While it’s commonly understood that small and large lot sizes each have distinct advantages, how to get the best of both is not.

The choice between small and large lot sizes is best approached from a both/and perspective. But for many companies, this choice is often seen as either/or. This assumption is not always unfounded: many manufacturing partners lack the capability to deliver the best of both. The reasons for this are twofold: First, they may lack the facilities and technology. Second, they may lack the in-house DFM expertise (Design For Manufacture) that ensures an innovation is optimized for flexible and scalable manufacturing.

At Pivot International, every product we create starts with a consideration of the end — of how design translates to manufacture. With 320,000 square feet of manufacturing across seven company-owned facilities located in three continents, we enable our partners to flexibly scale production in response to fluctuating demand and changing market conditions. Whether you need manufacturing of prototypes, all the way through large-scale production, we’ve got you covered.

Let’s look at the advantages of small and large lot sizes and how to get the best of both.

Small Lot Sizes

While small lot sizes have traditionally been reserved for customized or quasi-customized products, small lot sizes can sometimes make sense for “plug and play” products as well. For instance, while modular or fairly simple products will almost always call for large lot sizes, small lots can be used for optional customization further down the chain. While it’s generally more cost-effective to manufacture in large lots, small lot sizes can come with hidden benefits.

Small lots reduce excess inventory and warehouse storage costs and all but eliminate waste. They simplify scheduling and can enhance quality. Regardless of whether the product in question is MTO (Made To Order) or MTS (Make To Stock), small lots can be an essential part of lean manufacturing strategy.

Large Lot Sizes

Though large lots do not allow for customization and can come with high inventory and warehousing costs, manufacturing in bulk is highly cost-effective and the obvious choice for a wide range of consumer, industrial, and medical products. Other advantages include reduced variability and the ability to ship products on demand.

ELS (Economic Lot Size)

It’s critically important to understand the various advantages afforded by small and large lot sizes; however, a bigger question needs to be addressed. This question concerns ELS (Economic Lot Size) and the flexibility and agility required for driving down COGS by scaling production in response to fluctuating demand and changing market conditions.

To illustrate, say a company forecasts product demand at 500 units for the coming year but learns that the most cost-effective lot size is 1,000. This means that two years’ worth of inventory will need to be stored and managed. If market demand drops significantly in this time, the business selling this product is likely in for some serious trouble. If this business had selected a manufacturing partner that offered flexible production runs from the beginning, a drop in demand would be a far less risky proposition.

On the other hand, if you’re a successful startup company that is slowly breaking new ground, penetrating new markets, and manufacturing in small lots in response to customer demand. Suppose the product takes off and demand suddenly spikes. In that case, the startup will need a manufacturing partner with the flexibility to increase lot size and rapidly ramp up production to capitalize on this unexpected growth opportunity.

Scalable Manufacturing Solutions

At Pivot, our nearly fifty years of experience spans over fourteen industries, including consumer, industrial, and medical. We are the proven partner behind a wealth of internationally award-winning innovations that put our clients on the map and drive their companies’ growth. With in-house DFM expertise and scalable manufacturing capability in U.S., European, and Asian markets (including alternatives to China), we help you deliver a successful product to market, on time, and on budget. To learn more about our collaborative approach to product development, contact us today!