White Paper Series

The Bottom Line on Two Bin Systems

by 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 Basics In a single-bin system, the shop oors 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 oor, the same would likewise hold true. The benet of a single-bin system is that workers go to a single location to pull material, but that benet is massively outweighed by the diculty 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 Systems Two-bin systems are designed with two specic 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. Regardless 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 becomes the Primary from which workers now pull. Careful consideration is given to a parts usage and the frequency with which the bins are replenished. Suppose a manufacturer consumes 250 pieces of part X each week and that the VMI supplier makes weekly replenishment visits. With a two-bin system, both the Primary and Secondary bins would be loaded with one weeks 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 Secondary bin is moved over to the Primary rack and becomes the new Primary bin.

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Physical Bin Locations When it comes to the actual layout of the racks on the oor, there are a variety of ways to implement 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 Bins With a two-bin Side-By-Side system, the Primary and Secondary bins are located on racks immediately 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 weeks 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 location. The fully replenished bins are then restocked into the Secondary rack.

Side-By-Side bins are simple to understand, but suer from a major drawback: both trained and untrained workers are likely to pull material from the rst bin they come upon - whether it is the Primary bin or not. This poses a signicant obstacle to maintaining the integrity of the VMI system, and in our experience has rendered this rack layout unreliable. Rotating Bins Rotating bins function in the exact same manner as Side-By-Side bins. The only dierence is that rather than being located on adjacent racks, the Primary and Secondary bins in a rotating system are located on specially-designed two-sided racks. The picture to the right is of rotating bins in use at one of our VMI customers facilities. Rotating bins provide a dierent way to lay out oor space than a Side-By-Side system, but suer from the same major drawback: the diculty 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 Bins Back-To-Back bins solve the major problems associated with Side-By-Side and Rotating bin systems. 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, BackTo-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. Summary Single-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 exible Vendor Managed Inventory programs by leveraging our leading expertise, nancial 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.
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