High Impact Coaching & Strategies
TheONE Demand Driven MRP (DDMRP)
Fully Compliant DDMRP Software endorsed by the Demand Driven Institute

DEMAND DRIVEN MATERIAL REQUIREMENTS PLANNING

Material Requirements Planning (MRP) was developed in the 1950’s and 1960’s by Joe Orlicky.  When MRP was brought to market in the 1970’s and he wrote the first edition of Material Requirements Planning there were only 700 companies in the world actually using MRP.  In his book, Joe highlighted a need to overhaul how a business plans and manages both inventory and resources.  By the year 1990, over 1 million companies were using MRP with little change from its original concept.

Industry is now presented a new dilemma as the circumstances that drove Orlicky’s original design have dramatically changed.  Since 1970 when Orlicky’s model was launched, Forecasts have gotten worse, Supply Chain complexity has increased, customer tolerance has decreased and inventory has become a priority.  These new age challenges have led to the inventory oscillation witnessed in MRP systems today.  The levels of demand and supply variability that exist in the 21st Century are further compounded by the inabilities of MRP to provide reliable and appropriate information for today’s supply chain planners.

The answer to this common problem is demand driven material requirements planning (DDMRP),  defined as a multi-echelon inventory and planning system that senses the shape of customer demand, then adapting planning and production systems all while pulling from suppliers in real time. [adapted from the Demand Driven Institute 2009]

DDMRP breaks down the myth that you need more inventory to maintain high customer service levels.  It provides the planning and execution tools for the 21st Century, enabling companies to become demand driven and responsive to their market while significantly reducing lead time, eliminating variability and volatility across the entire supply chain and achieving Return on Capital Employed.

0
%
Inventory Reduction
Up to
0
%
On-Time Delivery
Up to
0
%
Inventory Turns Improvement
0
%
Lead Time Improvement
Up to
0
%
Obsolescence Reduction
0
%
Customer Service Improvement
Up to
0
weeks
Typical Implementation

Easy and Intuitive

0
%
Planner Availability

Contact Us

Our Services Contact Us

AN INTRODUCTION  TO DDMRP

Courtesy of the Demand Driven Institue, LLC

5 STEPS OF DDMRP

5 Steps of DDMRP

The first step is not a question of how much inventory a company should hold, or even the make/buy question. This first fundamental step of DDMRP is to identify where should inventory actually be positioned across the entire supply chain. Where in the supply chain, retail to distribution through to the factory and multi-tiered suppliers will we achieve maximum benefit from lead time compression and the dampening of variability? Where can we create maximum protection and establish decoupled independence between all points of demand and supply?

After, and only after, the strategic locations have been identified can we then start to determine targeted inventory levels. However, we must first understand more about the parts that are being positioned at these strategic locations. The creation of Buffer Profiles will enable of parts to grouped based on particular behavioral traits of the parts in the group.  The Buffer Profiles will define the part type, the level of demand and supply variability and the replenishment lead time.

Once the Buffer Profiles have been established and parts assigned to these profiles, we can then size the targeted inventory levels which are referred to Buffer Zones. In DDMRP there are three specific zones that are utilized the subsequent Planning and Execution steps. The overall size of each zone will be defined based on the attributes of the Buffer Profile.  If a Buffer Profile defining parts with a high demand variability will have a greater impact on the size of the zone more than a Buffer Profile defining parts with low demand variability.

As we know, nothing stands still for time within a supply chain.  Buffer Profile attributes will change, demand patterns over time increase and decrease, and the parts being positioned can change.  All these changes together need to update the size of each Buffer Zone.

Dynamic Adjustments enable a company to continually optimize the inventory being positioned to ensuring maximized Return on Capital Employed (ROCE).  Changes in demand patterns are sensed on a daily basis and Buffer Zones are dynamically recalculated.   Planned Adjustments can be put into action to account for periods of seasonality, increasing Buffer Zones for peak seasons and product ramp up, and reducing Buffer Zones for low seasons and product planned obsolescence.

This step takes advantage of 21st Century Demand Driven approaches which react to the dynamic nature of the Buffer Zones, availability of inventory, current demand requirements and the supply situation at each strategic inventory location.  Demand Driven Planning within DDMRP is a quick, visible and effective task. Supply order requirements are defined based on the level of depletion in current inventory, DDMRP demand spike criteria and status of current open supply orders. The inbuilt visibility enables planners to very quickly understand what is required and take most appropriate action without the need of comprehensive Excel modeling.

MRP is a forecast driven planning system and has failed to provide specific execution tools to manage open orders. The final step completes the definition of the DDMRP integrated system providing execution management tools for all open orders, whether Supplier Purchase Orders, Manufacturing Work Orders or distribution Stock Transfer Orders. Planners are supported with execution system that doesn’t rely on a due date but instead prioritizes all open supply based on the level of on-hand inventory depletion at each strategic location.

Better to have a supplier who doesn’t stock you out than one who always delivers on time!

Tia: THE INTELLIGENT ASSISTANT

The Intelligent Assistant (Tia) within our DDMRP compliant software enables planners and buyers to become proactive towards further optimization of the supply network rather than being entrenched in the daily battle to have sufficient availability of inventory.

  • Tia: Daily Sensing and Shaping

    On a daily basis Tia monitors variability in the supply chain, demand patterns and supply performance to ensure the most up to date part attributes associated to Buffer Profiles are established and assigned.  Based on these attributes Tia will dynamically align the strategic inventory positioning to the current market conditions and subsequently comparing the current inventory, actual demand and supply orders.  Supply order generation automatically takes place with the planner or buyer only having to confirm, without endless hours in the construction of excel “workarounds” to disprove what traditional MRP systems are recommending.

  • Tia: Supply Chain Visibility

    Tia monitors the availability of on-hand inventory alerting planners and buyers when the strategic inventory position is at risk. Furthermore, Tia will determine the priority for all open supply orders within the factory and supply network significantly improving supply chain visibility. With a shift in how Tia looks at priority management,  due date is no longer the key measure of priority, inventory availability and the level of inventory penetration at the strategic location is now key.  Better to have a supplier who doesn’t stock you out than one who delivers on time.

  • Tia: Reducing Variability in the Supply Chain; aka the Bullwhip Effect

    Tia drives DDMRP for you to eliminate supply variability and demand distortion through the entire supply network, enabling constant availability of inventory to meet sales demand requirements whilst at the same time establishing stability in signal generation for the supply network.

HOST SYSTEM OPTIONS

We offer both Cloud-based and On-Premises options.  Here are a few key points regarding our cloud-based option.

  • Server Uptime

    Microsoft Azure has a 99.99% Microsoft-Backed SLA uptime; e.g. Microsoft Azure scales to enable AccuWeather to respond to 10 billion requests for crucial weather data daily.

  • Data Encryption

    Secure site using https that encrypts any data during transmission between server and browser. Also, we have the ability to encrypt the data at rest (if anyone physically stole the database files, they couldn’t be used). For data in transit, Azure uses industry-standard transport protocols between user devices and Microsoft data centers, and within data centers themselves.

  • Threats

    Microsoft employs intrusion detection, denial-of-service (DDoS) attack prevention, regular penetration testing, and data analytics and machine learning tools to help mitigate threats to the Azure platform. Azure meets a broad set of international and industry-specific compliance standards, such as ISO 27001, HIPAA, Fed RAMP, SOC 1 and SOC 2, as well as country-specific standards like Australia IRAP, UK G-Cloud, and Singapore MTCS.

FAQs

Frequently Asked Questions about DDMRP and TheONE.

Is DDMRP just another type of Safety Stock?

Safety is a supplementary inventory position designed to make up for misalignment between planned orders, actual demand and supply orders.  It is not designed to be used and MRP will never consume.

DDMRP utilizes strategically positioned inventory to decouple the points of supply & consumption in order to dampen variability whilst at the same time compressing lead times through decoupling of the supply and consumption nodes.  All strategically positioned inventory is designed to be consumed.

How can you reduce inventory levels whilst increasing service levels?

Unlike any inventory reduction program, DDMRP establishes a dynamic optimum level of strategic inventory that reduces lead times, absorbs demand distortion and supply disruption.  In doing so, inventory is replenished quicker thereby reducing times customers have to wait whilst achieving a consistent availability of inventory.

Will DDMRP just push inventory back to the supplier?

No.  DDMRP will reduce inventories across the supply network, not just in your company.  This is achieved by positioning inventory at strategic locations. Even if suppliers do not implement DDMRP, experience shows their performance will actually improve through reduction of distortion in demand enabling the supplier to improve planning and execution.

How long does it take to train our planners and buyers?

Due to the extremely user-friendly nature of our DDMRP application and the fact that Tia works for you, training on how to use the software can be completed in one day.

How long does it take to implement DDMRP?

This is dependent on the company, the amount of data etc. However, typically standard implementations to deploy the software and integrate can about two weeks. However, a program of introducing DDMRP to an organization will take longer and is dependent on the lead times of the strategic parts included.

Is there a limit to the number of users within our company that can use TheONE?

There are no restrictions on the number of users within your organization that can access our DDMRP compliant software application within TheONE.

TheONE DDMRP
DDMRP Compliance
The DDMRP compliance logo is a trademark of the Demand Driven Institute, LLC – all rights reserved.

The Demand Driven Institute’s endorsement of TheONE was important to us as it not only recognizes our software in the same way early MRP developers received Joe Orlicky’s endorsement but also indirectly acknowledges our work in the last 10 years establishing demand driven supply chains around the world.  TheONE combats the most common problem our clients were continually facing…MRP failed to provide appropriate and reliable information.  TheONE will provide companies with the tactical planning and execution tools they require to operate a demand driven supply chain in the 21st Century.

Sandy Goodwin, President

The Demand Driven Institute’s endorsement of TheONE was important to us, as it not only recognizes our new software but also our work over the last 10 years establishing demand-driven supply chains around the world.

Sandy Goodwin, President

Contact Us

Our Services Contact Us
High Impact Coaching & Strategies
info@myhicoach.com
Phone: +1 888 841 8621

top
Copyright © 2016 High Impact Coaching. 
Progessive Thinking