Theory of Constraints Handbook - James Cox Iii [166]
The standard lead time is eight weeks. The production buffer is four weeks. The current planned load is only two weeks. The rule says that the safe date is two weeks (the current planned load) plus half of four weeks (one-half the production buffer). It means the safe date is four weeks from now and the release date is now. However, if Sales quotes eight weeks, the pragmatic question is, “Should we release the order now, or wait for four weeks and then release it (leaving four weeks of production buffer for the order)?”
If we delay the release of the current order and do so to every order that gets the due date of eight weeks from now, then in two weeks the CCR would be idle for a while. If, within two to four weeks, many more orders would come, orders that would push the planned load to be more than six weeks, then due to lack of capacity at that time the quoted time for some orders might be more than eight weeks. Here is the damage—we do not fully utilize the CCR at the off-peak time and later we find we need the lost capacity.
Thus, the recommendation is to release the material based on the planned load minus half the production time buffer even for orders whose due dates are later than the safe dates. This ensures that as long as we have orders to be delivered within the standard lead time, we’ll release them at the appropriate time to load the CCR continuously. Of course, there are obvious negatives to starting production earlier than the time truly required for safe on-time completion of that particular order. Nevertheless, given the situation that the shop floor is not fully loaded and wasting the capacity of the CCR might cause significant future damage, we still suggest releasing the order early in these circumstances.
Capacity Reservation
What If Some of the End Products Have Significantly Different Standard Lead Times?
As long as the planned load plus half of the production buffer is still at, or earlier than, the shortest standard lead time there is no problem—it is possible to quote the standard lead time. However, if the planned load stretches beyond the shortest standard lead time, what should we do? It could be the case that the short delivery can be promised because a substantial part of the orders have longer lead times, so just a little manipulation of priorities, which is naturally done by BM (short buffer orders change their color faster), would still ensure excellent due date performance. But, how can we tell?
The problem in determining a safe date based on the planned load is that we assume that at the time we calculate the safe date all orders that are supposed to be delivered before that date are known. If, when we determine a safe date, we are not certain whether we have all the orders to be delivered until that date, then we cannot rely on the planned load.
There are four cases where this possibility of having shorter-delivery orders is relevant.
1. The perception18 in the market is that for standard products the delivery time should be shorter than for products that are more complicated.
2. A strategic client requires faster delivery than the standard.
3. The “rapid response” type of service, meaning clients are given an optional service of very fast delivery for a considerable markup.
4. Items that are MTS. The problem here is that when orders to stock are released, the time those items will be needed is not known a priori. We’ll deal with that case in another chapter dedicated to MTA.
All four cases have to be handled through the mechanism of reserving capacity for the “special” products that have to be completed faster. Suppose that on average the part of the “short-delivery