The pandemic has truly proven the disruptive potential of unpredictable events. Lockdowns and closures continue to impact global supply chains, highlighting the need for flexible management strategies that can react in real time. Demand Driven Material Requirements Planning (DDMRP) provides the manufacturing software needed to thrive in this volatile new normal.
Traditional MRP tries to reduce risk by staging extra “just in case” inventory throughout the supply chain using forecasting formulas, so when potential disruptions occur, buffer inventory can be used. However, there are two problems here. First, carrying extra inventory ties up cash and space, which can be wasteful if these forecasts are inaccurate. Secondly, as the pandemic has shown, unpredictable events are exactly that—unpredictable. They won’t show up in any forecast.
DDMRP improves upon traditional MRP by tracking real-time usage. So, while traditional MRP “pushes” inventory based on forecasted need, DDMRP “pulls” materials based on demand. Put simply, DDMRP is structured around a “position, protect, and pull” methodology.
Key materials are identified at critical positions. Buffer inventory is made available to protect the production schedule. So, when disruptions arise, inventory can be pulled strategically. Unlike traditional MRP, the buffer inventory is not deployed as part of the initial plan. DDMRP uses visual cues to monitor inventory levels and maintain the buffer within a specified range.
As such, DDMRP offers the following four benefits:
- Right Inventory at the Right Time
The pull technique ensures the right amount of strategic inventory is maintained, which not only optimizes for space by 30 to 45 per cent but also saves money because stock has less time to become obsolete, both cost-saving benefits. This is especially relevant for perishable items like groceries.
- Flexibility to Meet Customer Demands
The visible execution cues provide an intuitive replenishment process that is easy to implement and maintain. Users see real-time priorities instead of working with conflicting forecast models. Traditional MRP can leave businesses flat-footed, trying to catch up with customer demand, whereas DDRMP’s dexterity allows businesses to smoothly adjust to shifting customer requirements.
- Streamline Processes
When supply chains and inventories aren’t burdened by unnecessary excess, lead times are improved by as much as 80 per cent, boosting agility and service levels. This will help cut overtime for workers clambering at the last minute to unload materials as well as freeing management to focus on other high-priority projects.
- Unpredictability Is a Feature Not a Bug
DDRMP thrives in a volatile environment making it the ideal solution in a post-pandemic world. Resiliency isn’t enough anymore; systems need to be designed such that unpredictability is an asset not a liability. So, while the competition is scrambling to adjust, you’re focusing on tactical goals, like building stronger relationships with suppliers around the world.
Contact us to find out exactly how much a DDMRP solution could save you compared to a traditional MRP system at https://sheaglobal.com.