Drum-Buffer-Rope Scheduling
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1 Using Drum-Buffer-Rope Scheduling Rather Than Just-In-Time Production B Y P ATRICIA H UFF, CPA, P H.D. 36 WINTER 2001
2 Management accountants are familiar with the use of Just-In-Time (JIT) purchasing and production to reduce the raw materials and finished goods inventory that a company maintains. The premise behind JIT is that it produces a product only when one is ordered by a customer. JIT purchasing works well to reduce raw materials. However,to implement JIT production effectively,a series of changes needs to be made to the production process. If these changes are not made,production will build high levels of work-in-process (WIP) inventory,which costs the company money. Another system,drum-buffer-rope (DBR) scheduling,solves this problem by working with the existing production system instead of trying to make complicated changes. The techniques used in DBR eliminate the buildup of WIP by controlling the release of raw materials,or jobs,into the system,based on the capacity of a system constraint. J UST-IN-TIME S YSTEMS JIT purchasing is the purchase of goods or materials such that a delivery immediately precedes demand or use. 1 This calls for a major change in procurement activities. Instead of just purchasing materials from the lowest bidder,companies must begin to develop long-term relationships with a smaller number of suppliers. These agreements need to include provisions for a stated level of quality in the delivered products,rapid responses to changes in scheduled production,and frequent deliveries of smaller quantities of material. JIT production uses a demand-pull system, which is effective at reducing the amount of finished goods inventory. In this system, production and demand are synchronized because production does not start until an order is received. 2 JIT strives to reduce the throughput time the total time from the start of production until the product is ready to sell. To achieve this,jit requires a series of changes to the production system. First is an increase in quality,which includes the quality of raw materials used and the production process itself. Higher quality reduces the time and money wasted on production of defective units. The second change is a reduction in setup times. When less time is spent waiting for a machine to be set up,production is quicker. This also saves money on the holding costs of inventory and allows for products to be sold more rapidly. The third change is a balanced flow rate. The most difficult to implement,this requires each workstation or cell within the manufacturing process to have the same process time and capacity. If this change is not made,work-in-process inventory will increase. The fourth change is to improve the factory layout. Machines and processes are relocated so the product will not have to be physically moved from one part of the factory to the other during production. These changes allow the products to flow more smoothly along the production line. The final step is to design performance measurements and reward systems that encourage throughput. Eliminate or reduce rewards that discourage production of unnecessary inventory. 3 T HE T HEORY OF C ONSTRAINTS The theory of constraints (TOC) is a production management method that identifies and manages constraints within the production process. A constraint is anything that limits a system from achieving higher performance relative to its goal. 4 Without any constraints,a system can produce and sell an unlimited amount of output. A constraint,or bottleneck,can be internal to the compa- MANAGEMENT accounting quarterly 37
3 ny,such as a machine with limited capacity,or it can be external,such as a market limit that would restrict total sales. There are three principles for production under TOC: increase throughput,decrease operating expenses,and decrease inventory. 5 In TOC, throughput is defined as the rate at which an organization generates money through sales. 6 Operating expenses include all production costs required to produce throughput,except for direct material. Inventories include all money invested to purchase things intended to be sold. In TOC,inventories are liabilities to the company because they contain an investment of funds,but they do not produce throughput. TOC is built upon the idea that the goal of any company is to make money. Money is generated through the sale of products and services,not by building inventories even though a certain amount of inventory may be needed to meet current customer needs. 7 D RUM-BUFFER-ROPE S CHEDULING I m a Believer DBR scheduling is based on TOC methods. It recognizes that most companies operate with at least one constraint. It also considers that it is not always possible to balance the workstations so that they have the same capacity and process time. In DBR scheduling,jit purchasing can be used to reduce raw material inventories. Some of the changes required for JIT processing can also be used in DBR. Increase in quality,reduction of setup times,factory layout improvements,and new performance measurement systems support Drum-Buffer- Rope scheduling. The drum,in Drum-Buffer-Rope,is the constraint. The nonconstrained resources should be scheduled to serve the constrained resource. 8 The buffer is a time buffer used to protect the drum from disruptions in the preceding production steps. Disruptions can be caused by breakdowns,longerthan-normal setup times,vendors who do not deliver raw materials on time,and so forth. Some companies also use a shipping buffer to aid on-time deliveries. The rope is a schedule that dictates the timing of the release of raw materials,or jobs,into the system. This schedule is designed to make all the workstations perform at the pace of the drum. 9 As most management accountants and financial managers know, Dr. Eliyahu M. Goldratt is considered the inventor of constraint management. He described it and the theory of constraints logistics in his book, The Goal. From those ideas, the manual scheduling technique Drum-Buffer-Rope (DBR) evolved, which he and Bob Fox described in their book, The Race. Constraint management originated as a way of managing manufacturing environments where the ultimate goal is to maximize company profits. This goal is accomplished by maximizing throughput, minimizing inventory, and minimizing operating expenses. In the language of constraint management, according to Pinnacle Manufacturing Consulting, the constraining elements that determine the output of the system are often called drums because they determine the pace or drumbeat of the manufacturing operation. DBR comes from this analogy. I learned about Drum-Buffer-Rope when I took an information class from the California Technology Center, a state-funded consulting organization designed to assist small to mediumsized California manufacturers. I was intrigued by the effect on inventory that this scheduling technique could make. We played two production simulation games that very clearly demonstrated the difference in the buildup of work-in-process (WIP) inventory when using DBR as compared to regular production. I teach TOC and JIT in my cost and managerial accounting classes, and I started seeing a weakness in JIT production the buildup of WIP inventory. One day I realized that DBR could be used to solve this problem. Now I m a firm believer. According to the Avraham Y. Goldratt Institute, several companies boast DBR success stories. Bal Seal Engineering used DBR to increase output by more than 50%, reduce inventories by 50%, improve due date performance to 97%, reduce operating expense, and double net profits. Boeing s printed circuit board manufacturing operation experienced a 75% reduction in lead times and more than 100% increase in throughput. Rockland Manufacturing realized increased throughput, reduced WIP inventory, and experienced a nearly 100% on-time shipment rate after implementing DBR. For more information about DBR, go to or another search engine site, and do a search on Drum-Buffer- Rope. 38 WINTER 2001
4 Figure 1: Drum-Buffer-Rope Time Relationships TIME AT WHICH THE JOB IS RELEASED TO THE SHOP FLOOR TIME AT WHICH THE JOB IS SCHEDULED TO BEGIN PROCESSING AT THE BOTTLENECK CONSTRAINT DUE DATE PROTECTIVE BUFFER SHIPPER BUFFER PROCESSING TIME (INCLUDING SETUPS) FOR WORK CENTERS IN FRONT OF THE BOTTLENECK CONSTRAINT PROCESSING TIME (INCLUDING SETUPS) FOR THE BOTTLENECK CONSTRAINT AND SUBSEQUENT WORK CENTERS In a process costing operation,dbr scheduling involves several steps. First,the constrained task in the assembly line is identified. Then a buffer size is determined that will ensure the constrained task is kept busy at all times. This can also include the determination of the shipping buffer size. The buffer size reflects the amount of the fluctuations and the capacity level at nonconstraint resources. The capacity level is crucial because it determines the time needed for a nonconstraint resource to catch up after a disruption. 10 Next,the schedule of raw material release is established by working backward from the due date of the job. Figure 1 presents a visual example of the DBR time relationships. 11 For a job in a job order shop to be completed,it may be necessary for it to be processed through a particular department more than once. DBR first identifies the constrained department. The buffer is set,for example,at five tasks (or visits to the constrained department). When a new job is received that requires processing through the constrained department,a check is made to see how many jobs and tasks already in the system will be passing through the constrained department. If the buffer is already full,meaning the existing jobs require five visits to the constrained department, the new job will not be released until one of the other jobs is completed. This type of scheduling keeps the constrained department constantly working,and the amount of work-in-process inventory is reduced. A DBR EXAMPLE DBR scheduling can be used by service companies as well as manufacturing companies. Consider the hypothetical example of the processing steps required for standard blood and x-ray testing for preoperative patients at the Master Surgery Center (MSC). Each patient scheduled for surgery must report for blood testing and x-rays two days before their scheduled surgery date. At present,msc does not make appointments for the preoperative tests. The processing of patients has four separate stations: administrative intake,where forms are completed and insurance information is taken; the blood lab, where blood is drawn; x-ray,where a chest x-ray is taken; and administrative discharge,where each patient is given complete instructions for his/her scheduled surgery. An examination by the MSC management indicated that the bottleneck,or constrained resource,is x-ray. MSC has only one x-ray room available. In order to keep the station working at all times,a buffer of three patients was established for the x-ray waiting room. This buffer size was based on past MANAGEMENT accounting quarterly 39
5 experience with the unexpected variations that can occur in processing times of the other two departments. Variations can occur because of patient delays or employees who miss work for illness and other reasons. Under DBR scheduling,when a patient arrives at administrative intake,a check of the x-ray buffer is made. If there are already three patients in the x-ray waiting room,no new patient is taken into administrative intake. A new patient is taken into administrative intake only when the buffer falls below three patients. This system avoids a backlog of angry patients in the x-ray waiting room. MSC has found that waiting patients are less disruptive in administrative intake than in front of the bottleneck x-ray station. Over a period of time,msc could use its experience with DBR to make appointments for the preoperative tests. A COMPARISON OF JIT PRODUCTION AND DBR SCHEDULING According to P.C. Cook,there are two major differences between JIT and DBR methods. 12 First,JIT requires the plant to be balanced so each task has the same output level. On the other hand,dbr uses a buffer in front of the constrained resource to reduce the buildup of unnecessary WIP inventory and allow for a continuous flow of products through the system. Second,because of the balanced plant,jit creates transfer batches of equal size. DBR allows different sized batches,making it better suited for use in a job order shop that takes custom orders of differing sizes. There are several studies that compare the performance of JIT and DBR. D.W. Fogarty,J.H. Blackstone,and T. R. Hoffman found that TOC processing,using DBR scheduling, gives superior performance with less effort. 13 DBR produced approximately 2% more units of output than the JIT production. In a simulation study by Cook,DBR and JIT performed better than traditional processing. However, DBR outperformed JIT in a number of categories. 14 DBR required less inventory,which led to reduced manufacturing costs,better responsiveness to customer requirements,and the opportunity for better product quality. DBR also produced more product with a lower standard deviation of flow time. Cook defined this benefit as better due-date performance. Such performance resulted because it was easier to determine when the product would be ready for shipment. 15 Based on the information presented,it appears that DBR scheduling can achieve a higher level of performance. Because it doesn t require a balanced set of production tasks,dbr lends itself to a larger number of processing situations. As in the case of a job order shop,dbr can be used in situations that allow for different sizes of batches to be processed. The evidence also indicates that DBR scheduling results in lower WIP inventories,which leads to lower investment in manufacturing costs. Compared to JIT,Drum-Buffer-Rope scheduling is clearly the superior production method. Patricia Lee Huff, CPA, Ph.D., is associate professor in the department of accountancy at California State University, Fresno, in Fresno, Calif. You can reach her at (559) or patricia@csufresno.edu. 1 C. T. Horngren,G. Foster,and S. M. Datar,Cost Accounting: A Managerial Emphasis,10th edition,prentice Hall,Inc., Upper Saddle River,N.J.,2000,p J. Zimmerman, Accounting for Decision Making and Control, 3rd edition,irwin McGraw-Hill,New York,2000,p Zimmerman,2000,p E. Schragenheim,and B. Ronen, Drum-Buffer-Rope Shop Floor Control, Production and Inventory Management Journal,Third Quarter,1990,p E. Goldratt and J. Cox, The Goal: A Process of Ongoing Improvement,2nd revised edition,north River Press,Croton-on-Hudson,N.Y.,1992,p S. Jayson, Goldratt & Fox: Revolutionizing the Factory Floor, Management Accounting,May 1987,p E. Noreen,D. Smith,and J.T. Mackey,The Theory of Constraints and Its Implications for Management Accounting, North River Press Publishing Corporation,Great Barrington,Mass.,1995,pp Thru-Put Technologies, Theory of Constraint, 12, Schragenheim, et al.,p Schragenheim, et al.,p E. Noreen,D. Smith,and J. T. Mackey,p P. C. Cook, A Simulation Comparison of Traditional,JIT, and TOC Manufacturing Systems in a Flow Shop with Bottlenecks, Production and Inventory Management Journal, First Quarter,1994,p D. W. Fogarty,J. H. Blackstone,Jr.,and T. R. Hoffman, Production and Inventory Management,2nd edition,south- Western Publishing,Cincinnati, Cook,1994,p Ibid. 40 WINTER 2001
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