Why Flow-Based Planning Works: The Practical Logic Behind Red, Yellow, and Green

Flow-based planning provides manufacturers with a simple, visible way to control materials without relying on static safety stocks or complex forecast models.

At its core is a straightforward concept: buffers—applied at the right points in the supply chain—adjust automatically to actual market consumption.

This approach is what allows Intuiflow to deliver high service levels and stable flow with less effort from planners. Below, we’ll look at how buffer logic works in practice and why it’s so effective.

What a Buffer Is—and Why It Matters

A buffer is established at the item-location level to ensure constant material availability.

Buffers aren’t applied everywhere; they are placed strategically at decoupling points in the flow—locations where variability needs to be absorbed so it doesn’t propagate through the entire supply chain.

When positioned correctly, these buffers do more than hold stock. They stabilize lead times, dampen the bullwhip effect, and create a predictable flow of materials that protects service performance.

To understand how buffers fit into a complete flow-based model—including stock, time, and capacity—read our article How Demand Driven Buffers Optimize Supply Chain Flow.

The Three-Zone Model

Each buffer is divided into three color-coded zones—red, yellow, and green—that make planning decisions visible and repeatable:

Red Zone – Protection Against Variability

This portion of the buffer acts as safety. It absorbs unexpected changes in supply or demand: supplier delays, quality issues, or sudden demand spikes. The greater the variability, the thicker the red zone.

Yellow Zone – Expected Usage Over Lead Time

The yellow zone represents the working stock needed to cover average consumption during replenishment lead time. It keeps material available while new supply is in transit.

Green Zone – Order Policy and Cadence

The green zone defines how replenishment should occur. It reflects operational realities such as batch sizes, minimum order quantities, and the desired ordering cycle.

Together, these zones provide a clear framework for replenishment. When inventory drops from green into yellow, the system generates an order to bring it back to the top of green. When it moves into red, the signal indicates higher urgency.

For a deeper comparison between DDMRP buffer loops and traditional methods, see Kanban Loop vs. DDMRP Buffer: Choosing the Right Replenishment Method.

From Forecasting to Consumption-Driven Planning

Traditional MRP systems plan to a forecast. In today’s environment, that assumption creates problems: forecasts are wrong, and their errors multiply as you push them down to item-level planning.

Flow-based planning reverses the logic. Instead of predicting what will happen, it responds to what is happening now. 

Buffers are recalculated using actual consumption and recent demand behavior. This results in a model that automatically aligns inventory levels to the real market signal.

This shift—from forecast-driven to consumption-driven—reduces dependency on long-range predictions and makes the plan inherently more stable.

How Replenishment Is Calculated

Each day, Intuiflow calculates a net flow position for every buffered item:

Net Flow = On-hand inventory + Open supply – Qualified demand

Qualified demand includes any order due today or in the past, as well as firm near-term requirements. When the net flow value falls below the top of green and into the yellow or red zone, the system issues an order recommendation to restore the position to the top of green.

This is how priorities are established. Items that have penetrated more deeply into their red or yellow zones rise automatically to the top of the planner’s action list—creating a clear, fact-based hierarchy of work.

To see how this logic improves planner control compared to traditional Kanban or min/max systems, read Dynamic vs. Static Stock Buffers: Finding the Right Balance.

Dynamic Buffers That Stay in Sync With Reality

Unlike traditional safety stocks, which remain fixed until someone manually recalculates them, buffers in Intuiflow are dynamic.

As demand increases, the buffer expands to maintain protection. As demand declines, it contracts to prevent overstocking.

Lead-time changes and variability trends are reflected in the red and yellow zones, keeping coverage aligned with real conditions.

This daily recalculation keeps the model self-correcting—without manual parameter updates or spreadsheet maintenance. Inventory stays balanced automatically.

If you want to understand how Intuiflow’s dynamic sizing logic extends across stock, time, and capacity, explore Maximizing Manufacturing Flexibility with Capacity Buffers.

Operational Impact: Stability and Visibility

Because every buffer follows the same logic, priorities across materials, production, and procurement become unified. Planners no longer need to interpret conflicting reports or maintain multiple spreadsheets to decide what to do first.

• Stability improves because variability is absorbed at the designed points in the flow.
• Service levels rise naturally as shortages are prevented.
• Working capital is released from low-value stock positions.
• Lead times shorten as cumulative variability is reduced.

What planners see on screen is simple: each item’s current position in its buffer. Green means healthy, yellow signals attention, and red indicates immediate action. This visibility replaces guesswork with control.

A Proven Methodology, Validated by Data

One of the advantages of the demand-driven approach is that its impact can be proven with your own data—before implementation.

Using Intuiflow’s simulation tools, we can model 12–24 months of your consumption history and show, item by item, how dynamic buffers would have performed.

The analysis provides concrete metrics:

• Expected service level
• Average on-hand inventory
• Number of supply orders
• Inventory turns

What you get is factual and transparent—no assumptions, no tuning for show. Most manufacturers see potential service levels above 97% while reducing total inventory by 20–45%.

Want proof that DDMRP buffers hold up under volatility? Download our Simulating DDMRP Buffers analysis where we used randomized demand from 57 real sources to measure performance. The data speaks for itself.

How Intuiflow Puts the Logic Into Practice

Intuiflow integrates directly with your existing ERP to add a flow-based layer of intelligence. The system:

• Calculates and maintains buffers at the item-location level.
• Recalculates protection daily using real demand and lead-time performance.
• Prioritizes materials automatically based on buffer penetration.
• Provides planners with clear, explainable recommendations—no black-box behavior.
• Offers simulation tools to test the impact of parameter or policy changes before implementation.

You end up with a planning environment that’s dynamic, explainable, and trusted by users.

Learn how Intuiflow’s Auto Pilot module applies AI to fine-tune these zones automatically in Intuiflow Auto Pilot: Revolutionizing Inventory Buffer Management.

See It With Your Data

Static safety stocks were built for a more predictable world.

Today’s supply chains need planning logic that adjusts as conditions change—without manual recalibration.

That’s what flow-based buffers deliver.

Request a 30-minute Intuiflow walkthrough to see how the red, yellow, and green model works with your own data. We’ll show you how daily recalculation keeps inventory aligned with reality—and how to validate the results before you implement.