In a couple of previous blog posts we have looked at the ideas of DDMRP and examined the five steps of the planning process. The intention with this blog post is to discuss how DDMRP relates to other planning solutions, how they can co-exist and how DDMRP differentiate itself from other well-known concepts.
DDMRP has some obvious benefits. It provides a solution for relevant challenges such as demand variability and long lead-times. It helps you protect your flow and create a lean supply chain. These are things MRP doesn’t do and that can cause a lot of waste and frustration in many companies today.
DDMRP uses intuitive color-coded indicators, the math is simple, and the rules are clear. That makes it easier to implement DDMRP, easier to train the people that will use the system and easier for people to trust the results and learn to rely on them. That said, for most companies I have meet I don’t believe in DDMRP should be their sole planning solution. It is best as a complement to existing MRP solutions. Only a fraction of parts are typically buffered; the rest will be planned as before, but now in a protected, low variability/short lead-time environment.
DDMRP requires flow – some finished goods items can and should be buffered, but more often demand is too un-predictable for a buffer to work. For many the real benefit with DDMRP lies in the possibility to reduce lead-times for critical sub-assemblies and components. The positive results will materialize as a vastly enhanced customer experience, with shorter lead-times across the board.
Decoupling points and buffers is nothing new, and the ideas about how to position them, explained as part of the DDMRP approach, have been researched for decades. The problem has been to properly implement the ideas.
One approach to introduce buffers and absorb variability in MRP is to introduce safety stocks. The buffers will sometimes save the day, but there is no inherit mechanism that suggests that you should consume safety stock, thus no absorption of variability and no lead-time reduction.
Another way to tackle this challenge could be to combine MRP with buffers planned using re-order points. The problem then will be that the MRP explosion will stop-once it reaches a part planned using a reorder point, so it doesn’t really work. Probably that’s a good thing because just a buffer is not good enough anyway. One of the greatest advantages with DDMRP is the concept of unprotected lead-times. By introducing a buffer, we break the chain of lead-times building up to the cumulative lead-time. The buffer will decrease the lead-times for all downstream parts. This is true within a single site manufacturing business as well as across a multi-site distribution network. It makes the concept of DDMRP a native multi-echelon planning solution that include a range of tools to best position inventory.
Another native capability in DDMRP, but rarely managed by re-order point systems is the handling of spikes–or exceptional demands–that is both inherent and automated. This type of demand creates a challenge that is very difficult to manage but is solved in a very elegant way with DDMRP. The final piece is the buffer execution status, discussed as part of the last of the five steps. It is easy to mix up the different types of statuses to begin with, but the buffer execution status and priority that is maintained and alive over the duration of the supply order, is something that will prove itself to be very valuable.
With IFS Applications 10 you get an embedded, validated DDMRP solution. Why not start small and gain a deeper understanding of DDMRP by implementing buffers for a few shared components? Over time you will realize the true impact of the buffer and you can gradually extend the footprint of DDMRP. There is no big, upfront investment in terms of software or integration involved. The DDMRP solution provided with IFS Applications 10 is a rare opportunity for improvement at basically no risk at all.
This article is based on a recorded webinar that you can watch here. Further IFS material about DDRMP can be found here.
Do you have questions or comments?
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i would like to ask, for which type of product is the ddmrp suitable (product complexity, demand variability, customization)?
thank you very much for reply