The Bottom Line on Two Bin Systemsby Greg Liepman

An integral part of any Vendor Managed Inventory (VMI) program is the replenishment vehicle - the method by which bins are stocked, located, and used as signals. Most Class “C” items, such as fasteners, small electronic components, and manufacturing consumables, are kept in one-bin or two-bin systems. This White Paper provides the basics of both inventory pull systems and a detailed review of two-bin options.

Single-Bin BasicsIn a single-bin system, the shop floor’s entire stock of an item is kept in one bin. For example, if there are 500 pieces of a certain item, all 500 of those would be found in a single bin. For all other parts on the floor, the same would likewise hold true. The benefit of a single-bin system is that workers go to a single location to pull material, but that benefit is massively outweighed by the difficulty of gauging the quantity of material in the bin and the resulting “guesstimation” of restocking points. This is not lean, and the uncertainty of supply means single-bin systems are susceptible to overstocking and stock-outs.

Two-Bin SystemsTwo-bin systems are designed with two specific goals in mind - to ensure the supply of parts and to protect the integrity of the bin supply system.

In a two-bin system, the entire stock of an item is kept (as the name implies) in two bins. Regard-less of the type of two-bin system implemented (discussed in detail later), there will always be a Primary bin and a Secondary bin. Workers pull from the Primary bin, and when those supplies are exhausted the Primary bin is moved to provide a replenishment signal and the Secondary bin be-comes the Primary from which workers now pull.

Careful consideration is given to a part’s usage and the frequency with which the bins are replen-ished. Suppose a manufacturer consumes 250 pieces of part X each week and that the VMI sup-plier makes weekly replenishment visits. With a two-bin system, both the Primary and Secondary bins would be loaded with one week’s usage (250 pieces each). At the end of each week, the empty Primary bin is moved to provide the supplier with a replenishment signal and the Secon-dary bin is moved over to the Primary rack and becomes the new Primary bin.

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Physical Bin LocationsWhen it comes to the actual layout of the racks on the floor, there are a variety of ways to im-plement a two-bin system. These include Side-By-Side, Rotating, and Back-To-Back. We will review each in turn, and assume once-a-week replenishment visits by a supplier.

Side-By-Side BinsWith a two-bin Side-By-Side system, the Primary and Secondary bins are located on racks imme-diately adjacent to each other, typically against a wall. The steps involved are:

1. On the initial load, the bins in both the Primary and Secondary racks are loaded with a full week’s inventory level.

2. Workers pull from the Primary bin until supplies are exhausted.

3. When the Primary bin is exhausted, it is moved to a location where the supplier will see it as a signal for replenishment, and the Secondary bin is moved into the Primary bin loca-tion. The fully replenished bins are then restocked into the Secondary rack.

Side-By-Side bins are simple to understand, but suffer from a major drawback: both trained and untrained workers are likely to pull material from the first bin they come upon - whether it is the Primary bin or not. This poses a significant obstacle to maintaining the integrity of the VMI sys-tem, and in our experience has rendered this rack layout unreliable.

Rotating BinsRotating bins function in the exact same manner as Side-By-Side bins. The only difference is that rather than being located on adjacent racks, the Pri-mary and Secondary bins in a rotating system are lo-cated on specially-designed two-sided racks. The picture to the right is of rotating bins in use at one of our VMI customer’s facilities.

Rotating bins provide a different way to lay out floor space than a Side-By-Side system, but suffer from the same major drawback: the difficulty of ensuring the integrity of the system as workers are likely to pull parts from both the Primary and Secondary bins.

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Back-To-Back BinsBack-To-Back bins solve the major problems associated with Side-By-Side and Rotating bin sys-tems. In a Back-To-Back system, the racks themselves are deeper and the Secondary bin is physically placed behind the Primary bin. When the Primary bin is exhausted, it is moved or turned over as a replenishment signal, and the Secondary bin slides forward to become the new Primary bin.

Because workers are unable to get to the Secondary bin until the Primary bin is exhausted, Back-To-Back bins accomplish both goals of a two-bin system - ensuring supply and protecting the integrity of the bins. Where possible, this is the system we urge all of our customers to utilize.

SummarySingle-bin systems are easy, but have little integrity and lead to a great deal of uncertainty. When properly implemented with and maintained, two-bin systems ensure the quantity of supply and provide system integrity. Back-To-Back bins provide the highest level of system integrity, and require little to no worker training.

About Allied Fasteners Allied Fasteners is a top-tier distributor of fasteners, electronic components, and manufacturing consumables. We provide manufacturers with flexible Vendor Managed Inventory programs by leveraging our leading expertise, financial strength, and broad range of capabilities. Visit our website at www.alliedfasteners.com or call us today to put our experience to work for you.

© 2009, Allied Fasteners, Inc. All rights reserved.

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