What is Demand Driven MRP?
A lot of information has become available since the concept of Demand Driven MRP has been released to the public in 2011.
A good overview can be found in the ‘DDMRP Innovation Series’ of Chad Smith:
Demand Driven MRP or DDMRP, uses strategic decoupling points (buffer locations) to drive supply order generation and to switch from a ‘Push and Promote’ strategy (current MRP) to a ‘Position and Pull’ strategy (DDMRP).
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DDMRP consists of 5 components:
- Strategic Decoupling: the supply chain is decoupled at strategic points. This reduces the lead time of the materials.
- Determining the correct buffer profile (maximum stock, reorder point and buffer safety stock level) impacts the protection level at the decoupling points
- Dynamic Adjustments define how that level of protection flexes up or down based on operating parameters, market changes and/or planned or known future events
- Demand Driven Planning: Supply orders (purchase orders, manufacturing orders and stock transfer orders) are generated by using the unique Net Flow Equation: Stock On-Hand + Supplies On-Order – Qualified Sales Order Demand = Net Flow Position.
- Visible and Collaborative Execution is the process by which a DDMRP system manages open supply orders.
Demand Driven MRP in S/4HANA 1809
With S/4HANA 1809, SAP introduced the Demand Driven MRP planning strategy. SAP has created several Fiori apps covering the 5 components of Demand Driven MRP.
The apps ‘Schedule Product Classification (DD)’, ‘Mass Maintenance of Products (DD)’ and ‘Buffer Positioning’ can be used to specify which products should be buffered according to your own parameters.
For example, you can use the ‘Buffer Positioning’ to see the lead times (also decoupled lead times), the longest path and product flow of a material.
Protect: Determine the correct buffer profile and Dynamic Adjustments
By using the apps ‘Schedule Lead Time Classification of Products(DD)’, ‘Schedule Buffer Proposal Calculation’ the calculations of the buffer levels (maximum level, reorder point and safety stock) are executed in the background.
The ‘Manage Buffer Levels’ app is used to check the results. Here, the details of the products for which new buffer level values are shown and changes are evaluated. Based on the result, the planner evaluates to adopt or ignore the proposed changes.
Demand Driven Planning
The actual planning is done using the ‘Replenishment Planning, by Planning Priority’ and ‘Planner Overview’ apps. These give a good overview based on coloured lines or graphs from where more details can be checked and required supplies can be created immediately.
Example of the result of the ‘Replenishment Planning, by Planning Priority’ app:
By clicking on the material detailed information is shown:
By using the app ‘Planner Overview’ the same information is shown as graph:
By using the app ‘Replenishment Execution, by On-Hand Status’ the supply can be monitored.
The example shows a planned order for material S-201 created by using one of the Planning apps, indicated as an Open Supply. Further details can be shown again by clicking on the line.
We believe Demand Driven MRP is an effective step forward for today’s complex manufacturing environment.
This new concept of planning is available in S/4HANA 1809 and offers great business impact when used well by planners who are familiar with demand driven MRP planning.
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