ASR: Dynamic Buffer Level Profiling & Maintenance

An ASR Recap:

There are 4 major elements to Actively Synchronized Replenishment (ASR):

  1. Strategic Inventory Positioning - literally, where in the Bill of Material structure, or where in the supply chain, should we hold inventory to provide the maximum benefit to performance?

  2. This page’s focus: Dynamic Buffer Level Profiling - establishing the “profiles” for the Buffer Stock, such that parts with high variability and high volume (for example) will have a different profile than parts with high volume and low variability, or parts with low volume and high variability, etc.

  3. Pull-based Demand Generation - stock buffer levels are replenished as actual Demand Pull moves Buffers into their Rebuild Zones. Every order generated is assigned a due date, based on a quoted lead time or a cumulative lead time for the part.
  4. Highly Visible and Collaborative Execution - Execution is one of the Achilles heels of the ERP/MRP world; MRP was never intended to be an execution tool.

The Buffer Management concept is fundamental to ASR.

The Buffer stock that is to be regularly replenished - whether a stock of materials, components, or finished goods - is viewed as being in 5 Zones.

The 3 main operating Zones are Green (plenty of inventory), Yellow (Time to rebuild), and Red (Expedite, there’s a threat of a stock out). A 4th Zone represents a stock out situation; and a 5th Zone (called OTOG, or on top of Green) represents an overage of inventory - more than is needed within the system.

Buffer management is absolutely crucial to the success of ASR, because it provides an answer that is both essential for effective Operations and unavailable elsewhere - what is the true priority of an order?

Buffers and Priorities

Consider this challenge: two work orders waiting to be worked on at the same resource are due on the same date. What is their relative priority?

In traditional systems there might be no way to answer this question effectively because due dates are the de facto basis for priority setting. Unfortunately, they are also entirely inadequate for priority management in many environments. With Buffer Management, however, we can examine the percentage penetration of the different zones.

So, for example, a Work Order with a due date of the 30th that is 75% penetrated into the Buffer is of a higher priority than a different Work Order with the same due date that is currently only 30% penetrated into the Buffer.

Dynamic Buffer Profiling

A Buffer Profile simply tells the ASR system how to set and maintain the size of the Buffers, and how to divide the Buffer size into the Zones.

For example, there are likely to be “Group” characteristics that will apply to many different parts, characteristics that reflect Order Cycles, or Demand Variability, or Supply Variability.

Then there are part-specific characteristics to be considered … for example average daily usage, Fixed and Cumulative Lead times, order minimums or maximums or multiples, seasonality factors, etc.

Then there are Ramp-up and ramp-down characteristics to be considered, too; ramp up profiles for new product introductions (perhaps reflecting cash considerations), and ramp-down to reflect product phase-outs where the aim is to never short customers while also making sure the company cannot be “stuck” with too much inventory of a now-obsolete product.

So, a number of parts might have identical profiles in terms of the proportion of Buffer that is Red, Yellow, Green … but the actual Buffer size and Zone size is dependent on the particular part characteristics of volume, order minimums, etc.

Synchronized Replenishment

Once established, the Synchronized Replenishment aspect of ASR takes over … parts are used, inventory levels drop, once in the “Rebuild” zone replenishment orders are released to the plant, and because the Buffer size and zones reflects the replenishment lead time, the Buffer is constantly being maintained at an appropriate level for the realities of the part - an appropriate level to reflect real part demand, real replenishment lead times, observed variability of demand and supply, and order characteristics such as minimums, maximums, multiples and etc.