Theory of Constraints Supply Chain Replenishment

A Guide to Implementing the Theory of Constraints (TOC)
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An Important Subtlety For Manufacturers

Theory of Constraints began in make-to-order environments with the logistical method that we now know as drum-buffer-rope. In a make-to-order environment we make a commitment to a customer to deliver their order at a particular time in the future. It seems to me less well understood nowadays that one of the primary consequences of implementing drum-buffer-rope in make-to-order environments is excellent timeliness. It seems to me even less well understood how this comes about. Let’s investigate this for a moment.

In the exploitation phase of drum-buffer-rope we write a plan – a schedule – to ensure that we fully utilize the potential of the weakest link, the drum. We protect the timeliness of the schedule by subordination, we subordinate all the upstream supply activities by creating a buffer across the flow between raw material release and the drum (and another from after the drum until before shipping). The drum and shipping buffers are not an exploitation activity, they are a subordination activity. They ensure or protect both the volume and the timeliness of the exploitation and shipping plan. The plan itself is an explicit forward record of the priority of work in the process as demanded by the customer.

We investigated a interim case of using shipping buffers to manage make-to-stock but came to recognize that there is no longer an explicit timeliness consideration for delivery and that priorities may indeed change over the period between material release and shipping to the stock buffer. Thus the concept of an explicit plan no longer holds. Instead in make-to-stock we have priorities, and priorities that might indeed change. We learnt that by moving fully to stock buffers and buffer management (no time buffers) that we can manage these changing priorities quite well. Timeliness is no less important in make-to-stock but now we manage this, not through the fixed priorities of an explicit plan for the drum and shipping buffers, but rather through the possibly changing priorities of the stock buffers themselves.

We now need to apply this knowledge to supply chain rather than manufacturing.

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