There are many techniques for optimizing inventory levels and improving cooperation between companies in the supply chain. Among them is the CPFR technique, i.e., the method of Collaborative Planning, Forecasting, and Replenishment, which belongs to a narrow group of e-business solutions.
Its premise is to deepen cooperation in demand forecasting, planning, and decision-making regarding inventory replenishment between enterprises. Within the CPFR technique, depending on the enterprise responsible for inventory, it is possible to apply VMI (Vendor-Managed Inventory), SMI (Supplier Managed Inventory), or CMI (Common Managed Inventory) solutions.
The first solution obliges the supplier to manage inventory, the second the recipient, and the last one boils down to the joint involvement of both enterprises. With the help of the Internet in the data exchange process, rather than the EDI standard using a VAN network, the CPFR technique has become a much cheaper and more attractive solution to implement. Low implementation costs facilitate the establishment of business partnerships.
The purpose of this article is to propose a solution for an enterprise in the construction industry, specifically a window manufacturer, that wants to reduce inventory-related costs and improve customer service quality through faster order fulfillment. It is necessary here to diagnose the problem in order fulfillment and then propose a way to overcome it that corresponds to the enterprise’s capabilities. The Theory of Constraints (TOC) will serve diagnostic purposes, which assumes that every system, regardless of its complexity, is regulated by a few components.
Finding the component that acts as a constraint for the system and managing it appropriately will bring results quickly, which will translate into the harmony of the entire system.
Theory of Constraints as an effective method for problem identification
The Theory of Constraints (TOC) was developed by Eliyahu M. Goldratt in the 1970s. It can be applied in any functional area of an enterprise such as production, marketing, accounting, project management, or logistics, using methods from the set of tools it possesses.
The Five Focusing Steps method, which constitutes this component, concentrates actions within the weakest link. Using an analogy, it treats an enterprise as a chain. Due to its structure, it is an additional tool in the process of continuous improvement. (…)
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Source: Logistyka Magazine 5/2012