Replenishment Strategies

Determining an appropriate production model starts with Demand Profile and Demand Segmentation.  High volume low variability items, and low volume high variability items behave very differently.  How to decide if a particular product is a candidate for a one piece flow cell or a craftsmen job bench?  Look to the coefficient of variation for a clue.

Demand Segmentation - Volume vs Variability


Type 1 – Rate-base or Just-in-time

  • forecasting of the flow rate or takt time
  • RCCP – rough  cut capacity planning to monitor impact of mix and volume on pace maker operation
  • produce to rate (or TAKT) vs discrete order or customer pull
  • demand flow vs time-phased requirements planning
  • maintain flow priority and timing
  • no detailed Capacity Requirements Planning required
  • no or minimal shop order launch or inventory transactions
  • highly visual and standardized shop floor control
  • “one-piece” flow, zero inventory, standard WIP – work-in-process
  • seamless flow/pull of material
  • Dynamic cycle time (Little’s Law)

Type 2 – Pull

  • combination of discrete forecasting and/or demand rate-based forecasting
  • MRP planning — pull Kanban, Heijunka visual shop floor control
  • RCCP, but no detailed CRP
  • flat Bills Of Materials
  • more cellular manufacturing
  • point-of-use vs. central stores
  • inventory is strategic: standard inventory, time-based replenishment, pull based on consumption vs. push based on demand
  • based on statistically balanced rate, build to level-loaded demand with calculated standard inventory buffers

Type 3 – Push or Job Shop Discrete

  • discrete requirements planning (firm orders and long range forecast)
  • Rough Cut Capacity Plan
  • time phasing of requirements
  • application of order policies: lead time, safety stock & time
  • Capacity Requirements Planning
  • MRP shop order launch & order maintenance (message filters and “noise management”)
  • ability to aggregate disparate requirements across multiple products by work center, supplier, product
  • central stores of inventory
  • multi-level inventory: stores, pick, kit, move, queue
  • batch processing
  • demand leveling difficult and uneconomical

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