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change as new suppliers and materials are used, new markets are opened and old markets deteriorate, and manufacturing capacity and methods change. Dynamic buffer levels allow the company to adapt buffers to group and individual part trait changes over a rolling time horizon. Thus, as these buffers encounter more or less variability, they adapt and change to fit the environment. Please note that the length of the rolling time horizon is very specific to the environment. Some companies may choose a 3-month roll while others must use 12 months. Figure 12-5 illustrates how a buffer can adjust based on actual consumption. The initial buffer size (based on its buffer profile and individual part traits) can be seen at the far left of the figure. The black line represents the available stock position, while the grey line represents demand per week. Let us say that, for this part, we were using a three-month rolling time horizon. Over the course of a 24-month period, you can see that demand rose dramatically, began to taper off, and then eventually stabilized. The buffer followed the trend.

Additionally, these individual buffer profiles can be manipulated through something called “planned adjustments,” based on certain capacity, historical, and business intelligence factors. In ASR, these planned adjustments represent the necessary elements of planning and risk mitigation required to help resolve the conflict between predictability and agility. These planned adjustments are manipulations to the buffer equation that affect inventory positions by raising or lowering buffer levels and their corresponding zones at certain points in time. Planned adjustments are used for common situations like seasonality, product ramp-up and ramp-down, and capacity ramp-up and ramp-down. In the seasonality example in Fig. 12-6, you can see a product that has a substantial bulge in demand once per year. In the part ramp-up example, you see a part that is being ramped up based on a sales and marketing plan. In the part ramp-down example, you can see a part that is being discontinued. In all cases, if the planned adjustments do not follow the actual consumption (who ever heard of a Sales and Marketing Plan being accurate?), the color-coding/buffer stratification system will quickly identify that things are not going according to plan.

FIGURE 12-5 Dynamic buffer maintenance.

FIGURE 12-6 Buffer profile adjustments.

The combination of these first two solution elements (strategic inventory positioning and dynamic buffer level profiling and maintenance) of ASR creates strategically placed points of inventory that are actively managed, carefully sized, and dynamically adjusted. These buffers dampen or eliminate the effects of variation caused by the bullwhip effect and system nervousness that are passed up and down the chain of resources and dependencies (Fig. 12-7a).

4. Pull-Based Demand Generation

Most Purchasing, Materials, and Fulfillment organizations have limited capacity and trust when it comes to sorting through the current demand signals and planned orders generated by MRP. The volume of reschedule messages is impossible to work before more changes happen and the process begins again. Many times critical actions are missed or incomplete pictures are painted. A significant understanding of MRP logic is required to even begin to understand the implications of a reschedule message. Many times it is easier to just leave it alone than risk disrupting the operation. However, this short-term fix can generate the need for many expensive corrective actions later (expedites, premium freight, overtime, etc.).

FIGURE 12-7a Conceptual illustration of dampening effect of stock buffers.

Generating, coordinating, and prioritizing all materials signals becomes much simpler when the environment is modeled properly. The current inventory status is evaluated for potential negative impacts and flagged for alert against open supply orders and demand allocations, which includes future sales orders that meet specific spike criteria. Planners then