DDMRP Overview

The Nuts and Bolts of DDMRP

DDMRP is the latest in a long line of effective supply chain management methodologies. Where it differs dramatically from these methodologies is that it combines the best parts of Lean, DRP, MRP and Six Sigma, adds a dollop of demand driven, and delivers an as yet unparalleled method of managing supply chains.

This methodology uses strategically placed inventory buffers (decoupling points) to drive order generation and execution management throughout the supply chain. This is done by maintaining a constant flow of relevant materials and information across the entire supply chain, thereby ensuring visibility of inventory in the supply chain, which supports excellent customer service.

Carol Ptak and Chad Smith, the creators of DDMRP, have given very specific instructions for the use of, and transition to, a demand driven supply chain and DDMRP. When followed, these instructions result in measurable benefits to your organization, including optimal inventory sizing, increased customer service, reduced lead times and reduction in overall supply chain costs.

The first, and most important step in this process is to Strategically Position the items in your supply chain which will act as decoupling points. The selection of these items is guided by predefined factors which can be used to identify which items will provide the most benefits to your supply chain from a DDMRP perspective, i.e.: promote flow of materials and information. These are the items which will be managed on iSimPlan.

For each item within iSimPlan a dynamic buffer is created based on the item type, its’ decoupled lead time, the variability in its’ supply and demand, and its’ average daily usage. This inventory buffer is designed to ensure that enough inventory is available to account for all normal demand on a daily basis, as well as large demand variations within a specified time frame. This buffer is NOT safety stock, its’ size fluctuates in line with actual demand.

The supply and demand data used to calculate the buffer sizes are also used to calculate the net flow position. The Net Flow Position is an indication of buffer health, and dictates which zone of the buffer an item is in. The buffer zones are as follows:

1. The Green Zone: Determines order frequency and size.
2. The Yellow Zone: Incorporates actual demand and decoupled lead time.
3. The Red Zone: Safety embedded within the buffer, its’ size increases with higher variability.

The color coded zone identification allows planners to identify items which need attention at a glance, rather than having to sift through lines and lines of data on a spreadsheet or within an ERP system. This is enhanced on iSimPlan with the automatic priority ranking on the Planning Table. When the net flow position is in the yellow or red zones, planners are prompted to order to the top of green.

The buffer color coding is also applied at the execution level, where each item has its’ own Execution Buffer. This allows staff on the floor to have sight of inventory levels of the items they are working with. On iSimPlan the execution staff have access to all the necessary supply and demand data (the same data the planners work with) needed to determine whether an expedite is necessary for an item. The visibility of supply and demand across multiple levels of the supply chain promotes collaboration between the levels, and ultimately creates a supply chain in which both material and information flow is continuous and optimized.