What is Demand Driven Material Requirements Planning?

Could you use help improving the flow of your operations and planning for needed materials at the right times? Ensuring strong connection between operations and planning is an important concern for most manufacturers. So what is Demand Driven Material Requirements Planning and how can it help?

What is Demand Driven MRP?

Invented in 2011, and supported by APICS, Demand Driven MRP is the paradigm shift.  Built upon Lean, Six Sigma and the Theory of Constraints, a Demand Driven Adaptive Enterprise no longer relies upon a forecast (always wrong!) to push inventory and cost into your supply chain anticipating demand.  Instead it aligns your actions to pull product through your supply chain driven by actual orders from customers.        

Per the Demand Driven Institute, Demand Driven Material Requirements Planning is a formal multi-echelon planning and execution method to protect and promote the flow of relevant information through the establishment and management of strategically placed decoupling point stock buffers.  DDMRP combines some of the still relevant aspects of Material Requirements Planning (MRP) and Distribution Requirements Planning (DRP) with the pull and visibility emphases found in Lean and the Theory of Constraints and the variability reduction emphasis of Six Sigma. These elements are successfully blended through key points of innovation in the DDMRP method. DDMRP is the supply order generation and management engine of a Demand Driven Operating Model (DDOM). 

Demand Driven Material Requirements Planning (DDMRP) is NOT a silver bullet.  DDMRP is based on sound flow-based principles to provide planning and execution performance improvements in variable environments where customer tolerance times are dramatically shorter than cumulative lead times (a situation that is very common today).  It is really that simple.  DDMRP is a methodology that gives people a step by step blueprint that is transparent, easy to interpret, intuitive, consistent, and sustainable. 

The FIVE COMPONENTS of DDMRP

Demand Driven Material Requirements Planning has five sequential components.  The figure below illustrates these components, their sequence and how they relate to the mantra, “position, protect and pull.”  The first three components essentially define the initial and evolving configuration of a demand driven material requirements planning model.  The final two elements define the day-to-day operation of the method.  DDMRP is most common the start of an organization's transformation to a Demand Driven Adaptive Enterprise.

How can DDMRP help?

DDMRP is a proven method across a wide array of industries. The Demand Driven Institute shares case studies across industries where companies have seen the following benefits:

  • Improved Customer Service: Users consistently achieve 97-100% on time fill rate performance

  • Lead Time Compression: Lead time reductions in excess of 80% have been achieved in several industry segments

  • Right-sizes Inventory: Typical inventory reductions of 30-45% are achieved while improving customer service

  • Lowest total supply chain cost: Costs related to expedite activity and false signals are largely eliminated (fast freight, partial ships, cross-ships, schedule break-ins)

  • Easy and Intuitive: Planners see priorities instead of constantly fighting the conflicting messages of MRP

Looking for more information on Demand Driven? Join us on September 24th for a FREE webinar on the Basics on Demand Driven Adaptive Enterprises. For additional information, contact us via our website at: http://apicsmilw.org or via email at: [email protected].