BP & The Prioritization Mechanism

Order method

The time of the holistic buffer is composed of Lead Time, time protection and shipping which is the total time from the order time till receiving the goods. Meaning, that the order time should be a buffer before the desired due date.

That will result in a situation were there are three relevant dates:

1. Need Date - the date where the goods are needed at our site. For example: we need to purchase RM for a specific production Work Order, the Need Date for the RM in this case is the scheduled release date for the production order.

2. Buffered due date - the date that we need the goods to arrive. This date mostly equals to the Need Date, except for the case where additional shipping is involved and the supplier isn't responsible for that addition. In this case that date will be shipping time before the Need Date.

3. Promised Due Date - This represents the date that the supplier quoted as a Due Date for the specific order. The promised due date should be earlier than the buffered due date. Based on this date we will also measure our supplier's performance.

BP & The Prioritization Mechanism

The main prioritization mechanism is done by color.

Black orders - Most urgent - already late.

Red orders - Very urgent - about to be late soon.

Yellow orders - We're OK.

Green orders - We have time, don't worry.

The second prioritization mechanism within the colors, is done by BP. The BP also determines the order color.

BP, or buffer penetration, is a percentage that represents the purchase order urgency.

The BP is defined in a way, that the order should be placed in 0% BP, and when the due date arrives the BP is 100%.

The Time Buffer in the above formula stands either for one holistic buffer or the supplier's Lead plus time protection.

The common cases

In the most common case the following conditions occurs:

• The holistic time buffer is compound of Lead Time and protection and there is no additional shipping.
• The Need Date equals the Buffered Due Date.
• The supplier is quoting it's Promised Due Date for the order.

As described in the picture below, the red zone starts only after the Promised Due Date is passed while the black zone starts after the Need Date passed. The time frame between that time and the Need Date represents the "Expediting zone" - the time that we might be able to do something in order to get the order before the Need Date.

Another case might be when an additional shipping exists:

• The holistic time buffer is composed of Lead Time and protection and there is no additional shipping.
• The Buffered Due Date is the Need Date equals the shipping time .
• The supplier is quoting it's Promised Due Date for the order.
• Additional shipping time out of the supplier's responsibility exists.

As described in the picture below, the red zone starts only after the Promised Due Date is passed. The black zone will start after passing the Need Date as long as the order hasn't been shipped yet. The time frame between that time and the Need Date represents the "Expediting zone" - the time that we might be able to do something in order to get the order before the Need Date. After the order is indicated to be shipped already there's nothing much we can do except of waiting.

If additional shipping is not the case and the supplier didn't quote a Promised Due Date buffer color will be as follows:

BP Range	Color
BP<33%	Green orders - We have time, don't worry
33%<BP<66%	Yellow orders - We're OK
66%<BP<100%	Red orders - Very urgent - about to be late soon
100%<BP	Black orders - Most urgent - already late

To conclude, the prioritization will be in the following way - The higher the BP is, the more urgent the order is.