Demand Driven MRP

Demand Driven MRP: From “Push and Promote” to “Position and Pull” - A Supply Chain Planning and Execution Revolution is Happening Now.

The Problem with Traditional Planning Systems

Traditional material planning and control system (ERP/MRP and distribution requirements planning systems) are systems in which detailed forecasts are used to procure needed materials and push manufacturing orders through the production and distribution system to the point of consumption. This system is typically called “Push and Promote.” These legacy rules and systems are causing enormous amounts of friction and compromises within and between manufacturers in today’s more complex and volatile supply chains.

Most Purchasing and Materials Managers feel like they are caught between a rock and a hard spot. Shortages of critical items must be eliminated while at the same time inventory levels must be dramatically reduced and expedite related expenses minimized. In today’s economic climate this conflict is more acute than ever. Unfortunately most of today’s available tool sets are insufficient to effectively resolve this conflict in the face of increasing demand and supply volatility and variability. Learn about the shortcomings of tools like MRP and kanbans as well as the conflict that they have with each other in the face of this volatility and variability. Discover a new and innovative demand driven approach that takes the relevant and meaningful attributes of tools like MRP and kanbans and combines innovative planning and execution techniques to satisfy both traditional planning personnel and Lean advocates.

What is Demand Driven MRP?

Demand Driven Material Requirements Planning is an innovative formal planning methodology that aligns resources, working capital and supply chain planning and execution to actual demand. Through innovative and intuitive approaches and fundamental planning changes DDMRP ends the compromises and dramatically augments the effectiveness of a company’s planning organization.

The five components of DMRP are

  1. Strategic Inventory Positioning;
  2. Buffer Profiles and Level Determination;
  3. Dynamic Buffers;
  4. Demand Driven planning;
  5. Highly Visible and Collaborative Execution.

For more information on the methodology

Questions and Answers:

Q.: For who is this training intended?
A.: Business Process VP’s Directors of Supply Chain, Demand Planners, Business Operation Planners, experienced schedulers, in other words Supply Chain Practitioners. The methodology is highly intuitively, but puts numbers to the ‘feeling’ and enables proven control mechanisms.

Q.: What makes DDMRP so different than e.g. APICS Training Modules?
A.: DDMRP is an integral methodology which encompasses many of the elements thought by APICS. See this as an advanced training which deals with the problems of many operational (out of date) MRP systems.
It also deals with the dynamic market conditions and sets in place tangible and operational tools in the process, irrespective of the IT support system.

Q.: I have followed an APICS training, what is the added value of pursuing this training?
A.: The APICS Training is a good and solid basis in Material Management and Operational Principles. The DDMRP Training which can lead to the official and ISCEA accredited education degree of Certified Demand Driven Planner can be seen as an advanced training. All terms and acronyms used are consistent with those used in APICS training modules. It is not required though to be APICS certified to join the training sessions, most Supply Chain practitioners understand the methodology well.

Q.: Which business functions benefit most by following this methodology?
A.: Source, DDMRP allows a comprehensive method to create calling off-schedules which can be managed well by schedulers. This can be created in conjunction with your (main) suppliers.
Make; The Bill of Material can be provided with tangible ‘buffers’ and shortened lead times.
Deliver; the methodology allows for optimization of the Delivery Network

Q.: What kinds of production processes are best positioned to benefit from the DDMRP Methodology?
A.: Discrete Manufacturing, Batch Type Processing, Assembly Lines, Value Added Logistics (VAL), continuous processing to a certain extend.

Q.: What can a Business or Process expect as Benefit from an implementation?
A.: Shorter Lead-times, Improved (customer) Fill Rates, Higher Return of Assets (ROI), and – in most cases – high(er) inventory turns (i.e. lower total inventories) and therefore have a positive effect on a(ny) business’ bottom line financial performance.

The Demand Driven Institute (DDI) was founded by Carol Ptak and Chad Smith, co-authors of Orlicky’s Material Requirements Planning, Third Revised Edition in order to proliferate and further develop demand driven strategy and tactics in industry.