Buffer Management – A Powerful TOC Tool and Technique

Buffer management in Production and Distribution/Supply Chain offers both real-time Priority Planning, and a basis for Focused Continuous Improvement

Buffer Management has no equivalent in any other body of knowledge, yet it plays a fundamental role in any Theory of Constraints logistical solution (production, distribution, supply chain, for example).

It also provided the backbone of the technique used in health care to shrink the average wait time for patients entering the Emergency departments of hospitals in the UK (and elsewhere); not only did it provide a basis for focus, but also for collaboration.

Buffer Management also has two dimensions, connected but separate.

1. As a technique providing day-to-day Operational Support

In a production environment, Buffer Management for Production provides employees (and managers) with a clear and consistent basis for priority management of work moving through a plant. This is a challenge even in simple circumstances in a traditional plant, but it is almost an impossibility in a conventional manufacturer in a make-to-stock environment, and worse still in environments where there are make-to-order and make-to-stock orders on the floor simultaneously.

It also offers a “snapshot” of what issues pose the largest threat to on-time performance at any time, directing attention to the very few things that need to be managed in order for the threat to disappear before it is fully formed.

In an environment where Replenishment makes sense as a technique for maintaining high availability of stocked items with low inventory, perhaps for materials, or finished goods, or inventory held at a customer’s or distributor’s site, or inventory held in regional warehouses and Distribution centers and even in retail environments … Buffer Management for Replenishment solves one of the most challenging problems– how to maintain the correct level of stock as demand rates vary with trends or seasonality.

2. As a basis for Focused, Continuous Improvement

In a Theory of Constraints manufacturing business, Buffer are in place to immunize a plant’s performance from variability, whether the performance factor is Exploiting a capacity-constrained resource, meeting due date commitments, or meeting inventory availability commitments.

There is a 3-Zone technique deployed that means, when a threat to any of the commitments moves to a level where it is relevant and significant, “Reason Codes” are used to provide an explanation of how the situation switched from being “OK” to “under threat.”

These reason codes are tracked and (for example) on a monthly basis, the data is analyzed and presented as a Pareto analysis. The most frequent cause of threats then becomes the focus for a serious improvement mini-project.

Sometimes, the threat is simply the result of a poorly advised company policy or measurement, often a legacy from pre- Theory of Constraints days. We call these, “Policy Constraints.” The TOC Thinking Processes can be applied if necessary to eliminate the problem, without creating new (and perhaps worse) problems; sometimes buy-ins are necessary, of course, and the Thinking Processes provide the material for these, too.

At other times, the problem simply needs a dose of common sense, at least initially. For example, if a piece of equipment is often the problem due to the failure of a machined part, and the company doesn’t keep any in stock … this doesn’t take a rocket scientist to sort the immediate problem out (although there may be a need for a deeper solution, of course).

And at other times, the problem justifies a team being formed, perhaps trained, perhaps being equipped with a budget and tools, etc to really “dive in” to the problem. This is where techniques such as Six Sigma can really come into their own, working in conjunction with Theory of Constraint.

The contrast to a “let’s improve everything, everywhere, at once” approach to improvement is stark.