Time Between Purchases — Frequency of Requirements Review

1 Time Between Purchases — Frequency of Requirements Review 

Managing consumption begins by defining the Time between Purchases, or TBP. These purchases do not have to be from outside vendors. They include pulls from upstream operations such as packaging or fabrication inside the company. 

In our example, we might request packaged SKUs every 30 days. We might want to run our packaging machine for these two SKUs every two weeks, so we would review our need for Item 1 every 14 days. The timing of orders for materials or intermediate products should be negotiated with the upstream outside or internal supplier. Table 33-3 summarizes these decisions. 

In establishing the TBP, the planner should consider the volume of sales, the cost of in-transit inspection for each delivery, and volatility in demand. In applying 3C, more frequent reviews (shorter TBPs) lower the supply chain inventory. 

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