How to put your project buffers where you really need them
Once upon a time there was an overstretched and under-resourced purchasing department. The culture was that it was impolite to follow up on ordered parts. It was easy to divert any enquiries they did make with a brusque “it’s not due for delivery yet, why are you asking?”. Besides, there were so few people in the purchasing team that they simply couldn’t follow up on everything routinely anyway.
Instead, the team would only begin to follow up orders and parts when the parts did not arrive onsite when they were supposed to. They would follow up on parts only when the Production team complained that the parts were not where they needed them to be.
Imagine what this meant for the company’s project timescales and its delivery due dates!
Well, like all good fairy stories, help was at hand, because the business where this purchasing team worked started to implement a new initiative; a new way of managing all its projects called Critical Chain Project Management, or CCPM for short.
CCPM changes project scheduling so that all projects have a single, combined time buffer at the end of each project, rather than many individual ‘invisible’ buffers built into every project stage.
This enabled the business for the first time to see clearly the impact that the delays in receiving external parts from suppliers were having on its production schedules and shipping dates.
Soon, it became clear that something must be done to address the issue of suppliers delivering vital parts later than originally agreed.
CCPM tells us that where a non-critical project path feeds into the critical path, we need to create a feeder buffer to ensure that any delays to the non-critical path will not impact the critical path.
Each part from an external supplier should have represented a non-critical path. But when it became overdue, its path became critical.
So the business applied CCPM logic to the situation. The purchasing department was given visibility of the project plans and when each part needed to be delivered.
Although there was a benefit to delaying the ordering of parts until required (so investment is not made sooner than it needs to be and capital is not tied up unnecessarily) this benefit was far outweighed by the impact on project delivery and shipping dates that late parts could have.
So the purchasing department began to make orders earlier than they previously would have done. They requested delivery dates that ran three or four weeks in advance of when the part was actually needed on site. This created a three or four week feeder buffer for each of these non-critical paths.
The purchasing team then had a three week grace period for any late part, during which time they could work hard to maintain the part’s status as a non-critical path.
In this way, the purchasing team was able to reduce the delays to project schedules and shipping dates. In the process, they also collected a great deal of information about their suppliers.
This information enabled the team to identify the worst offenders. It gave them ammunition to chase up parts early, negotiate more favourable terms, and even change suppliers in some cases. One of the important things the Theory of Constraints (TOC) teaches us is that, in many cases, we put too much value on the price of a part and not enough value on the reliability of a supplier – because a 5% discount on a part is quickly absorbed by the cost to the business of a four or five week delay to the project delivery date.
Creating feeder buffers to ensure the non-critical path of a third-party-provided part doesn’t become a critical path – or, worse, a delayed critical path – is a really important way to alleviate the risk and cost to the business.
And the members of the purchasing team? Well, they all lived happily ever after, of course. This is a fairy story, after all.