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Homepage > Resources > Throughput Accounting >Make-To-Stock environment, long replenishment times

In a Make-To-Stock environment, long replenishment times for customers result in higher inventories for customers and a greater risk of stock-outs.
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With the application of Drum-Buffer-Rope in production we can cut production lead times in half. However, despite being considerable shorter, production lead-times are still significant. In addition, in many cases transportation time from the plant to the client is also significant.
A warehouse decouples lead times therefore reducing the replenishment lead time to be very short.

For example, a warehouse at a plant decouples the production lead-time from the transportation lead-time. Meanwhile, a regional warehouse decouples the transportation time to the warehouse from the transportation time to the client.

Therefore, if we hold the right inventories at a warehouse it reduces the replenishment time to be only transportation time from the warehouse.
So, with the implementation of Drum-Buffer-Rope; to reduce the replenishment time and hence reducing the inventory required to be held; and with a plant warehouse, and if needed secure warehouse space (and handling) in the appropriate regions, we can protect the customer against holding high inventories whilst simultaneously reducing the number of stock-outs they experience.

 

 



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