Lot size one: small quantities, big benefits
Lot size one refers to a small quantity (‘one’) of goods ordered for delivery on a specific date or manufactured in a single production run.
Today’s consumers – both in B2C and B2B contexts – don’t want ‘one size fits all’. They buy custom Nike trainers and furniture made on demand. Firms ask their suppliers for branded packaging and tailor-made services, and they want it delivered at the right time – the time that suits them best. As a result, companies that want to stay ahead of the curve have to swap their ‘one size fits all’ processes for a ‘lot size one’ approach. A logistical nightmare? Not necessarily!
Opportunities in every industry
The demand for a wider range of variants and more personalized products and services is not limited to specific sectors. The obvious examples are fashion and high-tech, but there are huge opportunities in other industries too, such as chemicals and fast-moving consumer goods. A brand of cleaning products, for example, can order customized sponges. Packaging is increasingly tailored as well, as manufacturers of consumer goods deliver their pallets to stores instead of to the retailer’s central depot.
The higher the quantity, the lower the cost of each item, right? Not if you count the cost of inventory, lack of flexibility and inability to meet customer needs.
No need for a big bang
The central idea of ‘lot size one’ is that you’re able to produce any product, in any variant, in any quantity, in any sequence and on any assembly line – at any time. Does that imply rewriting your business model or invest big in the newest technology? It doesn’t have to, and it definitely doesn’t have to happen overnight.
You could, for example, produce modular products or a basic product in large quantities and then customize these further down the supply chain. Alternatively, rely on subcontractors to take care of the customization. Tools with embedded forecasting optimization or multi-echelon inventory capabilities are also a big help, as are advanced supply chain solutions, data analytics, robotics, IoT and 3D printing. Yet again, you don’t need big investments or complex implementations to start your journey towards ‘lot size one’.
3 good reasons to experiment with lot size one
Afraid to take the plunge? These three benefits might win you over:
- Reduce inventory (costs)
- With smaller lot sizes, you need less inventory, reducing the need for working capital, warehouse space, warehouse personnel and, consequently, costs.
- Ensure customer loyalty
- Meet customer needs for personalized products quickly to keep them coming back.
- Win new business
- React swiftly to demands and win the hearts of new customers. Diversify your product range to explore new business opportunities.
How delaware can help
‘Lot size one’ is slowly gaining pace in companies around the world. Rather than a big bang, the transition is often a step-by-step venture.
As an experienced IT services provider, delaware has deep expertise in supply chain processes. Combining our know-how with the insights of our colleagues at delaware digital, we can help you:
- assess the backbone you have in place – as a solid backbone is the start of every successful supply chain project;
- define your needs and develop a roadmap;
- recommend, develop, implement and integrate the applications needed, based either on the SAP or Microsoft stack;
- take the lead in the change management process and communication.
Why choose delaware?
- We offer a structured approach
- We offer end-to-end solutions
- We collaborate closely with your team
- We have 15 years of experience in business transformation across numerous industries