The DDMRP method: demand-driven thinking

Demand Driven Material Requirement Planning (DDMRP) is a method based on demand-driven supply chain management. This recent methodology follows the traditional Material Requirement Planning (MRP) method, which controlled material and component requirements according to the production load.

The Supply Chain is undergoing many upheavals that require resilience and vigilance from companies. Therefore, it needs forecasts to manage its stocks and steer its flows, but these forecasts obviously do not guarantee optimal management. Companies are weak when they confront out-of-stock situations, surpluses, restocking or even the "Bull-Whip" effect, a weakness of the MRP method in which one goes from an out-of-stock position to a strong surplus.

In need of a more complex and sophisticated methodology, DDMRP takes action and includes demand in the management of its production flows to counter the risks that companies face in volatile markets. This methodology implements intermediate stocks or buffers at different stages of the production chain.

DDMRP has five key steps:

• The strategic positioning of buffers in the supply chain to make the various processes independent (expected lead time, order book, external variability, stock flexibility, etc.) 
  
• Calculation of the levels of buffers to define the characteristics of articles and define the parameters of the demand,
  
• Response to the demand by identifying the adjustments to be made on buffers according to the evolution,
  
• Planning by prioritizing orders (generally it is based on color coding),
  
• Execution according to orders and priorities.
  

The DDMRP method is relevant when the company is positioned on markets with volatile demand and long supply times. MRP is essential to evaluate and share customer needs between buffers. Yet, DDMRP controls these buffers and becomes more agile.