In a past podcast, Amir Schragenheim, President of Inherent Simplicity, is a software firm specializing in Theory of Constraint software discussed supply chain thinking with me.
Related Podcast and Transcription: Red, Yellow, Green: Is Supply Chain Thinking that Easy?
Excerpt from the Podcast:
Joe: Is there places that this type of management doesn’t work? That you would say, this industry, or you’re doing it this way, which really complicates problems, that I don’t see how buffer management and TOC supply chain would work?
Amir: Yes definitely I would not say that TOC doesn’t work I’m saying that the current solution would not work. It is part of why I added a few chapters or mini-chapters in my chapter there saying special environment like when we have short shelf life product we need to tweak some of the solution. What do I mean by tweak is just examining the logic seeing what assumptions were good for the general case and not a specific case. Then seeing what changes we need to do.
What we always should do is follow the logic follow the cause and effect logic, saying if that’s the case that’s what’s done then we need a different solution. For example, you mentioned some of the old business ,the old business is not something that will work in this solution. Not as easy as it is because everything in the cart is one so what’s the good in replenishment. You discussed part of the solution which is well I’m not buffering specific item I’m buffering a group of items that represents some clients need, like lamps. If I order a new lamp it’s not going to be the same as the one that was sold right? This is an example of an environment in which you need to change the solution in order for it to make sense.
Joe: Is there something you’d like to add to this conversation maybe I didn’t ask?
Amir: There was one thing you asked back before and I had some more to add to it. You asked when we maintain buffer how do we make sure that some crisis happens and we don’t have enough. I wanted to add that some of the theories also just the fear of reducing inventory. When we say that you should reduce inventory, we were too much in the green and not really a strategic threat.
We do have some SOPs or standard operating procedures and one of them is when we go to a new client or let’s say one of our clients have a new clients they’d like to replenish to. We tell them we tell ourselves people when you talk to the client don’t say we’re going to reduce the inventory. That moment we receive a signal to reduce the inventory. Let’s take all the things that we should reduce and put them in a contained space, we’re going to mark them. After a few months, we can show them OK now you see those ones you haven’t used them all. That means you don’t really need it then we can build confidence in the system. That’s something we use in the sales marketing side in order to enhance the confidence that the client has in the solution.
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