Demand Driven MRP is a formal planning and execution method designed to correct the inadequacies and inappropriate rules of conventional Material Requirements Planning (MRP) given today’s more volatile, complex and service oriented supply and manufacturing scenarios.
The DDMRP method was first fully articulated in the third and latest edition of Orlicky’s Material Requirements Planning (McGraw-Hill, 2011), co-authored by Carol Ptak and Chad Smith.
Demand Driven MRP (DDMRP) builds upon the traditional replenishment approach of replacing what was taken to create a dynamic and effective pull-based solution to answer the challenges of today’s manufacturing landscape. In addition, through a new approach in materials planning and execution, DDMRP is designed to directly tie material availability and supply to ACTUAL consumption. This is a prerequisite to effectively utilize pull-based scheduling and execution methods like Lean and TOC's Drum-Buffer-Rope (DBR).
DDMRP’s use of strategic inventory buffers provides constant availability without being wasteful. Buffering raw materials and purchased components protects production from delays and reduces manufacturing lead times. Buffering key manufactured components and subassemblies further protects production from delays and further reduces manufacturing lead times. Buffering saleable items prevents loss of sales and provides the shortest possible lead time to your customers. Buffering distributed items protects from loss of sales while reducing the amount of on hand inventory needed to meet demand.
Consider the impact on the bottom line and the balance sheet of being able to identify the few key items for which buffering will result in reduced lead times and increased flow. Minor adjustments often lead to major performance improvements.
Catena Strategies is a DD affiliate.