Replenishment the TOC way
Replenishment the TOC way is all about synchronization of flow, starting with the end consumer and ending with the origins of raw material the solution focuses on synching the flow of consumption signals with physical replenishment of goods. It allows a meaningful improvement in performance by eliminating unnecessary waiting times in the supply chain management process, placing just enough inventories where it makes the most sense, and reacting to demand in the most cost effective manner.
Replenishment the TOC way introduces new rules into the supply chain management practices that harness the power of technology and combine them with sound business common sense resulting with surprising reduction in the levels of inventories while at the same time increasing availability. The first rule demands that any consumption is immediately informed to the supplying node of the supply chain, thus eliminating a meaningful portion of the supply time and allowing a meaningfully more effective and efficient work to the supplying node.
The second rule is about where inventories should be held, and it stands to reason, they should be held where they can protect consumption from shortages without flooding the system with inventory, these points are logically appropriate aggregation points in the system. The following rule is treating the quantities in each node of the supply chain, calling for "just enough" inventory. Now that inventory is strategically located in appropriate aggregation points, sufficient inventory is directly related to transportation time, meaning much less inventory required with much higher accuracy.
And finally, based on the quantities defined, the solution creates an execution monitoring system that allows all participants to have clear and consistent priority signals to handle Murphy as well as guide improvement efforts.
