Transition of the production system at a manufacturer

Abstract

In today's context, in order to stay competitive in the manufacturing market, companies need to both provide high customisable products and short delivery times. This thesis investigates the transition of the production system at Company Alpha, going from a project-based, make-to-order (MTO) approach toward a hybrid production model, incorporating make-to-stock (MTS) strategies. This is what the company refers to as product-based production planning. The study aims to map the current production and planning setup, identify areas of problem through a low hanging fruit matrix and propose suitable improvements to align with a hybrid production structure. Further, it aims to identify possible effects the transition can achieve. A mixed-method approach was used, including a pre-study, literature review, case study, interviews, and observations, to gain an in-depth understanding of the company’s operations and identify key processes. The findings revealed significant misalignments between planning and execution, caused by capacity constraints, inadequate cross-functional communication, and reliance on infinite-resource assumptions. The results are continuous rescheduling, requiring valuable time from all roles involved in planning and production, causing an unstable schedule and flow. To address these issues, the study proposes a series of changes connected to the transition including product segmentation, optimal decoupling point determination, adjusted lot sizes, and improved capacity allocation. Also changes outside the transition such as enhanced cross-functional collaboration, usage of safety stock, and improved measurements are suggested. The analysis shows that transitioning to a hybrid planning model can reduce lead times, increase delivery precision, improve capacity utilisation, and enhance overall efficiency and customer satisfaction. This thesis contributes practical insights into how manufacturing companies can successfully manage the shift toward hybrid production systems. It highlights the importance of aligning planning and production and balancing efficiency with flexibility to meet today’s dynamic market demands.