Michael Watson Ph.D
Oct 7th, 2013

I recently wrote an article for Supply Chain Digest (Three Types of Supply Chain Buffers) that discussed that every supply chain has variability and will buffer this variability with some form of inventory, capacity, or time.

What is interesting about this concept is that is applies to every business, not just a supply chain.  The same concept applies within your manufacturing plants or within your service business.

For example, if your factory experiences variability (from poor supplier deliveries, machine failures, or changing customer orders), you will need to create buffers (or they will be created for you).  Either you buffer with extra inventory (raw material and finished goods inventory), extra capacity (more machines in case one fails), or time (you make customers wait when things go wrong).

As another example, if you run a services business, you also face variability– the time to complete service jobs varies and demand varies.  It is more difficult to buffer with inventory but extra capacity (having extra service people) or buffering with time (making customers wait or schedule appointments) are viable options.

This is an interesting concept that can make you think about your business in a different light.