Imagine a smooth flowing process. The work is easy, employees are happy and inventory seems to flow like a stream of water. Now, think what would happen if just one operation in the process couldn’t keep up with the others. Or, a machine breaks down. Now your flow is halted and a lot of waiting occurs. Many traditional manufacturers in these cases rely on inventory buffers to prevent a complete line stop and keep lines running. So, what is an inventory buffer?
When something is said to be coupled, it would mean that the two items are connected and interdependent on one another. In the case of processes and supply chains there can be both positives and negatives with regards to coupled inventory and decoupled inventory. As you know, demand can fluctuate, shortages will occur, people call in sick and shipping routes are sometimes detoured. There is a long list of issues that can disrupt both internal processes and supply chains.
Independent Demand is an item that generates demand all by itself. In other words, it is not dependent or related to any other demand item.
Dependent demand is the demand that is directly related to or derived from the bill of materials structure for other items or end products which are independent demand.
MRO inventory stands for maintenance, repair, and operations inventory. In general it is used to maintain or repair items that are used in operations. This can include all the supplies an organization uses for its production processes that do not become a part of an end product or finished goods.
Whether it’s materials or information, if the inventory is not there when a customer wants it, chances are they will go somewhere else to find it. Next, revenue is lost and then it gets worse and worse. For example if inventory is not available throughput is decreased, waste is introduced and supply chains slow down. With that being said, many traditional manufacturers and service providers use a type of inventory known as Safety Stock to solve these sometimes catastrophic issues. In this module we will introduce you to Safety Stock.
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