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Decoupling stock is the strategic buffer inventory of subassemblies and WIP that may very well be used when suppliers are unavailable, when there are inside disruptions like equipment breakdown, or when demand is larger than anticipated. It permits corporations to stop all-around stoppages and mitigate the bullwhip impact.
What’s Decoupling Stock?
Decoupling stock is the buffer inventory saved to complement strategic levels of the manufacturing course of to counter disruptions within the firm’s provide chain. It means stocking up on particular subassemblies and work-in-process stock with a purpose to shorten lead occasions or to stop stoppages in a single space of manufacturing from spreading over to the entire operation.
For instance, a furnishings producer with simply two
workstations – meeting and portray – may need to preserve an additional stock of
merchandise which are assembled, however not but painted. On this case, when meeting
breaks down as a result of provider points, worker sickness, and many others., the portray
division can proceed work on the assembled furnishings put aside as decoupling
stock, thereby having the ability to fulfill buyer orders on time. Having this
additional WIP stock may also assist the corporate reply to unexpectedly excessive demand.
One other instance can be fashionable car producers that usually first assemble almost-ready automobiles, retailer them in stock, after which add customizations like paint and extras in accordance with incoming buyer orders. On this case, the core product is used as decoupling stock to make sure immediate deliveries to prospects.
This stock administration method can be utilized, nevertheless, in any atmosphere with a number of interdependent workstations. Conserving additional decoupling WIP stock between these levels of manufacturing (within the decoupling factors) can be sure that when a breakdown happens in a single workstation, the others down the road can proceed work as regular. Likewise, if one stage of the manufacturing course of is slower than the others, retaining additional stock on the decoupling level between this and the following leg of manufacturing can considerably cut back lead occasions. The identical goes for when uncooked supplies are delayed. As such, decoupling stock generally is a very efficient antidote in opposition to the bullwhip impact.
What’s a Decoupling Level?
A decoupling level is some extent between completely different levels of manufacturing the place decoupling stock is held. This doesn’t essentially imply that the additional inventory is bodily saved in an space between completely different workstations. Moderately, these subassemblies and WIP are nonetheless held within the warehouse and dropped at the manufacturing flooring when wanted.
For instance, within the aforementioned furnishings workshop, the decoupling level is between meeting and portray. Which means the decoupled stock is assembled however not painted.
Extra advanced techniques can, nevertheless, have a number of decoupling factors, thereby making a extra versatile provide chain.
Benefits of Decoupling Stock
The benefits of retaining decoupling stock are:
- Prevents stoppages as a result of provider
unavailability. - Prevents stoppages as a result of inside elements such
as worker sickness or equipment breakdown. - Permits the corporate to answer spikes in
demand. - Mitigates the bullwhip impact by making a
barrier between provide and demand, thereby lowering the fluctuations on each
ends. - Permits the corporate to carry out upkeep on
sure workstations with out halting manufacturing. - May very well be used to attenuate lead occasions.
Probably the most discernible disadvantages of decoupling stock are the upper stock prices and additional area necessities, but when approached analytically, the benefits will certainly outweigh the disadvantages.
Decoupling Stock vs. Security Inventory vs. Pipeline Stock
There could be appreciable confusion concerning the phrases
“decoupling stock”, “security inventory”, and “pipeline stock” as all of them
consult with some form of a listing buffer. However the distinction is kind of simple to
perceive.
As we already realized, decoupling stock means constructing
up a inventory of additional stock for use in manufacturing when a disruption breaks
the traditional manufacturing cycle. Usually, decoupling stock is related
with the interior provide chain of the corporate. Meaning it’s used to
mitigate the danger of stoppages as a result of equipment breakdown or upkeep,
worker unavailability, and many others. That is finished by supplying the decoupling factors
between completely different levels of manufacturing with additional subassemblies and WIP
stock.
Security inventory, alternatively, refers to a buffer of uncooked supplies or completed merchandise which are used to answer disruptions on the suppliers’ aspect or to spikes in buyer demand. The time period “security inventory” is subsequently usually used within the context of countering points within the exterior provide chain of the corporate. Corporations that make to order can use the protection inventory of uncooked supplies and components to proceed manufacturing when suppliers are delayed whereas corporations that make to inventory can use a security inventory of completed items to answer unexpectedly excessive demand.
Pipeline stock, nevertheless, refers solely to the suppliers’ aspect of the provision chain. It consists of the components and uncooked supplies that the corporate has already ordered however which have but to reach on the facility. Companies may need to preserve a pipeline stock when suppliers’ lead occasions are very lengthy. This manner, some portions of the required uncooked supplies and components are consistently in transit and arrive at common intervals which are a lot shorter than the lead time of the provider.
Decoupling Stock in ERP/MRP techniques
The best solution to arrange decoupling stock in an ERP/MRP system is to create multi-level payments of supplies on your items. Inside this performance, you may create merchandise which are composed of subassemblies. If it’s worthwhile to preserve observe of decoupling stock, you may deal with WIP that has accomplished sure levels of the manufacturing course of as subassemblies which are used within the closing product.
For instance, a plain picket desk generally is a subassembly for
making a painted picket desk.
When a buyer orders a painted picket desk and a producing order is created, the system routinely checks if the mandatory subassembly (the plain picket desk) is already in inventory. If not, the manufacturing order consists of the manufacturing of the required subassembly. As with different merchandise, the subassemblies will also be assigned security shares and reorder factors so {that a} outlined variety of decoupling stock would all the time be in inventory. It’s also doable to have the subassembly product group named “Decoupling stock” and have it categorized as WIP for accounting functions.
Key takeaways
- Decoupling stock is the buffer inventory saved to
complement strategic levels of the manufacturing course of to counter disruptions
within the firm’s inside provide chain. - It means stocking up on particular subassemblies
and WIP, in addition to uncooked supplies and components wanted to finish the merchandise, at
the decoupling factors with a purpose to shorten lead occasions or to stop stoppages in
one space from spreading over to the entire operation. - Decoupling factors are the factors between
completely different workstations the place stock is decoupled, e.g. a furnishings
producer may decouple between meeting and portray. This manner, there’s
all the time assembled furnishings able to be painted and shipped out. - Decoupling stock is commonly confused with
security inventory and pipeline stock. Whereas decoupled stock means
subassemblies and WIP stocked at decoupling factors, security inventory refers to uncooked
supplies and completed items that act as a buffer when suppliers are
unavailable or when demand is larger than regular. Pipeline stock is the
move of supplies that’s constantly in transit, arriving at common
intervals to mitigate lengthy provider lead occasions. - Decoupling stock will be simply managed in an
ERP/MRP system that helps multi-level BOMs.
You might also like: What Is Vendor-Managed Stock (VMI) and Tips on how to Use It?
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