What is Demand Driven MRP?

DDMRP (Demand Driven Material Requirements Planning) is an advanced planning method that helps companies manage their inventory more effectively. Unlike traditional systems, DDMRP uses real demand data instead of forecasts, leading to better planning accuracy and avoiding over or under stocking. DDMRP has five core components:

• Strategic inventory positioning: Determines where to place inventory at key points in the supply chain.

• Buffer profiles: Defines protection levels at these points to absorb demand and supply fluctuations, using a color-coded buffer model.

• Dynamic adjustments: Allows buffers to adapt based on market changes and future events, keeping inventory levels optimal.

• Demand-driven planning: Uses actual sales orders to drive planning, ensuring better accuracy and preventing overstocking.

• Visible and collaborative execution: Assesses priorities, checks inventory forecasts, and manages supply chain execution with custom alerts and SAP IBP dashboards.

By implementing DDMRP with SAP IBP, companies can achieve better inventory balance, increased efficiency, and improved customer service. It helps reduce the bullwhip effect, optimize inventory levels, and enhance overall supply chain performance.

Why do you need Demand Driven MRP?

What if you could bring your inventory down by -10 up to -20% and at the same time perform with a 5 to 10% higher service level and with that, realize an increase of your turnover by 2 to 5%? Now you are probably thinking that this will require a big project and a complete redesign of your supply chain. This would also mean that complex optimizers and algorithms, which almost nobody can understand, are needed to achieve this for you. What if we also told you, that this is possible with a methodology, which is fully explainable and understandable and fulfilling today’s complex supply chain requirements? Giving visibility on your supply chain and making you able to work on a priority basis, meaning that you can focus on what is important at this moment. On top of that, this is all supported by a user-friendly and easily adoptable IT solution.

DDMRP and SAP IBP

This all might sound too good to be true or perhaps even utopia, but what if we told you that by a combination of Demand Driven MRP (DDMRP) and SAP IBP this could be within reach? Three simple words and just five steps.

• Position will determine how to decouple your supply chain and with that create better flow.

• Protect, this will make sure that the decoupled points have the correct level of protection and flexes up or down based on operating parameters, market changes and/or planned or known future events.

• Pull will perform the replenishment supply elements, based on priority via your net flow position (On-Hand + On-Order – Qualified Sales Order Demand = Net Flow Position).

It is better to be roughly right than precisely wrong

Precisely wrong relates to why conventional planning systems fail, due to the way they have been designed and how the bullwhip effect appears, using traditional planning like MRP. Shouldn’t it be time to move from precisely wrong to roughly right and achieve all-round better performance in your supply chain?

Visie Partners and McCoy and Partners believe in the strength and possibilities of DDMRP and SAP IBP. Together we believe in a ‘Simply Proof’ approach and in combining our knowledge and vision. Visie Partners, affiliated with the Demand Driven Institute, can help in adapting the methodology and applying the rules in the correct way, while McCoy and Partners has the Supply Chain and technical experts on DDMRP within SAP (IBP).

For more information about DDMRP with regards to SAP IBP check out our solution page for SAP IBP.