What Is Decoupling Inventory?
Decoupling inventory is the term used to describe the process when product manufacturers store extra raw materials or work-in-progress goods for all or some stages in a production line in a way that a low-stock issue or failure at one stage doesn’t slow down or stop operations. Companies might also judiciously stock up on production-critical maintenance, repair, and operation (MRO) products like paint or PPE.
Decoupling inventory can be a helpful method for reducing the impact on the supply chain or manufacturing operations. Furthermore, it ensures that a production process can continue through all of its stages, even if there are inventory shortages or bottlenecks in other areas. The “final product” of that stage of the production process is decoupling inventory.
How Does It Work?
Inventory managers decouple inventory by allocating a portion of the stock for each node of production. As a buffer against inventory interruptions in the operation’s nodes, the computer maker might set away a portion of the parts required at each stage of constructing a laptop. In this way, despite inventory problems, orders can travel smoothly from one stage of manufacturing to the next.
Effective inventory tracking makes it possible to determine how much decoupling and other sorts of stock to keep on hand. Manufacturers can identify areas that require extra decoupling and other buffer stock. By continuously tracking the flow of raw materials, components, and final goods through the supply chain. This also helps to guarantee that nothing goes out of date before it is needed.
Why Is Decoupling Inventory Important?
Decoupling inventory offers a priceless buffer against unanticipated interruptions in both the inventory supply chain and specific production line sectors. It makes sure that problems with suppliers, inconsistent lead times, and production halts in individual nodes don’t cause the supply chain to collapse.
Without decoupling inventory, businesses would be unable to fulfill orders on time, lose money, and eventually lose clients. Companies that favor just-in-time (JIT) inventory management over just-in-case (JIC) inventory management may prefer to keep more decoupling inventory on hand.