Demand Driven MRP and Demand Driven S&OP are now officially a best practice in the SCOR Framework!

Author: derk Date 28 July, 2020

Demand Driven MRP is another way to look at processes for planning and execution of production orders, purchasing orders and distribution orders. In order to implement the method, dozens of software solutions are available for all kinds of different types of ERP systems. All software solution providers that are actually recognized as ‘DDMRP compliant’, are listed on the website of Demand Driven Institute.

In the SCOR Digital Standard for supply chain improvement, that we will introduce in our courses after summer 2020, Demand Driven MRP (DDMRP) and Demand Driven S&OP (DDS&OP) have evolved from an emerging practice into a best practice.

This means that these two Demand Driven concepts are now viewed as medium-risk and are no longer seen as being high-risk emerging concepts. Because of the increasing acceptance and the implementation approach, uncertainty will be very limited.

SCOR definition of ‘Best practice’

Best practices are current, structured and repeatable practices that have had a proven and positive impact on supply chain performance. Current means that these practices are not emerging or outdated. Structured means that they feature a clearly stated goal, scope, process and procedure. Proven denotes that they have been demonstrated in a work environment and that they are linked to key metrics. Being repeatable shows that they have been proven in multiple organizations and industries. (Source: SCOR reference model)

Demand Driven

Although the risk of DDMRP and DDS&OP are very limited, it is important to follow a proven implementation roadmap. The advantages of DDMRP can be realized without a major investment in IT, processes and skills. This means that implementation time is expressed in months instead of years. Within six months, the organization can already reap the benefits of implementing a Demand Driven approach.

Typical benefits of Demand Driven MRP are:

Advantages	Improvements with Demand Driven MRP
Inventory reduction	30% – 45% savings on inventory investment is usually feasible.
Lead time reduction	Up till 80% of lead times reduction is possible, thereby reduction work in process inventory.
Higher service levels	Consistently high levels of customer service between 97% and 100% of on time in full can be achieved.
Lower supply chain costs	Improving flow through the stages of the supply chain, results in a reduced need for expediting, less partial deliveries, a higher capacity utilization of capital goods and less transshipments between warehouses. Thereby reducing supply chain costs.
Highly applicable	Demand Driven MPR is highly intuitive and results in more effective planner activities.

DDS&OP

Demand Driven Sales and Operations Planning aims at realizing the plans of the Sales and Operations Planning using Demand Driven techniques. When a company expects changes in the demand for products that belong to a product family, Demand Driven Planning is used to make a projection of required production capacity, storage requirements as well as working capital.

During the DDS&OP process, different scenarios can be evaluated for their contribution to company objectives.

DDMRP roadmap

Visie Partners offers a proven roadmap for the implementation of Demand Driven MRP practices. You will start realizing advantages very soon after the implementation. In our roadmap we have clearly defined steps that help you to get an impression about the implementation process.

About SCOR

SCOR is a framework for supply chain performance improvement. The framework combines and connects a process hierarchy, a performance metric hierarchy, best and emerging practices and required skills. The framework is industry neutral and can therefore be applied to any environment that produces and delivers products and services. The SCOR framework can also help (to) define standardized internal processes and metrics. This will save time and money for the organization.

The framework comes with a solid process to analyze performance gaps, analyze alternative solutions and (to) select improvement projects. In total, there are more than 180 business practices that could be evaluated on their effect on performance and processes. The business practices are grouped in the following categories, that can help (to) focus on specific problem areas.

Practice CATEGORIES
Business Process Analysis and Improvement	People Management (Including Training)
Customer Support	Planning and Forecasting
Distribution Management	Product Life Cycle Management
Information and Data Management	Purchasing and Procurement
Inventory Management	Reverse Logistics
Manufacturing and Production	Risk and Security Management
Materials Handling	Sustainable Supply Chain Management
New Product Introduction	Transportation Management
Order Engineering	Warehousing
Order Management

Each of the 180 business practices that are part of the categories mentioned above, will have one of the following three maturity levels:

Emerging practice

Best practice

Standard practice

DDMRP and DDS&OP have become a best practice in the category ‘Planning and Forecasting’.

For more information about the SCOR model and how you could start using it, please visit our website