Theory of Constraints Handbook - James Cox Iii [234]
Projected Stockout Alerts are for parts where projected consumption may result in a stockout prior to receipt of incoming supply orders. This is a radar screen that alerts materials and planning personnel to anticipated projected on-hand red zone penetrations over the ASR lead time of the part based on average daily usage and open supplies. If a company manages its Projected Stockout Alerts well, it will reduce the number of Current Inventory Alerts.
Material Synchronization Alerts are for situations when any parts’ demand and supply dates are out of synchronization. A part can have demand against it generated by a sales order or work order for a parent item. If the open supply promise date for this part is after the due date for the demand, then there is a potential negative available stock position. This means that demand and supply are not synchronized. This situation can occur when the demand moves in earlier than the open supply promise date or the open supply promise date moved out in time. Typically, this will drive either expediting action on the child component or the rescheduling of the parent item.
Lead Time Alerts are used to prompt personnel to check up on the status of critical non-stocked parts before these parts become an issue (see the section titled “Lead Time Managed Components”).
Visible Buffer Status
ASR allows actual order priorities (POs, TOs, or MOs) to be conveyed effectively without additional efforts, disconnected subsystems, or other workarounds. Color-coding gives an easy to understand general reference. The percentage of buffer remaining gives a specific discrete reference. These references convey the actual priority regardless of due date. Figure 12-10 shows examples of buffer displays for geographically distributed (by location), manufactured, and purchased items. Note how the due date may not correspond with actual priority (WO 819-87). Additionally, observe on the Purchased Items display how easy it is to identify priority when things are due on the same date.
Lead Time Managed Components
Many critical components simply do not make sense to stock due to their relatively low volume. Ask most seasoned materials managers in major manufacturers and they can immediately recite a list of these types of components. These long lead time components can be very difficult to manage especially if they are sourced from a remote supplier. Without an effective way to manage these parts, we risk major synchronization problems, costly expediting, and poor service level performance. In ERP/MRP systems there is very little done about the management of these parts. They are managed by due date with no formal system of visibility and proactive management to reflect real priorities. The assumption remains as it did when MRP was first developed that all the parts will be available at the time of the order that needs them being released. Only when those parts are missing do personnel become aware of it and then expediting begins. The problem is only identified when the part is late. Orders using that part are released short those parts, causing possible rework on the shop floor and increasing work in process. Alternatively, some companies will begin to pull parts ahead of time to identify this kind of shortage. This process results in a storehouse of partially filled kits and a manual system to track the missing parts.
FIGURE 12-10 ASR buffer displays for geographically distributed items.
ASR gives special status and visibility to these parts. These lead time managed components are tracked and at a defined point in the part’s lead time, buyers are prompted for follow-up. If satisfactory resolution is not achieved, the visible warning or alert continues to rise in priority. Resolution could be either the assignment of a follow-up date (temporary resolution) or the assignment of a final confirmed date and decision (could be sooner, on time, or later). Regardless of what the resolution is, at least it is known and understood ahead of time. Then the other parts affected can