What I have understood is that the demand-driven material planning (DDMRP) is all about the planning based on the actual sales generated. In contrast, MRP was about the planning the material requirement based on the forecast. The prime goal of the DDMRP is the overcome the shortcoming of the traditional MRP. The pride of the DDMRP conception is going to Carol Ptak and Chad Smith.
In the simple words, the DDMRP can be understood in the five stages
- Inventory Positioning (Where to store the inventory? or where to set the buffers)
- Buffer Profiles (Strategic planning of level of inventory and number of buffers level)
- Dynamic Buffer Adjustments (Strategy for Peak Period, uncertainty and Exception situation )
- Demand-Driven Planning and
- Highly Visible and Collaborative Execution. (Put in action)
let have insights to each stage
Strategic Inventory Positioning
Inventory positioning is the strategic decision related to the where to set the inventory buffers / Storage. The following key factor we can be kept in the mind
Customer tolerance Time
Market Potential Lead Time
Sales Order visibility horizon
- Variable rated demand
- Variable Rated Supply
Inventory leverage & Flexibility
Critical Operation Protection
Buffer profiles are the decision related to the level of the inventory in the buffer and the numbers of the buffers to be in manufacturing and supply chain method. Buffer stock level helps to reduce the cumulative lead time with decoupled lead time.
Note : – More buffers then more inventory and more the total overall all cost so keep only the necessary buffer stock level to meet the customer tolerance time.
Dynamic Buffer adjustment
Dynamic Buffer adjustment is all about Strategy for Peak Period, uncertainty and Exception situation. The core aim behind the DDMRP is that buffers should get dynamically adjusted based according to the average daily usage (ADU) changes. The automatic buffer adjustment is quite robust in the majority scenario but in the case of any uncertain big changes in the demand manual anticipation is suggested in buffer setup. This kind of the situation can occur in cases such as natural product lifecycle (phase-in, phase-out), promotions for stock clearance or boost sales or because of seasonality.
Demand Driven planning come in the picture since the supply orders are actually generated. Here the system DDMRP suggests you about when to reorder and how much to reorder based on the Net flow position. This helps to achieve the situation where you not stuck in the too high stock level of inventory or in the situation where you have no inventory to fulfill the orders.
Net flow position is calculated based on the Incoming Product + Quantity on hand – Qualified Demand.
Highly Visible and Collaborative Execution.
This is the final and most crucial stage of the whole system. Here the decision is taken based on the many of the criteria. Let take one real time example to get it more Suppose you are having the 200+ open manufacturing order so on which you will focus the more? which order will you take in the priority? How will you filter it based on the date?
So here system helps you to give the alert based on the
- Material synchronization alert
- On Hand Alert