Buffer Positioning

Buffer Positioning

The creative design and positioning of buffers and control points is vital to an effective fulfillment strategy. Statistical tricks such as variability pooling can be used to minimise the chances of problems caused by the well known bullwhip effect.

The following factors need to be taken into account when deciding where to position buffers;

Inventory Buffer Positioning Factors

Customer Tolerance Time The amount of time customers are willing to wait for the delivery of a product.
Market Potential Lead Time The lead time that will allow an increase of price or the capture of additional business.
Demand Variability   The swings and spikes in demand.
Supply Variability The potential for the severity of disruptions in sources of supply and/or specific suppliers
Inventory Leverage & Flexibility Places in a BOM or the distribution network that leave the company with the best lead time compression to meet the business needs.

 

Time and Capacity Buffer Positioning Factors

Customer Tolerance Time The amount of time potential customers are willing to wait for the delivery of a product. In the case of time and capacity buffers this is the backorder time.
Cycle Frequency           The current performance characterics of the supplier for a product and therefore its minmum order size and remake time.
Latent Capacity Most cost effective combination of efficiency, labour, equipment utilisation and WIP that delivers the capacity required for supply chain responsivness
Critical Operation Protection Best way to protect the critical operation (the Drum) in the supply chain from stoppages.

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