Balancing nesting efficiency against limited work-in-process (WIP) is an ongoing challenge for OSH Cut, a high-mix, on-demand sheet metal manufacturing service. So it developed in-house software that balances nesting efficiency against production needs.
Single-part, just-in-time production is often considered a manufacturing gold standard. Work-in-process (WIP) has a real cost in space, labor, machine time, and cash.
Let’s consider cash: A manufacturer spends money to acquire raw materials, pays labor and overhead costs to convert that material into finished goods, delivers product, and then invoices customers. If the entire process from material purchase to invoicing takes two months, then at any given moment, you will have at least two months of cost of goods sold (COGS) tied up either in raw material or WIP inventory. Shortening that cycle from two months to one month takes 50% of that value and puts it back into your bank account, where it can be leveraged to grow the company in other ways. And cash isn’t the only factor. Storing piles of WIP and raw materials clutters the workplace, increases confusion, and decreases revenue-per-square foot achievable in the space.
Reducing WIP sounds great, but sheet metal is something of a special case. When cutting or punching parts out of flat sheets, nesting parts can yield significant material savings. When raw material costs potentially represent a significant percentage of COGS, that can really matter. There is also a significant benefit to consuming full sheets, to avoid the cost and overhead of stocking and tracking remainders. So we have competing requirements. Yes, reducing WIP saves space, reduces cash tied up in inventory, and rations valuable machine time. But cutting just one or two parts might produce other waste that completely eliminates savings from reduced WIP. Single-part flow is a strategy, not a silver bullet.
Balancing nesting efficiency against limited WIP is an ongoing challenge at OSH Cut, a high-mix, on-demand sheet metal manufacturing service. We regularly fulfill between 100 and 200 unique orders a day, each containing a high mix of parts and materials. When scheduling production, we can almost always look far enough ahead to top off a sheet with parts that aren’t due for another week or two. That’s great for material efficiency. But our lasers can quickly overwhelm downstream processes with parts that don’t need attention yet, creating piles of parts that cause delays while our people sort and hunt. It’s a complex tradeoff.
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