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DDMRP - Built for People not for Perfection!

by  Chad Smith


First things first – Demand Driven Material Requirements Planning (DDMRP) is NOT a silver bullet. DDMRP is based on sound flow-based principles to provide planning and execution performance improvements in variable environments where customer tolerance times are dramatically shorter than cumulative lead times (a situation that is very common today). It is really that simple. DDMRP is a methodology that gives people a step by step blueprint that is transparent, easy to interpret, intuitive, consistent, and sustainable. Let’s go through each of these important characteristics one by one.

Methodology – a body of methods, rules, and postulates employed by a discipline: a particular procedure or set of procedures

DDMRP can best be summarized as “Position, Protect, and Pull” with five components meant to be implemented in sequence and sustained together. Are the components of DDMRP radical new ideas? For the most part no. Many of the components of DDMRP are known and even generally accepted terms and practices but they have been reconciled together with a few key innovations to make them work properly. These innovations include decoupled lead time, the net flow equation, decoupled explosion and priority by buffer status (as opposed to due date). With DDMRP the whole is much greater than the sum of its parts. DDMRP is not about forgetting what you know, it is about building on what you know and bringing in other great ideas – AND not OR!

Figure 1
Transparent – characterized by visibility or accessibility of information especially concerning business practices

Let’s face it, people tend mistrust what they don’t understand or can’t see – especially when their job is on the line. Planners and buyers with any amount of experience will go to extreme lengths to try to gain visibility to relevant information – they will not just blindly do what the computer system tells them to do. DDMRP was developed with this in mind. Its equations are simple, intuitive and straightforward allowing planners and buyers to immediately determine why planning and execution recommendations are or are not being made. Its planning equation answers, in an elegant straightforward format, the four questions planners really care about:
  1. What do I have?
  2. What do I have in the pipeline coming to me?
  3. What demand do I need to fulfill immediately?
  4. What future demand is relevant?

Ease of Interpretation – to give or provide the meaning of; explain; explicate; elucidate

DDMRP uses intuitive colors and percentages to indicate the current and future status of critical protection points. Color gives a general reference while the percentage gives a discrete reference for prioritization. This allows planners and buyers to quickly determine which items require resupply or attention.

Figure 2


Intuitive – using or based on what one feels to be true even without conscious reasoning; instinctive

Because it is transparent and easy to interpret most people find it highly intuitive. An inexperienced planner or buyer can have immediate effectiveness within a DDMRP system. An experienced planner or buyer can refocus their time to work on improving the DDMRP model’s overall performance and therefore directly contribute to driving better company ROI.
Consistent – constantly adhering to the same principles, course, form, etc.

The DDMRP approach allows for planning and purchasing personnel to speak the same language across a department, multiple plants and even companies. This eliminates the typical individualized or fragmented approaches to planning and execution that are common place in most companies. With this consistency comes better potential for consensus and clarity about new directions and innovations for the supply chain function.
Sustainable – able to be maintained or kept going, as an action or process

A key for sustaining anything is that people have to actually continue to use it. People use what they trust! People will trust something more when it is transparent, easy to interpret, intuitive, and consistent.  Furthermore, these attributes make it much easier to sustain performance with other personnel when critical personnel leave or are temporarily unavailable. This just makes sense from a risk mitigation perspective. This also has the impact of dramatically reducing stress for planning personnel and with it reducing personnel turnover.

Are there other ways to get better in planning and supply chain than to implement DDMRP? OF COURSE! Are those methods transparent, easy to interpret, intuitive, consistent, sustainable and systemic packages? Not in our experience. Many are piece-meal “a la carte” solutions relying heavily on "black-box" algorithms or a few key employees or consultants to work their unique magic act. There are a few things that should always be asked with regard to these initiatives.

  1. If they are a la carte, do they really effectively work together without creating critical gaps?
  2. Are they even consistent in their own fundamental approach or even something as simple (but not trivial) as company vernacular?
  3. If they are a la carte what is the combined spend to acquire, implement and maintain them?
  4. Are they relatively quick to implement and get immediate results?
  5. For all the companies that use these a la carte tools, how well are these tools driving and sustaining service level improvement, working capital control and expedite expense minimization all at the same time?

DDMRP is a beginning not an end. It is a significant starting step to a much larger transformation into becoming a Demand Driven Adaptive Enterprise. DDMRP quickly produces significant results, reinforcing and proving the doctrine of flow. DDMRP provides the confidence for an organization to keep going – to continue to strip out the common nonsense and build practical management systems and metrics based on flow that facilitate true return on investment in a highly complex and volatile world. DDMRP is not a silver bullet. It is, however, a more appropriate, safe and reliable planning and execution method.

Here is what you need to have in order to START with DDMRP:

  1. A brain – DDMRP requires teams of people to use their experience and intuition together within a common and sensible framework. DDMRP is more about thoughtware than it is hardware or software.
  2. A non-scientific calculator – the equations are simple and straightforward. None are above a sixth grade math level. Simple and straight forward equations, however, should not be mistaken as naïve and ineffective. Math is, has been and always will be contextual. Simplicity applied in the right places can be extremely effective – in science and mathematics this is called “elegance”.

These two things can get you and your team to a point where you will be ready to further explore  how to apply DDMRP method in your environment.

Ultimately, supply chain professionals and executives should make an informed decision about whether DDMRP can offer value for their enterprise. Usually the only wrong answer is an uninformed answer. 

So why not explore DDMRP? DDMRP is past the early adopter phase. The political risk to try DDMRP has largely been removed as it has moved into the mainstream. DDMRP is now a rich technical modeling, planning and execution method supported by many text books, educational programs, academic research, professional certificates and well known ERP and point solution software products. It has produced consistent and significant results across a wide array of industries including aerospace, consumer products, bio-tech, electronics, heavy assembly, retail, machining and fabrication and distribution.

Here are some links that you may find helpful:

The DDMRP page at the Demand Driven Institute website that includes a professionally produced ten minute video introduction to DDMRP: https://www.demanddriveninstitute.com/ddmrp

DDMRP Case studies (videos and presentations) from dozens of companies including Michelin and British Telecom: https://www.demanddriveninstitute.com/case-studies

Information on the Demand Driven Planner (DDP) Program (including personal stories about what people were able to accomplish with the education): https://www.demanddriveninstitute.com/demand-driven-planner-ddp

About the AuthorChad Smith

Chad Smith is the co-author of the third edition of Orlicky’s Material Requirements Planning  (Ptak and Smith, McGraw-Hill, 2011), Demand Driven Performance – Using Smart Metrics (Smith and Smith, McGraw-Hill, 2013) and Demand Driven Material Requirements Planning (Ptak and Smith, Industrial Press, 2016).  He is a co-founder and Partner in the Demand Driven Institute, an organization dedicated to proliferating demand driven methods throughout the world.  Chad served as the Program Director of the International Supply Chain Education Alliance’s Certified Demand Driven Planner (CDDP) Program from 2012 to 2016.

Content copyright © Demand Driven Institute - used with permission.

For further information, contact Ken Titmuss
 

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