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Demand Driven Material Requirements Planning (DDMRP)

What it is. What it isn’t.
By
Kristie Bane

What is Demand Driven Material Requirements Planning (DDRMP) and why do we need it? Short and sweet, DDMRP is a proven and effective multi-echelon planning and execution method for how to run replenishment based on sound flow-based principles.

At its core, DDMRP’s planning equation answers the four questions planners most care about: “What materials do I currently have? What is coming to me in the pipeline? What demand do I need to fulfill right now? What future demand is relevant for how I prioritize?”

Originating from the Demand Driven Institute (DDI) and governed by the Demand Driven Institute, DDMRP is a true game-changer with a step-by-step decision support structure that boosts planning and execution. Few technology platforms are certified to support DDMRP but SAP specifically, S4/HANA and Intelligent Robotic Process (IRP) is included on the short list.

The need for DDMRP has accelerated as supply chains have increasingly grown more complicated. Too often, we commit too early to purchases, capacity booking, freight stocking position and stocking level. Accordingly, our system of management forces a lack of flexibility and agility in the supply chain. It becomes a monumental effort to turn the ship as things change—and it takes us far too long to even notice that things are changing.

DDMRP gives us the framework on how to react and respond, while dampening the up-and-down effects of disruptive forces on the supply chain. Metaphorically DDMRP contains the fire that threatens to rage out of control. In doing so, it allows us to continue working efficiently because we are protecting the parts of operations that are most likely to be impacted by disruption.

While DDMRP is beautiful in its clarity, transparency and simplicity once in place, there is a lot of consideration that goes into getting that framework readied and the thought ware installed within the team so its usage can be optimized. That evolution starts with a clear understanding of what DDMRP can and cannot support to fully understand and manage expectations.

Since DDMRP begins with the word “demand”, it is easy enough to believe that DDMRP is a tool based on Made-to-Order (MTO) planning. It is not. DDMRP uses customer orders to drive activities, but it would be erroneous to believe it can only be used in an MTO environment.

Similarly, DDMRP is not a forecasting improvement tool nor is it a replacement for forecasting. We do still need to do our best to predict what is happening with customer demand in order to position ourselves for success in the future.

It is also important to recognize that DDMRP is not the replacement for MRP. Rather, it is a complementary solution to help manage volatility while making the best use of our assets. DDMRP gives us the ability to react and respond quickly to changes in demand and run our supply chain—particularly our manufacturing floor—in a way that does not hide our inefficiencies, but rather helps us to see, understand and improve them.

When used as intended, DDMRP is a methodology that give planners a step-by-step blueprint that is transparent, easy to interpret, intuitive, consistent, and sustainable. It is nothing short of an evolution in supply chain planning and offers enticing benefits across a wide range of industries. By synchronizing inventory with demand, compressing production lead times and stabilizing the production environment, you can transform the way you approach business—for the better.

Find out more about how DDMRP redefines supply chain management—from bringing in raw materials to support production to prioritizing what and when to produce. Download our full white paper, Controversy in the Supply Chain WorldDemand Driven Material Requirements Planning (DDMRP).

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