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there is for disruption and volatility during that time or that the customer tolerance time will not allow for this lead time (analyzing these risks and breaking up the cumulative lead time is a key aspect of ASR’s Strategic Inventory Positioning solution element). With this cursory recognition, companies often hold intermediate or subassembly stock and stock on long lead time purchased items. These stock positions protect and compress lead times for end items. Simply put, this means that the realistic lead time for a manufactured part is neither the manufacturing lead time nor the cumulative lead time. In fact, the realistic lead time is determined by and defined as the longest cumulative unprotected leg in the BOM. This is called the ASR lead time. An illustration of the ASR lead time concept is shown in Fig. 12-9. The first section of the figure represents the BOM for a part called “20Z1.” Beside each unique part is a number that represents the manufacturing lead time of that part in days. As you can see, the manufacturing lead time for part 20Z1 is four days. The cumulative lead time path of 31 days is depicted in the second section of the figure as a bold line. The third section of the figure shows that when part 501P is buffered (depicted as grayed out) it shifts the longest unprotected sequence in the BOM to the bold marked path. The ASR lead time of 20Z1 is now 24 days, with the longest child contribution to lead time coming from 408P. Now, the fourth section of the figure shows that when we buffer 408P it shifts the ASR lead time to the other side of the BOM and is 21 days. The final section of the figure shows that this company chose to buffer the subcomponent 302. The ASR lead time for 20Z1 is now 11 days and the ASR lead time for part 302 is 17 days.

FIGURE 12-9 The ASR lead time concept.

TABLE 12-3 ASR Planning Visibility

Highly Visible Priority

All ASR buffered parts are managed using highly visible zone indicators including the percentage of the depletion of the buffer (frequently called buffer penetration). This is a far simpler and faster approach than to have to sift through the planning queue checking all available stock equations to determine real priority. Table 12-3 shows an example of ASR planning visibility. Again, the buffer status in ASR planning relates to the available stock position. The recommended order quantity will be the quantity to bring the available stock position to the top of the green (which is the top of the buffer).

Qualified Order Spike Protection

Most MRP systems force planners into a choice—bring in all known future demand or bring in none of it. The demand forecast consumption rules are some of the most complex areas to understand in even the most rudimentary MRP system. The big question is how to handle the overage or under consumption against the expected quantities. When MRP was planned in weekly time buckets, the choices were a bit easier, but now with MRP planning in daily quantities, the forecast error can be almost impossible to identify and respond to in a timely fashion. The demand time fence will not allow the planner to realize that a qualified order in the planning horizon is looming and will cause enormous disruption to the plan once the order matures and crosses the demand time fence. In ASR, the buffer profiles and stratifications combined with the concept of ASR lead time allow qualified order spike protection over a realistic compensation time horizon. Thus, an order spike threshold is applied out over the ASR lead time to qualify sales orders that, according to the buffer profile, are spikes and will jeopardize the integrity of the buffer. This allows Planners to compensate effectively for known upcoming spikes in demand.

Realistic Lead Time Visibility

All orders are assigned due dates using ASR lead times. In an MTO environment, it is important to have ASR lead times visible because it can help focus any necessary expedite efforts and be used to make promises that are more realistic to customers. In make-to-stock (MTS) environments, ASR