Leveraging centralized resources for efficiencies across three facilities in as many countries.

Some industries have specialized end-market requirements. For example, corporate headquarters in fast food and fast casual restaurants dictate menu items and the equipment needed to support those items by region. Franchisees have choices in equipment configuration and a timeframe in which they need to buy it from a designated food processing original equipment manufacturer (OEM). They typically order very small quantities, however, making it challenging for a food-processing OEM to fulfill orders utilizing a single manufacturing location and centralized stocking model. There are also regional differences in input power voltages, cycles and plug styles. Preferred language for control overlays also varies. This creates a configure-to-order (CTO) dynamic that adds complexity to the variable demand model. Outsourcing adds flexibility to this equation because it gives food-processing OEMs access to shared production resources which help mitigate the production resource utilization inefficiencies that this type of high-mix, variable-demand production can create. It also helps OEMs more easily support a global customer base with minimal investment in production resources.

Regardless of whether the project is outsourced, when these units are manufactured in a single location, the wastes of overproduction, waiting, transportation and inventory are likely to be significant. At the same time, dividing variable-demand, small-lot production among multiple facilities has the potential to create inventory imbalances and production inefficiencies, particularly if the work is divided among contract manufacturers and managed separately by region. Lean manufacturing philosophy provides guidance on finding a balance that supports customer requirements while still leveraging some economies-of-scale.

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