What is Demand Driven Materials Requirement Planning, and why do we need it in the Supply Chain?
Demand Driven Materials Requirement Planning or DDMRP! What is it? It is a planning method used both for supply planning and execution control, defining stock positions and stocking levels in a dynamic way. It generates supply events according to the sales order of the day plus qualified sales spikes. DDMRP guides and alerts planning and execution in a visual way.
To understand DDMRP requires one to think differently about supply chain flows and the decoupling of specific points in the supply chain. This is easier said than done, but if this hurdle is overcome, then DDMRP becomes surprisingly uncomplicated to understand and simple to use. The challenge however lies within the “if.”
DDMRP is not a buzzword, it is not a marketing spin on an existing concept. The buzz comes from the unique approach to modeling supply chains and the process of triggering a supply event from a demand signal. With DDMRP a supply chain is not a chain, but rather a network of networks.
The networks within a network are decoupled, meaning there is no immediate and direct action and reaction between them. The flow of goods is buffered in strategically located positions with dynamically updated targets. The proverbial bullwhip impact is thereby controlled.
What Does DDMRP Mean for You?
DDMRP offers a unique advantage to customers. The incremental value of any concept or technology is only in its comparison to a baseline or existing accepted norm. DDMRP screams volumes on the value spectrum when compared to traditional MRP and iterative DRP, especially for those customers struggling with a complex and inaccurate demand planning process.
DDMRP offers a tangible reduction in obsolete and excess inventory in addition to a proven track record of customer service improvements. Of course, reduced inventory and higher service levels are value claims not unique to DDMRP.
For many customers, these benefits are augmented with the unique value proposition of simplicity. Once one has embraced the demand driven basics and the strategic configuration components are in place, DDMRP is remarkably easy to plan with. The execution component is simple and intuitive. DDMRP borrows from the Theory of Constraints (TOC) approach of buffer level alerts using the colors of a traffic light. In caution of oversimplification, red is bad, yellow requires some replenishment action and green is ‘hold.’ Onboarding a new supply planner has never been easier.
What Happens Next?
The adoption of a Demand Driven Operating Model requires a holistic approach. It is not something that can be done in part without considering technology, talent and process—and success is in the preparation. This includes having accredited talent on the planning team (not only the implementation team) and using experts to perform the supply chain modeling and determine the optimal placements of strategic inventory buffers.
So now you know more about DDMRP and that it is certainly more than just an acronym in your overall operational planning.
Shaun Phillips, Global Product Manager, QAD