DDMRP stands for Demand Driven Materials Requirements Planning.
DDMRP is a method for planning the production chain. Its aim is to implement a relevant supply chain management based on demand.
Where does DDMRP come from?
This method was invented by Carol Ptak and Chad Smith in the United States in the 2000s. It follows an older method, the MRP method for Material Requirement Planning, which dates back to the 1950s, and which became widespread in the 1970s. This method favored steering the supply chain by production load, not by demand. With the DDMRP method, we now speak of flows driven by demand, and no longer driven by production.
DDMRP is based on concepts from MRP, Lean Manufacturing, Six Sigma, theory of Constraints…with additional specifications. It is finally a relevant compromise between all these methods.
A specific industrial context
The DDMRP system was designed to adapt to an economic and industrial environment that has changed enormously since the MRP method was first implemented. Today, market issues are much more complex and volatile. Product life cycles have shortened, forecast errors have increased and lead times are shorter overall.
The DDMRP method aims at stabilizing the flows, which are subject to strong variations of the demand, and thus optimizing the management of the flows.
DDMRP: a simple 5-step protocol
Generally, the DDMRP method is implemented in 5 key steps, which are the following:
- Strategic positioning of buffers
- Calculation of buffer levels;
- Demand response
- Planning
- Execution
1. Strategic positioning of buffers
The first step is to define the key points for the implementation of buffers, so as to favor Lead Time compression. These buffers will prevent a shortage at a point in the supply chain. Placed at relevant locations, they will also limit the risk of overstocking.
2. Calculation of buffer levels
Then, it is important to characterize the demand so that the inventory level at each stage is consistent with reality. We choose the best parameters to model the consumption and thus customize the volume of each stock.
3. Response to the request
The third step is in continuity with the second one. It consists in adjusting the buffers so that they correspond to the real consumption and that they adapt to the different events or seasonality.
4. Planning
The planning stage enables the management of buffer stock replenishment according to the supply chain flows. It also involves anticipating possible orders or exceptional events.
5. Execution
The purpose of the execution is to visually monitor the level of stocks, using colored indicators for example. The management of buffers takes into account work in progress, future needs and urgent orders, in order to manage the execution of the demand as well as possible.
DDMRP: for which companies?
Companies that have implemented the DDMRP method observe significant improvements in their business, with greater serenity in the teams, a reduction in inventories, less variability in the supply chain and a quicker reaction to market disruptions.
However, the DDMRP method is more or less relevant depending on the type of company. It is particularly recommended for companies with strong demand variations and long lead times. However, it can be implemented in a wide range of industries, such as the automotive or retail sectors. Overall, this method is very well recognized in companies that adopt it because it leads to a better management of the supply chain.
Written by Emma Guignard
