Tools for Supply Chain 4.0: DDMRP and Value Stream Mapping

Supply Chain 4.0: a smarter supply chain

Supply Chain 4.0 is an emerging concept describing a supply chain that is safer, faster, and more flexible. Achieving this requires integrating technologies into existing processes — such as artificial intelligence, Big Data, and Machine Learning.

Production and inventory management methods can also improve productivity and operational efficiency. Among these are Lean Management solutions such as the DDMRP method and the Value Stream Mapping (VSM) tool. In this article, we detail what lies behind these tools.

The DDMRP method: Demand Driven Material Requirement Planning

The DDMRP method — short for Demand Driven Material Requirement Planning — is a demand-driven Supply Chain management tool.

Historical note: The DDMRP method was born in the 2000s in the United States, evolving from the MRP (Material Requirement Planning) method, which was based on driving the Supply Chain by production load. DDMRP is built on the opposite principle: demand drives the Supply Chain. This shift followed the increasing volatility of demand from the late 1990s onwards. As stock surpluses and shortages became ever more common across businesses, managers adopted the concept of demand-pull flows rather than production-push flows.

The primary objective of this method is to optimise inventory management in line with market demand. The goal is to keep stock levels as lean as possible at all times, minimising storage costs and production stoppages. It also aims to stabilise flows, reducing Supply Chain variability and thereby gaining flexibility and productivity.

To achieve this result, buffer stocks — known as “buffers” — are introduced at strategic points in the supply chain. Implementing this tool typically follows 5 steps:

• Strategic Buffer Positioning

This step involves defining the key points for implementing the buffers.

• Buffer level calculation

Here, demand is characterised and the best parameters are selected to tailor the volume of each stock buffer to actual consumption.

Building on the second stage, this step involves adapting to seasonality or to the various events likely to cause demand fluctuations.

Planning refers to managing the replenishment of buffer stocks in line with demand variations.

This step involves tracking buffer variations, taking into account WIP (work in progress), future requirements, and urgent orders.

For more information on this method, and in particular to find out whether it can apply to your business, you can also read our article DDMRP: everything you need to know about flow planning.

The VSM tool: Value Stream Mapping

Value Stream Mapping is a process map that enables all the activities carried out by a business to be identified. This map represents the interaction between information flows and material flows. It therefore makes it possible to identify low- and high-value-added tasks, and thus determine which tasks to eliminate and which process points to improve.

More specifically, this map contains the following information:

• Customer demand details,

• The information flow, circulating between the production manager and the production line,

• The physical flow of the product, corresponding to the stages of the production line,

• A timeline detailing, in particular, the waiting times between the various workstations.

To go further, you can find out how to create a map in our article The Value of Value Stream Mapping for a High-Performing Business.

And many more tools at your disposal!

As we have seen, the DDMRP and Value Stream Mapping methods make it possible to eliminate waste and produce better and more sustainably, by placing the customer at the centre. There are many other Lean Management tools that also enable process improvement. Among those you absolutely need to know are the 5S method and the Six Sigma method.

You can find many more on our blog, and in particular in the article: Lean Manufacturing: discover the essential tools and methods.