How Buffers Can Improve Supply Chain Flow

What is a Demand Driven Buffer?

In the specialized language of Demand Driven methodology, the term "buffers" holds significant importance. What role do these buffers play? How do they function? This article offers an introduction to fundamental concepts, which are extensively covered in the training courses provided by the Demand Driven Institute.

Buffers and the Challenge of Variability.

For those familiar with supply chain management, the unpredictability of daily operations is a well-known reality: machinery breakdowns, shortages of components, delayed suppliers due to their own constraints, receipt of sudden urgent orders, quality-related halts in production batches, the unavailability of key operators – sometimes, a confluence of these issues occurs simultaneously. Does this scenario resonate with you?

Despite the tireless efforts in Lean and Six Sigma initiatives to curb variability, it remains a pervasive force. To ensure uninterrupted workflow and the flexibility to respond to market demands, the deployment of buffers within our systems becomes crucial. These buffers function as absorbers of the inevitable variability.

Striving for meticulous synchronization across all operations, regardless of the sophistication of technology employed, is a misguided endeavor. The reality we inhabit is imperfect and rife with unforeseen events.

To mitigate variability, three options exist:

Leveraging Stock: Often the simplest to implement, this lies at the core of DDMRP (Demand Driven Material Requirements Planning). It is typically the initial step when adopting a Demand Driven approach. This method suits cases with recurrent demand for items suitable for stocking.

  • Incorporating Time: In essence, this involves creating queues within our processes. This strategy is well-suited for make-to-order processes. When dealing with non-recurring items that can't be stocked, time buffers absorb the effects of variability.

  • Preserving Available Capacity: If certain stages of production possess excess capacity, they can absorb demand spikes or compensate for delays caused by unexpected events.

  • These three buffer types collaboratively contribute to constructing a resilient model. Excess capacity diminishes the need for stock and can reduce queues downstream.

Critics might argue that these strategies – introducing stock, time (equating to delay), and available capacities – contradict Lean principles, which emphasize waste elimination.

However, a careful interpretation of Lean is essential. Lean prioritizes customer value, i.e., the flow. The pioneers of Toyota's production system, the progenitor of Lean, never declared stock itself as waste; rather, it's the surplus stock that constitutes waste. Optimal stock, timely buffers, and appropriate available capacity are investments aimed at upholding the flow and the value delivered to customers.

Strategic Placement and Sizing for Flow Safeguarding.

Every manufacturing facility and distribution center contends with stock, queues, and available capacities – familiar challenges. But, are these aspects managed proactively or merely endured?

The initial step in establishing a Demand Driven framework entails designing the model. This encompasses describing and analyzing the flow throughout the industrial system, making decisions about buffer placement, sizing, and control mechanisms. These decisions constitute investments intended to construct a resilient and agile supply chain.

This process resembles the mapping of future state value streams (VSM). It relies on data analysis of the existing model and, more significantly, the collective intelligence of teams.

Leveraging Buffers for Action.

Buffers serve as triggers for daily decisions by teams. For this purpose, regardless of whether dealing with stock, time, or capacity, a management system employing color codes – red, yellow, and green – is employed. This visual approach fosters shared priorities comprehension and accelerates reliable flow-promoting decision-making.

Before its adoption as DDMRP, the model was known as "actively synchronized replenishment". Its essence lies in guiding teams to take appropriate actions: placing orders, expediting ongoing orders, allocating additional personnel to a station, slowing down a process to prevent queue congestion, and so forth.

Utilizing Buffers for Continuous Enhancement.

Each buffer serves as a data collection point. Daily, events involving these buffers are logged: Did the stock fall into the red/yellow/green/blue category? Was the flow equation red/yellow/green/blue? Did the time buffer reception align with the red/yellow/green/blue zones? How many days were capacity buffers loaded in red/yellow/green/blue?

Based on these analyses, the question arises: How can we enhance the model's performance, augmenting its speed, reliability, and stability while curtailing investments?

Integrating the Concept into ERPs.

Most ERP systems available on the market lack the necessary logic to drive a comprehensive Demand Driven operational model, encompassing the management of stock, time, and capacity buffers. The majority of existing solutions primarily address stock buffers. Demand Driven Technologies' solutions, however, facilitate the incorporation of all three buffer types within any ERP environment.

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