WHAT IS DEMAND DRIVEN MATERIAL REQUIREMENTS PLANNING (DDMRP)?
Current MRP systems use a forecast driven model which:
Improve Demand Signal Accuracy by Shifting to a Consumption Driven Model
Demand Driven Material Requirements Planning (DDMRP) is an operational supply planning and scheduling methodology that reduces the bullwhip effect and promotes supply chain flow by creating and managing strategically placed inventory buffers.
- Dampen the bullwhip effect that creates inventory imbalance for businesses with large demand variations.
- Manage inventories that have shortages and overstocks at the same time.
- Build more closely to actual market requirements.
- Promote better and quicker decisions and actions at the planning and execution level.
- Improve visibility for supply order execution.
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The FIVE COMPONENTS of DDMRP
Demand Driven Material Requirements Planning has five sequential components. Split into three stages: Position, Protect and Pull, this figure illustrates these components. The first three components essentially define the initial and evolving configuration of a demand driven material requirements planning model. The final two elements define the day-to-day operation of the method.