How High Mix Low Volume Outsource Makes High-Profitability Sense

There are three reasons why high-mix, low-volume (HMLV) products are proliferating:

• A growing trend toward corporate mergers and acquisitions, which compounds product offerings while consolidating production management
• Customer demands for more choices and more product variations, even to the point of customization
• Today’s manufactured goods perform longer, requiring replacement parts for obsolete models still in service

The LEAN supplier advantage

One of the ways manufacturers can enhance their management of an HMLV basket of components is to engage suppliers that implement LEAN methodologies in their manufacturing and supply chain processes.

When LEAN drives the supplier’s production and supply chain practices, end customers have better assurance that HMLV components will be free of the production and delivery compromises that are too often typical of suppliers who do not follow LEAN principles.

The catch: many smaller suppliers inclined to take on high-variation, low-volume business are less inclined to invest in LEAN. Finding suppliers who will take low-volume runs and already subscribe to LEAN principles is easier said than done.

Five considerations in selecting an HMLV supplier

• Rely on suppliers with an established record of success in HMLV production — experience running smaller batches and executing changeovers efficiently
• Look for technical setups purpose-built for quick tool changes and short runs
• Verify LEAN discipline in both manufacturing and supply chain processes
• Confirm willingness to hold and manage inventory across a wide part mix
• Choose partners with a track record of long-term effectiveness, not just a low quote

The outsourcing case

Outsourcing the entire HMLV function to a partner who specializes in it frees managers to do what they do best: manage high-volume business. The HMLV portfolio gets the focused, creative, flexible management it needs — without consuming internal resources that are optimized for scale, not variety.