Demand-Driven Material Requirements Planning (DDMRP)

The new planning methodology

Demand-Driven Material Requirements Planning (DDMRP) is a new planning methodology that has been gaining traction in recent years in the field of Supply Chain Management. Post-covid supply shortages have made this concept even more relevant. DDMRP is designed to address many of the limitations of traditional Material Requirements Planning (MRP), which often struggles to cope with the inherent variability and uncertainty of real-world supply chains.

In Dynamics 365 Supply Chain Management, Microsoft has incorporated DDMRP functionality to help organizations adopt this new planning approach. With the DDMRP module in Dynamics 365, businesses can benefit from enhanced visibility and control over their supply chains, improved response times, and reduced inventory costs.

One of the key features of DDMRP is its use of buffers to manage dynamic inventory levels, automatically adjusting buffer levels based on actual demand and supply. This helps ensure that inventory levels are always aligned with current demand while also providing protection against variability and uncertainty.

With Dynamics 365 Supply Chain Management, users can identify decoupling points where the system automatically calculates buffer levels. These buffer levels can be calculated based on historical transactions on future demand (like forecasts or orders) or a mix. The decoupling points effectively absorb and dampen the amplification effects of downstream Demand signal distortions and upstream Supply disruptions that can occur in complex and lengthy supply chains. This effect is known as the Bullwhip effect.

Another important aspect of DDMRP is its focus on net flow-based planning. This means that instead of considering ALL future demand and supply and netting it to zero like traditional MRP, the net flow approach considers only actual issues to be expedited in the immediate future and planned receipts like firmed purchases or production orders.

In summary, integrating DDMRP functionality into Dynamics 365 Supply Chain Management gives businesses a powerful new tool for managing their supply chains. By adopting a more dynamic and flexible planning approach, organizations can improve their responsiveness, reduce inventory costs, and achieve greater overall supply chain efficiency.

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