Supply Chain Solutions No.10 – High Mix Low Quantity Vs Low Mix High Quantity Supplier Selection
Sourcing a supplier based on your company’s product mix and order quantity is a critical success factor in forming a long-term supplier relationship.
If your company produces multiple product styles per year, and the quantity is low versus a company that produces high volume that is replenished for either short or longer term periods, the capability and capacity need of the manufacturing facility will be different.
Capability to be able to for fill development and manufacturing demand is an important need for both scenarios, but what is different is the management and the production facility setup.
If you take an apparel brand where there is a high mix of styles per year with small quantity, the production line set up must be small to accommodate the order size, ensuring sewing labour become familiar with the technique to guaranteeing output speed and quality.
Trying to manufacture high mix low quantity in manufacturing facilities with large production lines will result in potentially lower quality as the product is made in-between the line, both labour and management will not give the order’s priority resulting in a relationship that will disintegrate quickly.
If you are manufacturing any product with a low mix of styles or product type, and substantial quantity, the production and assembly lines need to be longer to facility capacity and output speed. High quantity orders are generally at a lower margin than low quantity. Manufacturing facilities are dependent on efficiency improvement to reduce cost and improve output, increasing both quality and profitability.
Where manufacture low mix high quantity in smaller manufacturing facilities, this will result in multiple production assembly lines working on one order, output efficiency potentially will not be found nor will quality resulting in late and undesirable quality production.
Source manufacturing facilities that match your business need, this will deliver pricing and quality consistency and lasting relationships. Be aware that many vendors will take your business, but if they are not used to your product mix and order quantity, there is a significant risk that the relationship will be short-lived costing both parties.
ID Global Concepts are experts in supply chain management. We add value to your supply chain through consultancy or management contract to ensure the business has the best practice systems that are the right fit for your business, customer and meet your value expectations.