In the manufacturing industry, there is a shift towards “high-mix, low-volume” production to meet diversifying consumer needs and rapid market changes. Against this backdrop, challenges that traditional procurement strategies cannot address are becoming apparent. Examples include increased procurement costs, complicated parts inventory, and cumbersome supplier management. This article introduces procurement methods suitable for the high-mix, low-volume era from a professional and practical perspective, including examples from Vietnamese manufacturing industries and GIS OTA Vietnam’s support cases.

“High-mix, low-volume” production is a manufacturing method where a rich variety of products are available, but the production volume per item is small. This style enhances responsiveness to diverse consumer needs while also contributing to reducing the risk of excess inventory. However, it also creates significant changes and challenges in procurement operations.

In contrast to conventional “low-mix, high-volume production,” where a fixed set of items could be procured and stored stably, high-mix, low-volume production necessitates procuring more parts in smaller lots and with shorter lead times. This leads to issues such as rising procurement costs, an increase in the number of suppliers, and increasingly complex inventory management.

In such a situation, “strategic procurement,” which combines procurement classification according to order patterns, utilization of cloud-based procurement systems, and flexibility in local procurement, is gaining attention. This makes it possible to achieve both overall procurement efficiency and flexibility, thereby realizing competitive manufacturing.

Procurement in high-mix, low-volume production presents multifaceted challenges different from traditional mass procurement. Below, we will specifically explain the main challenges and methods for solving them.

When sourcing a wide variety of parts in small quantities, unit costs tend to be higher. Additionally, each part may come with different delivery times and ordering conditions, which increases the workload for ordering and inspection. These inefficiencies ultimately drive up overall procurement costs.

Solution:
Clarifying procurement policies according to order patterns (e.g., high-frequency/small-lot vs. low-frequency/large-lot) is effective. For example, by switching frequently used standard parts to forecast orders while ordering custom parts as needed, inventory and costs can be optimized.

An increase in product types directly leads to an increase in the number of suppliers. If suppliers are dispersed, managing quality and delivery times becomes difficult, potentially destabilizing overall manufacturing.

Solution:
It is necessary to consolidate suppliers and strengthen relationships with those capable of handling multiple items. Real-time information sharing through EDI (Electronic Data Interchange) and ERP integration also contributes to the efficiency of procurement operations.

Due to the characteristics of high-mix, low-volume production, demand forecasting becomes difficult, making excess inventory and stockouts more likely to occur.

Solution:
It is crucial to introduce IoT and cloud-based production management systems to establish a system for demand forecasting and automatic replenishment based on actual data. Furthermore, standardizing and centralizing BOM (Bill of Materials) management is effective in increasing the utilization rate of common parts.

By combining and executing these methods, stable procurement activities can be achieved even in the high-mix, low-volume era.

Optimizing procurement requires flexible responses tailored to on-site conditions and regional characteristics. Especially in emerging manufacturing hubs like Vietnam, systems are being developed to meet high-mix, low-volume procurement needs.

Vietnam boasts a wealth of small and medium-sized parts manufacturers and EMS (Electronic Manufacturing Services) companies, making it attractive for its flexible responsiveness to short-delivery and small-lot orders. Furthermore, local procurement of materials can reduce transportation costs and lead times, which is a significant advantage.

On the other hand, operational challenges such as variations in quality and delivery times, insufficient BOM information sharing, and minimum order quantities (MOQ) per lot also exist. Therefore, establishing a smooth information sharing and inventory management system between Japan and the local site is key.

GIS provides the following services to support procurement operations for high-mix, low-volume production:

In this way, by coordinating local procurement in Vietnam with design and production management in Japan, it is possible to achieve stable and efficient manufacturing even in high-mix, low-volume production.

In the era of high-mix, low-volume production, the procurement department is strongly required to have flexibility, speed, and multi-site response capabilities. The key is to break away from the traditional mass bulk procurement and shift to a procurement strategy that supports small-lot, high-mix production. Optimizing inventory through ERP and IoT, streamlining supplier management, and actively utilizing overseas procurement, including in Vietnam, are directly linked to strengthening competitiveness in manufacturing sites.

Conclusion

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