Theory of Constraints Handbook - James Cox Iii [186]
Actually, when there is high load on the CCR, it could easily generate a recommendation to increase the buffers of several items. If production management takes the recommendation to increase the buffers, then a substantial additional load will be added to an already high-load pressure. This extra load might cause more items to penetrate the red zone for too long, causing even more items to penetrate the red for too long. It can easily turn into a vicious cycle! Thus, the point is to allow buffer increases only when there is no immediate load pressure, or when additional capacity can be used for it.
Of course, buffer decreases are easier to make and they reduce the load pressure. However, if the recommendation to decrease the buffer is not justified, then some time later we would see a recommendation to increase the buffer; then, depending on the total capacity situation it might be difficult to do.
As we have seen, certain supply problems can cause “false” recommendations to increase the buffers. By “false” we mean either that the problem observed by buffer management is just a rare statistical fluctuation or that while there is a real problem with the current specific target levels, the targets should not be increased at that time. This is the case when a temporary lack of a specific raw material is causing the end item to go into the red without being able to replenish it very soon. In such a case, an increase of the buffer would not help anything. Once the missing material shows up, the dilemma of whether to increase the buffer or not can be dealt with. The main point behind the dilemma is whether the manufacturer may want to protect itself from a future lack of materials (because it happened this time) by building a relatively high level of stock. The more sensible alternative is to increase the buffer of the specific raw material and settle the issue that way.
DBM is vital for getting the right signals about the validity of the buffers. In manufacturing, the author highly recommends that any actual decision about changing a buffer should be judged by the human mind and in no way be left for a software package to dictate. Asking and understanding why a buffer is continually in the red or green should be done prior to increasing or decreasing the buffer target. In a distribution organization, the number of buffers makes such a human judgment on any buffer change very difficult.
The power of DBM comes from judging the combination of demand and supply. However, the author thinks that for the sensitive decision of increasing or decreasing a finished-goods stock buffer in manufacturing environments, a focused analysis of both the demand and the flow in the production shop floor, pointing out to possible critical changes in their respective behavior, and checking possible shortages of materials should be key in the decision. Such an analysis should be done fast, based on focused information that should be part of the information system, so that the decisions can be made quickly. Right now, such an analysis is not a part of the known TOC solution for MTA.
The Role of Protective Capacity and the Usefulness of Maintaining a Capacity Buffer
The need for protective capacity to maintain availability has already been mentioned in this chapter. A special problem of MTA is that the commitment to the market cannot be conditioned by a total amount. You certainly can tell your customers that the commitment is to maintain availability up to a certain level of one-time demand. This way you protect yourself from excessive one-time demands. For an item whose target level is 100 units, a demand of 30 units coming from one customer at one time is already problematic, and a one-time demand for 60 units cannot always be answered even when the MTA procedures are done according to the book. Therefore, it would be wise to tell customers that the commitment for availability for that item is limited to up to 15 units per customer at one time. The idea is that one-time demand of up to one-half of a zone,