manufacturing, from 3/31/08. This conversation brought it all to mind again, and, in truth, it is a recurring soapbox issue for me.

To maximize investment in lean, continuous improvement, and quality programs, an HVM company must recognize and include its full operations value chain in those efforts.

Inputs, Process Control and High-Variety Manufacturing

I was reading a chapter in Lean Manufacturing for Job Shops (Tristani and Irani) that introduces the concept of process control. The following statement resonated with me:

" . . . consistent inputs help give better internal work-center-to-work center quality, which tends to lower the amount of re-work a job requires. That means the work content is less, product cost is less, and product lead time through the shop is improved."

I believe that many manufacturers overlook what should be one of the easiest and potentially most critical input to control: their manufacturing documentation.

In high-variety manufacturing (HVM)*, by definition, there is variety and variation of products manufactured, and, in many cases, uniqueness of product. That means that the manufacturing documentation which details the specific requirements of the specific product or product variation to be manufactured is absolutely critical to the effectiveness (productivity and quality) of the manufacturing process.

There is no universal standard for manufacturing documentation; in HVM, especially, it needs to mirror the variation and variety of product. It must, however, include all relevant content and present it in a way that reduces and/or clarifies complexity. (One common error is to include too much irrelevant information that ends up obscuring the most critical information.) The physical organization must match the workflow of the shop floor, as must the specific presentation match the needs of each process step. That is, a drawing may be needed for some steps, but other steps may just need a dimensional cut list. In some cases generic assembly instructions or drawings may not be needed in the packet itself, but accessible on an as needed basis. The documentation also needs to reflect the needs of the workforce in terms of language and technical literacy.

Too many times, however, the manufacturing department just accepts what it receives as either it doesn't realize that the documentation can be improved or it's been told that that is another department's responsibility and not its concern. Both of these conditions, and the lack of control and quality in the manufacturing documentation, are symptomatic of a larger issue: the lack of understanding that in HVM "production" or "operations" encompasses more than just the manufacturing floor and that, as such, process and quality improvements, whether lean or other methodologies, need to extend beyond the factory threshold.

More on this subject forthcoming.

* High-variety manufacturing includes types such as job shop, build-to-order (BTO), configure-to-order (CTO), engineer-to-0rder (ETO), mixed model, high-mix low volume (HMLV), mass customization, modular, and so forth.

Production information quality call to action

With all the focus and investment in lean and Six Sigma and all the other methodologies, why do so many companies settle for ineffective, inefficient, and some times just plain incorrect order and manufacturing documentation?

This is a special vice of high-variety manufacturing as, almost by definition, each order and manufacturing packet can be different.

The content and format of manufacturing packets are the inputs to manufacturing value streams. Efficiency and effectiveness of that information is as important to a streamlined and productive production process as any kaizen event. Yet time and time again, I see horrifically inefficient project engineering processes; reliance on manual data management; manual drafting instead of automated, smart drawings and models; poorly constructed and confusing shop floor information packets; manual programming of CNC machines; and so forth.

There are so many opportunities to improve the quality of this information. In many cases, its just making better use of the tools at hand whether it’s 2D CAD, solid modeling, ERP or MRP. The problem is that inertia sets in with how these tools are used, the users are not trained in the application capabilities beyond minimum functionality, and management does not demand an appropriate level of performance accountability.

My call to action for anyone involved in high-variety manufacturing is to really start questioning whether your information foundation and content is really supporting your lean, quality and process improvement programs.