The Constraint Buffer

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Overview of the Constraint Buffer

The buffer of inventory placed immediately in front of the constrained resource is critical to the throughput maximization of the constraint, because the buffer protects the constraint from a work shutdown caused by a shortage of processed materials coming from upstream workstations. An inadequate buffer will result in periods when there are no materials to feed the constraint, yielding a throughput decline just as severe as if the constraint itself were mis-managed. These shortages can be caused by a wide array of production problems that are bound to occur to some degree, despite a company’s best efforts to root out their causes. Though it may be possible to reduce the size of these production variations, there will always be variations – and the buffer is used to protect the constraint from them. If the level of production variation is high, then the protective buffer will be commensurately large, while smaller variations will call for the use of a much smaller buffer.

If a company has minimal excess capacity in its non-constraint areas, it will have an extremely difficult time recovering from a production shortfall, since it is only barely able to keep up with the demands of the constrained resource. This will likely result in a very long time to rebuild the inventory buffer if the buffer has been reduced to cover a production shortfall. Consequently, if there is a minimum amount of excess production capacity upstream from the constraint, management must choose between maintaining a large buffer or investing in more excess capacity. Since it is difficult to establish a large buffer in the first place (because there is so little excess capacity), the only real choice left is to invest in extra capacity or tolerate stock-out conditions at the constraint.

This does not mean that a company should invest in inordinate amounts of excess capacity throughout its facility – far from it. Instead, managers can measure the amount of capacity that would have been needed to rebuild inventory buffers within a reasonable time period, and then only invest in that incremental amount of capacity. If the capacity problem relates to a work center that uses labor, rather than machine time, then the appropriate response is to engage in enough employee cross-training to ensure that staffing levels can be rapidly increased if a significant amount of extra inventory is needed.

Alternatives to the Constraint Buffer

An alternative to increasing the size of the inventory buffer is to intentionally replace it with so much upstream sprint capacity that the system can very rapidly replenish inventory shortages in front of the constrained resource. However, this is not normally a cost-effective solution, since capacity increases are usually much more expensive than incremental increases in inventory at the buffer. However, it can be a useful technique if used solely to address recovery from very large upstream variances that would otherwise call for the use of an inordinately large buffer.

Podcast

A discussion of throughput concepts is available on Episodes 43 through 47 of the Accounting Best Practices podcast.