Inventory Decoupling
The process of inventory decoupling is the act of setting aside of raw materials or materials in various stages of manufacturing to avert shortages should something go wrong. If delivery were delayed due to an equipment or transportation issue, production could come to a standstill if there were not additional supply on hand to tie production over until delivery occurs.
You could also face a slowdown in production if one or more workflows experience a breakdown, due to an equipment failure or labor shortage. If you have decoupling inventory for that stage available, you can continue production while addressing the problem.
You may even want decoupling inventory to facilitate equipment maintenance. If a regular tune-up were to hold up production, it would occur infrequently, if at all. Being prepared for scheduled checkups will keep things running smoothly.
Why is decoupling important?
Decoupling in inventory management is an important process for ensuring business continuity. When you are prepared to handle problems, production can continue at its normal pace allowing you to meet demand while mitigating issues. Decoupling minimizes the impact of external factors, empowering your business with greater control over the outcome. It is not a suitable solution for every business. If a product is perishable, the amount of time you can hold on to additional inventory is very limited. But if you are talking about computer parts or toys, decoupled inventory makes a lot of sense.
Decoupling is not employed as a method to manage change in demand, rather it creates an emergency supply to continue filling orders at their current rate.
Decoupling Points
The production workflows must be configured to establish decoupling points to properly track and manage the quantities held to the side for production as production ebbs and flows according to activities occurring at earlier workflow stages or effecting lead time.
SOS Inventory software can track your decoupling inventory, as it tracks inventory at all stages from raw materials through production to customer delivery and then returns.
What is the difference between decoupling inventory and safety inventory?
Decoupling inventory and safety inventory are both types of inventory management strategies used by companies, but they serve different purposes.
Decoupling inventory refers to the inventory that is held between two different stages of the production process to reduce dependencies and increase flexibility. This inventory acts as a buffer between the stages, allowing them to operate at their own optimal speeds and reducing the likelihood of delays or stoppages. Decoupling inventory can help companies to improve their production efficiency and reduce lead times.
On the other hand, safety inventory is held as a precautionary measure to protect against unforeseen fluctuations in demand or supply chain disruptions. Safety inventory is typically held at the final stage of the production process, such as finished goods, to ensure that there is enough inventory available to meet customer demand. Safety inventory can help companies to manage the risks associated with supply chain disruptions, such as delays or quality issues.
What is an example of decoupling?
When you have a product assembled from many different parts which also require assembly such as a vacuum cleaner, or any type of machine, you may create additional assemblies at any stage to set aside in case something happens to the equipment that creates the vacuum hose or the motor, for example.
When facing supply chain disruptions as we’ve recently endured throughout the pandemic, retaining decoupling inventory is a strategy to mitigate loss and prevent production shutdowns. You stand a greater chance of controlling the outcome from within your own walls than attempting to manage chaos originating from your suppliers.
Naturally, implementing sophisticated inventory software to carefully track and manage every aspect of production and inventory movement is the most initiative-taking step your business can make towards streamlining production and controlling inventory across your organization. SOS Inventory fits the bill with a wide array of software tools to give you the control and insights you need to meet demand and stay profitable. Why not get started today?
