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DDMRP and Human Driven Supply Chains

By Bernard Milian

Long Live Technology!

Over the decades we have developed more and more technology for our supply chains, invented sophisticated algorithms, interconnected remote sites around the world, traced in real time the slightest event. This debauchery of means, computing power, software and complicated acronyms would tend to make us think that it’s all scientific, mathematical, electronic and fantastic!

Science and Technology are great!

Just think: we can land a mini robot on a tiny comet 4 km long after a journey of 7 billion kilometres, we can fly drones that know how to return on their own to their take-off point, we have in our pocket enough to communicate instantaneously with the antipodes, etc.So how is it possible in this same technological 21st century to continue to suffer such trivial things as shortages, emergencies and obsolete stocks? Is the solution going to be provided by artificial intelligence, machine learning, more and more technology to automate our supply chains?

The technology is great, digitalization is key, but don’t we have a little problem?

Technology Doesn’t Like Approximation!

Perhaps one difficulty that makes technology less effective is that our operations management environment is not as scientific or Cartesian as we would like it to be.

Sales forecasts are estimates, lead times are estimates, lot sizes are estimates, our future capacities are estimates, etc. We collect a multitude of estimates, we inject them into the big calculation engine of our ERP, and we keep our fingers crossed…

What’s more, once we have carefully calculated our requirements, we will be subject to variability. In reality, our supply chains are first and foremost driven by men and women with intelligence, reason, emotions, politics, objectives, flaws, etc. These men and women receive information, interpret it and make decisions. Wouldn’t the humanities be in fact the most important sciences for piloting our supply chains, far ahead of the latest sophisticated algorithm for predicting the unpredictable? What if the secret to the effectiveness of the DDMRP was precisely the recognition and consideration of this human factor? Let us examine several aspects of the methodology from this perspective.

“Thoughtware before Software”

The challenge is to align the thinking in the company with what really counts, i.e. the FLOW to meet the demand. It seems natural / innate and yet it is indeed a matter of changing paradigm in most companies, as we have acquired over the decades a culture focused on reducing costs, which often goes against flow. More than just installing new supply chain software, we need to install a new way of thinking – that is to say, enable our teams to think systemic flow!

Let Us be Roughly Right Rather Than Precisely Wrong.

This is very shocking to our Cartesian minds, engineers, and managers.

I remember a debate with a SVP WW Operations of a multinational company, not understanding why for a “short” lead time a lead time factor of 60 to 100% is recommended, and 20 to 40% for a “long” lead time. “What does short / medium / long mean? Why 60 to 100%? What is the science behind this statement? »

The same manager is not shocked that his MRP system calculates a requirement precisely based on a forecast, which is structurally approximate. If, in addition, the forecast has been elaborated with a complicated algorithm, that is reassuring…
My physics teacher in high school used to tell us all the time: make sure orders of magnitude first.

The static and dynamic dimensioning advocated by DDMRP is based on this principle, familiar to all those who practice kanban loops: build a model that makes sense, and then you will improve it.

Let Us Manage Visually

We all know it: representing a supply chain as a linear flow from the supplier of the supplier to the customer of the customer is no longer at all appropriate in today’s world. Today’s supply chains are complex, nested and global networks of suppliers, subcontractors and customers. At each node of this network there is a human-operated MRP (ERP) system.
The teams in charge of each of these nodes receive signals, interpret them, make decisions, send signals and products to the other players, and gradually adapt their behavior, through learning.

We need to present our teams with clear information that allows us to make relevant decisions. MRP and other APS systems are often black boxes for their users, overwhelmed by action messages, data integrity issues, and multiple changes. How do you make the right decisions and continuously improve performance in all this confusion? In contrast, DDMRP implements highly visual control based on blue/green/yellow/red/dark red color codes – for planning, for execution monitoring, and for performance analysis. What could be more intelligible? Since the advent of the automobile we all understand traffic lights.

Teams have the tools and supply chain technology to work on the right priorities, make the right decisions at the right time, and drive improvement.

Focus on Adaptation

From the design of the operating model to its strategic management via Adaptive S&OP, the Demand Driven system helps us configure our supply chains to make them agile and resilient.

We know that the world is increasingly Volatile, Uncertain, Complex and Ambiguous (VUCA) – the reality that a company will face will differ from what was predicted, so we need to develop its adaptability.

Some find the “Demand Driven Adaptive Enterprise” to be a marketing concept. Even if this were the case, what would be the problem? Isn’t it the heart of the matter, to convince all layers of the company that adaptability is the key to success and sustainability? It is necessary to convince, explain, preach, educate, because it is indeed a question of influencing the behavior of a human organization.

Building agility in the design of the model by positioning decoupling points, fighting the inertia of the existing supply chain, turning the S&OP into a process to adapt to changes: none of this is obvious for the teams of most companies, and it is indeed a matter of changing behaviors!

Why is DDMRP delivering concrete, meaningful, timely and sustainable results? For my part, it is clear: it recognizes the human factor of our “Human Driven Supply Chains» and makes evident the behaviors that promote flow and adaptation.

That is also why Demand Driven Technologies’ solutions are designed to be extremely intuitive, simple to use, and facilitate decision-making for the men and women in charge of managing operations.

f you are interested in learning more about our Demand Driven Supply Chain Software solutions feel free to contact us and see how DDMRP can improve your supply chain. 

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