Buffer Management

In the theory of constraints, a buffer is an inventory item that is used to protect the flow of work through a system. Buffers are used to absorb fluctuations in demand and supply. Buffers help to ensure that the work-in-process (WIP) does not exceed the maximum allowable WIP for the system.

Buffer management is the process of controlling the level of buffers in a system. The goal of buffer management is to ensure that the buffers are always at the correct level. If the buffers are too small, then the system will be overloaded and work will flow through the system at a slower rate. If the buffers are too large, then the system will have excess capacity and money will be wasted.

Buffer management is a critical function in logistics. The level of buffers in a logistics system affects both the speed and accuracy of the supply chain. Buffer management should be considered when making decisions about inventory, capacity, and transportation.

There are three types of buffers in a logistics system:

1) Material buffers: Material buffers are used to protect the flow of materials through the system. Material buffers are used to absorb fluctuations in demand and supply and are a component of materials management.

2) Capacity buffers: Capacity buffers are used to protect the flow of work through the system. Capacity buffers are used to absorb fluctuations in demand and supply, and for part of capacity planning.

3) Time buffers: Time buffers are used to protect the flow of time through the system. Time buffers are used to absorb fluctuations in demand and supply, by provisioning process time or transit time.

The level of buffers in a logistics system should be based on the type of business and the needs of the customer. For example, a company that sells perishable goods will need more material buffers than a company that sells non-perishable goods. A company that sells custom-made products will need more capacity buffers than a company that sells pre-packaged products.

The level of buffers in a logistics system can be controlled by using the following methods:

Changing the order processing time: The order processing time is the amount of time it takes to process an order. If the order processing time is increased, then the level of buffers in the system will be decreased.
Changing the lead time: The lead time is the amount of time it takes for a product to move from the supplier to the customer. If the lead time is increased, then the level of buffers in the system will be decreased.
Changing the production rate: The production rate is the number of products that are produced per unit of time. If the production rate is increased, then the level of buffers in the system will be decreased.
Changing the demand forecast: The demand forecast is the predicted amount of product that will be demanded in the future. If the demand forecast is increased, then the level of buffers in the system will be decreased.
Changing the inventory policy: The inventory policy is the way that a company decides to handle excess inventory. There are two types of inventory policies:
- The first type of inventory policy is the fixed order quantity policy. Under this policy, a company will always order the same quantity of product regardless of the demand. This policy will result in a high level of buffers in the system.
- The second type of inventory policy is the variable order quantity policy. Under this policy, a company will order different quantities of product based on the demand. This policy will result in a low level of buffers in the system.

Buffer Management

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