You don’t need a crystal ball

Want the right goods in the right place, at the right time, every time? We’re here to help.

In manufacturing facilities, maintenance depots and retail chains, the absence of a stocking item might mean a halt in production, the delay of return to service after maintenance or the loss of a sale. Successful replenishment means determining the minimum amount of inventory that must be held in order to provide an agreed level of service.

The problems faced by distribution systems are nearly universal, including inventory shortages or excesses, ageing inventory causing spoilage and sub-standard product performance, and delays in product launches during the clearing-out of old inventory. Organisations attempt to mitigate the effects of these issues by forecasting demand—a complex and unpredictable process. Enter Dynamic Buffer Management.

Key components of Dynamic Buffer Management:

Aggregating variability as far up the supply chain as possible
Knowing and measuring the three components of lead-time: order lead-time, manufacture lead-time and transport lead-time
Understanding the variation of demand and lead-time
Ordering daily and replenishing frequently

Distribution: Dynamic Buffer Management

Imagine decreasing inventories while maintaining or even improving service levels. The proven TOC solution of Dynamic Buffer Management (DBM) does just that. It works by understanding average rates of consumption for a given item, variability in consumption and the different types of lead-time involved in moving the item, from its point of production through to its point of consumption. And, of course, it focuses on then constraint, or weakest link.

Besides dramatically improving service levels, DBM employs the principle of holding and aggregating inventory close to the point of production. This requires a lower investment of working capital, reducing overall inventory costs and freeing up cash.

Applying DBM to your situation

We help you establish an inventory target for each product in a central warehouse. Inventory should be ordered daily and replenished on a regular basis, and inventory targets should be closely monitored according to zones. We also encourage clients to re-examine their make-to-stock and make-to-order policies. We recommend implementing solutions on a significant product line; decisive results should be evident within less than three months.

Although DBM was developed for manufacturing, we’ve used it to manage the ‘bench’ of large consulting firms, where skill types are treated as virtual inventory and demand is aggregated across large numbers of projects.

If all this sounds appealing, get in touch today for a free consultation.