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DEMAND DRIVEN MATERIAL REQUIREMENTS PLANNING (DDMRP)

Demand Driven Material Requirements Planning is a formal 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.  DDMRP combines some of the still relevant aspects of Material Requirements Planning (MRP) and Distribution Requirements Planning (DRP) with the pull and visibility emphases found in Lean and the Theory of Constraints and the variability reduction emphasis of Six Sigma.  These elements are successfully blended through key points of innovation in the DDMRP method.  DDMRP is the supply order generation and management engine of a Demand Driven Operating Model (DDOM).  DDMRP can best be summarized as...

Position, Protect, Pull and Adapt

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START YOUR DDMRP EXPLORATION HERE

WHAT IS THIS THING CALLED DDMRP?

Most planning professionals and managers are understandably skeptical when first learning about DDMRP.  Why wouldn't they be?  Most have been burned again and again by new planning “solutions” and systems.  Yet DDMRP continues to produce amazing results across a wide array of industries and more and more major software providers are coding to DDMRP sepcificaitons.

DDMRP is NOT a silver bullet. DDMRP is based on proven flow-based principles to provide planning and execution performance improvements in variable environments where customer tolerance times are dramatically shorter than cumulative lead times (a situation that is very common today).  It is really that simple.  DDMRP is a methodology that gives people a step by step blueprint that is transparent, easy to interpret, intuitive, consistent, and sustainable

A BRIEF INTRODUCTION TO DDMRP

AN ANIMATED VIEW OF DDMRP

WHAT ARE PRACTITIONERS SAYING ABOUT DDMRP?

DDMRP RESULTS

DDMRP has produced amazing results across a wide array of industries. Below is a table with common results when DDMRP is properly implemented and supported by the right education and compliant software. To see dozens of case studies by industry go to our CASE STUDY page.

A BRIEF EXPLANATION OF THE SIX COMPONENTS OF DDMRP

DDMRP is essentially a package of augmentations to conventional MRP.  It has a looping or cyclical pattern of activity with six defined components.  Like conventional MRP, DDMRP requires appropriate configuration decisions and specific inputs to perform properly.  Many of those inputs are the same as MRP but there are some critical differences that make a huge difference in the VUCA World.

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The first three components define the initial and evolving configuration of a DDMRP model. The fourth and fifth elements define the actual operational aspects of a DDMRP system; planning and execution. The sixth component looks at the model’s past and projected performance to make model configuration changes in the first three components.

Strategic Decoupling

It all starts with the determination of the placement of strategic decoupling points.  These decoupling points act as supply chain firewalls for both demand signal distortion and supply continuity in both supply order generation and execution. The selection of decoupling points is a strategic decision because it determines customer lead time and inventory investment. DDMRP uses six criteria to establish where decoupling points are placed in an environment.

Buffer Profiles and Levels

Buffers must be sized in a way that will reasonably guarantee that the point will remain decoupled.  In DDMRP, each decoupled item is assigned to a buffer profile. The buffer profile is a group of settings applied to a group of items that have similar attributes including lead time, product structure tier and susceptibility to supply and or demand variability. Buffer profiles ease the management of large numbers of decoupled items across an organization.

Dynamic Buffer Adjustments

the VUCA world is an incredibly dynamic environment. The third component of DDMRP allows the buffers at decoupling points to flex up or down through time based changes to an item's properties such rate of demand, lead time and profile change as well planned or known upcoming events such promotional or seasonal activities. Many of these adjustments are automated in DDMRP compliant systems.

Demand Driven Planning

The fourth component of DDMRP is an operational activity that involves the application of unique supply order generation rules against the configured DDMRP model. These supply order generation rules are collectively called the net flow equation. The equation is typically applied at least once a day to all decoupled (buffered) positions. Dependent demand generated form those positions passes down through lower levels to the next buffered position in process known as decoupled explosion.

Visible and Collaborative Execution

In DDMRP, a careful distinction is made between planning and execution.  The planning phase of DDMRP ends once the order recommendation has been approved and is converted to a scheduled receipt. DDMRP execution manages open orders against the scheduled receipts created from the DDMRP planning engine through two categories of alerts – Buffer Status Alerts and Synchronization Alerts. These alerts are designed to point out blockages to flow that will impact customer commitments or jeopardize the integrity of the buffers.

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Tactical Adaptation

The final component of DDMRP manages the adjustment or adaptation of the DDMRP model as defined by the first three components of DDMRP collectively known as the Master Settings.  The adaptation cycle is driven by both past performance and expected or planned future activity. This is called Demand Driven Sales and Operations Planning (DDS&OP) and is vital in maintaining an effective DDMRP implementation. Like DDMRP, DDS&OP will introduce some key changes to convention. One of the major changes is that a master production schedule (MPS) is no longer used.

RECOMMENDED BOOKS ON DDMRP

Demand Driven Material Requirements Planning (Version 3) (Ptak and Smith, Industrial Press, 2019)

New in Version 3

  • Full color, with the use in specific, consistent, and focused ways to clearly and effectively highlight planning, execution, and model reconfiguration priorities.

  • Expanded Appendix E, looking at the most recent innovations of DDMRP.

  • Revised graphics scattered throughout the book.

Why are we recommending this book? This book is still the definitive and most extensive resource for the DDMRP methodology. It is the official text book of DDI's Demand Driven Planner (DDP) program.

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Orlicky's Material Requirements Planning, Fourth Edition (Ptak and Smith, McGraw Hill, 2023)

The most recent collaboration from Carol Ptak and Chad Smith, Cofounders of the Demand Driven Institute.

Streamlined and reorganized, this fourth edition brings clarity and focus to the prerequisites, choices, inputs, outputs, latest techniques and challenges associated with modern MRP systems across a variety of industries including project, custom, batch, repetitive and continuous process manufacturers. Included is the latest evolution of MRP logic including the increasingly popular DDMRP derivative and its components.

Why are we recommending this book? This book will show you the critical differences between conventional MRP and DDMRP.

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DDMRP COMPLIANT SOFTWARE SYSTEMS

The systems below have passed the DDMRP compliance test. The DDMRP compliance criteria is intended to ensure that a software has enough features and/or functionality to implement, sustain and even improve a DDMRP implementation.  To see the criteria and learn more about these systems visit the DDMRP Software Compliance page.

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DDMRP EDUCATION

DDI Co-Branded Simulations and Workshops

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For all levels.

For Planners, Buyers, Schedulers, Planning and Purchasing Managers.

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For Planners, Buyers, and Managers in a distribution entity.

DDMRP ARTICLES

DDMRP is a methodology that gives people a step by step blueprint that is transparent, easy to interpret, intuitive, consistent, and sustainable

 

Our article "DDMRP - Built for People not Perfection" discusses each of these important characteristics one by one.  Take me to the article on LinkedIn

The DDMRP Innovation Series comes in four parts and details the four big innovations that allow DDMRP to be so special.

Part 1 on LinkedIn: Decoupled Lead Time

Part 2 on LinkedIn: The Net Flow Equation

Part 3 on LinkedIn: Decoupled Explosion

Part 4 on LinkedIn: Relative Priority

Many people initially scoff at the name “Demand Driven Material Requirements Planning” and claim it is just clever branding or “MRP III”.

is DDMRP just a marketing gimmick?  No, the name is technically descriptive and accurate.  We explain exactly why in this article.

Take me to the article on LinkedIn

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