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What is DDMRP and how does it compare to MRP for Supply Chain Management?
DDMRP (Demand-Driven Material Requirements Planning) is the newest iteration of MRP, combining all the best elements from tried and tested manufacturing principles.
What is MRP?
MRP, Material Requirements Planning, has been the foundation of manufacturing software systems for over 50 years. It determines which parts and materials to order; the amount required and specifies when they will be required. It also pinpoints when activities must start, in order to complete the work by the forecasted completion date.
MRP relies on accurate and timely demand forecasting, based upon past activity, however there can still be a few shortages and surprises along the way.
MRP continues to be useful, but it is often a standard function of modern-day ERP. A handful of other manufacturing principles and methods have transformed manufacturing in their own right. This includes Distribution Requirements Planning (DRP), lean manufacturing, theory of constraints (TOC), and Six Sigma.
What is DDMRP?
Today, there is increasing volatility, complexity, and uncertainty in supply chains. Companies of every shape and size still have items that they either have too much, or not enough of. This drives unplanned schedule amendments, creates inefficiencies and increases costs in a variety of ways.
DDMRP (Demand-Driven Material Requirements Planning) is the newest iteration of MRP. Whilst relatively new, it borrows and combines all the best elements from tried and tested manufacturing principles.
To understand the difference between MRP and DDMRP, we need to understand the difference between a push versus a pull system. MRP is a push system. It starts production, based on forecasting information, to anticipate future demand. Whereas DDMRP is a pull system. It starts production to plan inventories and materials, based on current demand.
What are the benefits of DDMRP?
- Improved customer service to consistently reach 97 to 100 per cent on-time order fulfilment rates.
- Compressed lead times for typical reductions above 80 per cent across several industry segments.
- Optimized inventory to unlock inventory reductions of 30 to 45 per cent without impacting service levels.
- Lower total operating costs by eliminating the false signals and schedule break-ins that drive expensive expedite activities, such as fast freight, partial ships, and cross-ships.
- Improved planner productivity by providing visibility of priorities instead of constantly fighting the conflicting messages of MRP.
DDMRP is “a multi-echelon planning and execution method to protect and promote the flow of relevant information through the establishment and management of strategically placed decoupling point stock buffers”.
The Demand Driven Institute exists as a standards organisation for all DDMRP matters. They certify software vendors to ensure that the principles of DDMRP are embedded and utilized in a business application. Microsoft Dynamics 365 Supply Chain Management is Demand Driven Institute Compliant.
To find out more, watch our recording from the webinar, Why DDMRP for Dynamics 365 vs MRP for Supply Chain Management? below.
What is DDMRP, and how does it compare to MRP?
In this 10-minute expert view interview, Matt Birtwistle chats with Chandru Shankar, VP Supply Chain Solutions at HSO Partner company B2Wise, about the benefits of using Demand Driven Material Requirements Planning (DDMRP) within Dynamics 365. B2Wise is a global leader in the Demand Driven MRP (DDMRP) method, providing innovative software and comprehensive training to help businesses transform their supply chain management.
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