Eli Schragenheim did a nice TOC ICO webinar the other day on the topic of buffers, Time Buffers, Stock Buffers and Buffer Management – The Key Insights and Their Universal Use. (Recording not available at this time.)
Buffers exist to act as a cushion or shock absorber to protect against variability or uncertainty. As I think I've mentioned before, buffers are always there, acknowledged or not. Unfortunately, most organizations don't acknowledge them. As a result, they don't get to take advantage of them - it's likely that buffers are placed incorrectly, and are thus wasted.
I suspect this mostly happens because we are afraid to admit that buffers exist, or there is a belief that "I can manage". The vicious cycle is there though. I believe I can manage because I have given myself a lot of protection from that uncertainty. And since that protection is "mine," I don't want to give any of it away or to tell people that my estimates have that protection baked in. And then in order to make sure people don't go too far with the protection, organizations attempt to place controls, like tracking adherence to budget or adherence to task-level due dates. And if the penalties for non-adherence are high (in reality or in my imagination), then I am likely to continue providing estimates that I am sure I can meet. How am I sure I can meet those estimates? Because I have added buffer into the estimate. And back around the cycle.
Strategically used buffers are there to protect commitments to customers - not individual operations or even local work centers. Strategic buffers are placed where they impact the customer: shipping buffers in production and project buffer in projects and stock buffers in the supply chain. Additional buffers might be needed to manage critically constrained resources or key integration points, but it is the buffer at the customer face which needs to get the attention and is the primary focus in active buffer management.
With all that said, buffers must be visible, and they must be actively used and monitored to take advantage of them. Over the short term, the buffers guide people where to focus, where to expedite ("expedite" is not a bad word - it's just the normal practice of expediting everything that is the problem), where to devote more energy. In the longer term, if you record the state of the buffers over time and what is creating the current buffer consumption, then you can use this information for continuous improvement - direct those improvement efforts on those things that are the common sources of red buffer penetration and the overall operation will improve.