Demand Driven MRP (DDMRP): The New Standard in Material Planning
Demand Driven Material Requirements Planning (DDMRP)
Is an innovative method for material planning that uses real customer orders to optimize the material flow within your organization or supply chain. DDMRP is designed to enhance flow and minimize the impact of variability. This is achieved through strategically placed stock buffers in the product structure of the supply chain.
Flow
The primary goal of the Demand Driven method is to maximize flow. The flow index measures the ratio between the desired output and the required inventory. Increased output and reduced inventory improve flow, resulting in higher ROA (Return on Assets) and stabilized production processes.
Traditional MRP
Material Requirements Planning
Traditional MRP planning responds to every change in demand forecasts, leading to continuous adjustments and inefficiencies such as rush orders and increased costs. Variability in demand and lead times causes inventory surpluses and shortages, which amplifies the bullwhip effect and destabilizes production.
DDMRP
Demand Driven MRP uses stock buffers to enhance flow and absorb variability rather than passing it along. Strategic inventory buffers shorten lead times, optimize capacity, and improve delivery reliability. This results in less work-in-progress and more stable planning. Customer order-driven buffers ensure that production and procurement are precisely aligned with actual demand.
Stock buffer
A stock buffer is a strategically placed inventory to optimize lead times, delivery reliability, and capacity utilization. Buffers are calculated based on variability, lead time, item type, and average daily usage (ADU).
Time buffer
A time buffer prevents bottlenecks from stopping by ensuring materials arrive early. This provides a stable flow to critical process steps and synchronizes the material flow with bottleneck planning.
Capacity Buffer
Capacity buffers are workstations with extra production capacity to absorb variations in the production process. These buffers ensure that critical processes can continue uninterrupted, even with production fluctuations.
We help companies transition to Demand Driven MRP
Our experienced consultants have extensive knowledge and experience in implementing Demand Driven concepts to optimize your supply chain.
Discover how Demand Driven MRP can make your company more efficient and profitable. For more information or to make an appointment, contact us.