Actively Synchronized Replenishment (ASR) – A Powerful New Solution Emerges
A Theory of Constraints implementation in production (Drum-Buffer-Rope) can encounter a lot of problems yet still yield superb results. Indeed, that’s one of the most desirable characteristics of TOC.
But one problem that genuinely damages and limits the success of an implementation is the presence of chronic shortages – of materials, or of purchased parts or, in environments where there’s a multi-level Bill of Material, shortages of some manufactured components.
The problem arises especially in manufacturing businesses using the MRP (Material Requirements Planning) module of their ERP software where the Bill of Material is deep, with many levels, … in combination with circumstances where the demand on the plant is volatile, and/or the upstream supply chain has some long lead time items and a high degree of variability.
In these circumstances, MRP logic guarantees that changes to forecast demand, or to customer orders, trigger a cascade of recalculated requirements throughout the Bill of Material, leading to a host of rescheduling actions being called for in order for the changed demand to be met.
Often these reschedules cannot be executed in a timely manner and the result is shortages. Variability in on-time performance by suppliers, and especially where long lead times are involved, can also be the cause of shortages.
Common wisdom in TOC suggests that efforts be made to flatten the bills of material; but in some environments, this is simply not possible (and may anyway be undesirable; the layers do somethimes have great meaning and even benefit to the company’s performance. )
Very commonly, all sorts of informal systems develop around the problem, usually in the shape of personally-developed spreadsheets, or Access databases. Unfortunately, the chronic shortage problem is the almost inevitable outcome of the combination of circumstances I’ve just described … and efforts to kill the problem rarely succeed.
This is where ASR Actively Synchronized Replenishment, comes in to its own.
The single most effective strategy for eliminating the shortage problem and it’s many consequences is to hold an appropriately sized buffer stock in very carefully chosen locations along the Bill of Material (or even, within a Routing of a component on the Bill of Material).
That’s the heart ofthe ASR approach.
There are actually 4 elements of the ASR approach in total.
The first is to pinpoint where in the Bills a stock buffer of a material, part or component will provide the most leverage in terms of either compressing lead times or improving the availability of parent parts of the components. ASR calls this “Strategic Inventory Positioning.”
The 2nd element is to set the parameters for the stock buffer; the ASR mechanism actually provides a dynamic buffer, one that changes in size with the actual demand for the product. In ASR, this element is called “Dynamic Buffer Level Profiling.”
The 3rd element is to have a Replenishment system in place in the plant that responds to the actual rate of consumption of the materials or parts or components in question. This is called Pull-based demand generation.
And the 4th element is to have an execution system in place with two chacteristics in particular; one, the system offers a highly visible aid to execution, and two, the system suppot a collaborative way of working. No surprise to learn that ASR talks about “Highly visible and collaborative Execution.”
The impact of these is typically the elimination or near-elimination of shortages, the consequent improvement in fill rates and the service level, along with reductions in the expenses associated with expediting-in or expediting-out, including overtime.