Demand Driven Material Requirements Planning (DDMRP) is a recognised approach within an extensive range of leading industries across the world and is revolutionising the Supply Chain Planning, rapidly becoming the method most used. DDMRP is just part of a broader business approach called the Demand-Driven Adaptive Enterprise (DDAE). If you haven’t come across it yet, make sure you do!
Simply explained, DDMRP is based on firm-flow standards to deliver planning and execution accomplishment in multiple backgrounds. Some of the benefits are:
- It facilitates people with a plan which brings transparency, easy interpretation, consistency and sustainability.
- It’s recognised as a multi-level inventory optimisation plan in the Supply Chain (SC).
- It boosts the development of relevant information through the setting and managing of tactically distributed decoupling point stock buffers, -upstream and downstream in the Supply Chain (a stock point is from where the customer has to be supplied.)
- It produces supply events matching to the sales order of the day and sales spikes, visually.
- DDMRP helps plan and manage inventories and items in today’s more complex supply settings, interest paid to ownership, the market engineering, sales, and the supply base.
Within weeks of starting pilot projects, the majority of companies that have used DDMPR have experienced: inventory brought down, service level/availability going up, whilst lead time for manufacturing decreasing.
Which are the five components of DDMRP?
Getting started with DDMRP is somewhat uncomplicated. This approach has five connected components:
- 1. Strategic Inventory Positioning will establish where the decoupling buffers are placed.
- 2. Buffer profiles and levels will control the total protection at those decoupling spots.
- 3. Dynamic Adjustments outline how that level of protection expands up or down, based on operating factors, market changes, and planned or known future events.
- 4. Demand Driven Planning is the procedure by which supply orders (purchase, manufacturing and stock transfer orders) are produced.
- 5. Visible and collaborative execution is the process by which a DDMRP system manages open supply orders.
How do top organisations start?
- It doesn’t need any new tech or change. You can easily do it through a Demand Driven Planner course.
- There's no innovative software, no experts, no considerable approval needed, and no long delays between testing something and grasping the results.
- It takes away your most complex-to-handle SKU’s (Stock Keeping Units) of your process, and manage the replenishment applying DDMRP procedure, directly deployed in Excel.
- In many situations relating fast-moving items, the after-effects can be seen in a short time.
- Several companies make available more cash from inventory dropping in the first months through DDMRP, than it costs in software, educating, or consulting.
- Of course, as soon as the pilot DDMRP successfully develops across lots of SKUs and different locations, there will be the need for experts in software, integration to your ERP, and a controlled-change plan.
- Inventory is applied skilfully to leverage your entire SC, making it more active and flexible.
- The critical decision is where the inventory should be held.
- The decision when to replenish an inventory SKU, and how much to reorder, is driven by a unique Net Flow Equation.
- Rearrange triggers and stock levels are automatically adapted to follow current procedure patterns and can be adjusted for known upcoming changes (e.g. marketing campaigns, different seasons, or maintenance procedures.)
Most DDMRP-driven operations can cope with demand variations by the use of an advanced multi-echelon “Position, Protect, and Pull” approach, which make it possible for a company to decouple forecast error brought about from supply orders; it aligns to actual market requirements, and boosts reliable and faster assessments and procedures at the planning and performance stage.
DDMRP welcomes the fact that there is so much variability, uncertainty, complexity and ambiguity (VUCA) in the real world that you will always oversee something, the reason why it needs to propose a secure, still agile system that comes with 95% of real-world differences.
Summing up: DDMRP is rapidly becoming the furthermost line of attack used by SC leaders. The innovations it brings are not always understood at first as a new planning solution. Haven't got your hands on it yet? Do not miss the chance to take all the advantages this approach could drive to your enterprise!
Dave Food
Prophetic Technology
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