DDMRP Implementation: Strategies & Best Practices

by Stan Alin | 7 Dec 23 | DDMRP Explained

Explore “Some Best Practices and Strategies for Implementing DDMRP” and learn critical components, best practices, and the importance of continuous improvement for supply chain efficiency.

Introduction

Demand-driven material requirements planning (DDMRP), known as Resilient Planning by Gartner, represents a significant shift in supply chain management. This approach, prioritizing consumer demand, refines traditional planning methods to guide production and inventory choices.

As market conditions fluctuate and supply networks grow more complex, effective DDMRP implementation is essential for organizational adaptation. The following article outlines key practices and strategies for successful DDMRP deployment.

Understanding the Core Components of DDMRP

Before diving into some of the best practice implementation strategies, it is worthwhile to note that DDMRP has a built-in implementation process consisting of five primary components.

1. Strategic Inventory Positioning: Identifying where in the supply chain to hold inventory to best respond to customer demand.
2. Buffer Profiles and Levels: Establishing inventory levels that adjust dynamically based on demand and supply variability.
3. Dynamic Adjustments: Automatic recalibrating of the buffers in response to market changes.
4. Demand-Driven Planning: Utilizing real-time demand signals rather than forecasts to drive the replenishment process.
5. Visible and Collaborative Execution: Ensuring transparent communication across all supply chain segments for effective decision-making.

Best Practice for a DDMRP Implementation

1. Comprehensive Training and Education

• Why It Matters: DDMRP represents a shift from traditional supply chain practices. It introduces concepts like ‘Push vs. Pull,’ decoupling, TOC, and 6 Sigma, which can be foreign to most people. Ensuring your team, especially supply chain managers and C-level executives, understands its principles is paramount because if you do not understand them, how do you expect to manage them?
• How to Implement: Over-invest in training. While the DDPP and DDLP courses provided by the Demand Driven Institute cover all the theoretical aspects in detail, I recommend starting with DDBRIX. In my 30 years in the industry, I’ve never encountered a tool quite like it. DDBRIX is more than just a serious game; it unequivocally demonstrates that being ‘Demand Driven’ consistently outperforms a traditional ‘Forecast Driven/Optimization’ approach.

2. Data Accuracy and IT Infrastructure

• Why It Matters: Typically, a DDMRP model is refreshed daily. Accurate, up-to-date data and robust integration with your ERP systems are crucial for a successful DDMRP implementation. Ideally, this integration should be automated in the early morning hours. This ensures that the system is updated when planners arrive at their desks, allowing them to start their day promptly.
• How to Implement: Conduct a comprehensive assessment of your data requirements and quality. Ensure that you allocate sufficient IT resources to the project. B2wise offers standard connectors for SAP, D365, and SageX3 to assist you. Even if your data is imperfect, I recommend connecting it to your DDMRP system, as a good tool will highlight precisely what data needs fixing and allow you to track progress. In cases where updating that data in your ERP will take time, utilize alternative master files such as Excel. Remember, though, that your ERP system is the system of record, and your strategy must be to update this system accordingly.

3. Gradual Phased Rollout

• Why It Matters: Embarking on a challenging task like implementing DDMRP requires a step-by-step approach. Like climbing a mountain, begin with the first step, ensuring you maintain stability and avoid stumbling. You’ll reach your goal much faster than anticipated by consistently executing the right actions each day and promptly addressing errors. As your confidence builds, you can gradually increase the pace of your progress, confident that you are doing the right things.
• How to Implement: Instead of overwhelming your planners with tens of thousands of buffers on day one, initiate the process with a subset of items. This phased approach enables planners to familiarise themselves with the new working method, understand the functional and business processes, and grasp the benefits. They can track in detail how DDMRP manages these select items and request additional focused training on managing the necessary adjustments. Once the foundations are in place, they will accelerate.

4. Orchestrating your Supply Chain Ecosystem

• Why It Matters: For your supply chain to function effectively, it necessitates orchestrating all organizational stakeholders, from the shop floor to the C-level executive suite. Everyone has a role to play.  So, not only is it crucial to generate an optimal plan, but also you must be able to execute it successfully across all departments. Having multiple cross-departmental plans is equally distracting as not having any plan. The goal is one clear, relevant plan that gets executed flawlessly every day. And then adapt and repeat!
• How to Implement: Without wanting to sound repetitive, I would recommend that you involve the entire organization in a DDBRIX session. Beyond imparting a deep understanding of DDMRP, DDBRIX also emphasizes the whole organization’s collective role in achieving the holy grail of planning—100% service delivery with the least amount of inventory and expedited. Do not just do this at the start of the project; do it continuously throughout your journey. Today, several major clients have licensed DDBrix from us as their primary supply chain planning training program.

5. Continuous Improvement and Adaptation

• Why It Matters: Your supply chain functions as a dynamic organism, constantly fed by data from across the business and requiring ongoing adaptation as your company evolves. Inefficiencies arise when systems, data, and processes fall short, leading planners to spend more time constructing plans than enhancing or adjusting them. I often hear the vision of automated planning in boardrooms, where systems autonomously generate orders without human intervention. While this concept is appealing, success hinges on maintaining data accuracy and implementing continuous improvement processes for the people who affect this system and the processes and rules you follow. It’s important to note that while AI offers valuable insights, it also requires vigilant monitoring. Automated planning succeeds only when organizations have robust data management and continuous improvement processes.
• How to Implement: Regarding data, most companies I come across in the market possess sound data, and poor data rarely impedes project initiation. With master data issues like BOMs, lead times, cost, and MOQ, these can be addressed relatively easily. However, inaccurate stock or purchase order information in your system poses a significant challenge that must be addressed first. In the realm of continuous improvement, I believe that Signal Integrity is the pivotal metric. It essentially gauges whether planners follow the system’s order recommendations. Achieving a metric of +98% accuracy signifies readiness for ‘Automated Ordering.’In the context of Demand-Driven Material Requirements Planning (DDMRP), this readiness is attained through implementing a management process known as DDS&OP. This process provides the levers to control your operating model and delivers continuous feedback on system performance, allowing you to adjust your operating model as your business evolves. 

Conclusion

Implementing DDMRP requires a significant shift in mindset and operations, but the payoff in enhanced efficiency and responsiveness is substantial. By following these best practices and strategies, companies can transition more smoothly to a demand-driven model, positioning themselves for success in the challenging and dynamic world of modern supply chains.

FAQ

1. What are the key components of DDMRP? DDMRP involves five main elements: strategic inventory positioning, buffer profiles and levels, dynamic adjustments, demand-driven planning, and visible, collaborative execution.
2. What are the best practices for implementing DDMRP? Best practices include comprehensive training and education, ensuring data accuracy and IT infrastructure, adopting a gradual phased rollout, orchestrating your supply chain ecosystem, and focusing on continuous improvement and adaptation.
3. Why is continuous improvement significant in DDMRP? Continuous improvement in DDMRP is vital for adapting to evolving business needs and maintaining data accuracy, crucial for automated planning and overall supply chain efficiency.

External links:

Please read this French article written by the Demand Driven Tech website’s editors. Click here for it!