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DDMRP

Demand Driven Material Requirement Planning (DDMRP) enables companies to plan supply chains based on customer demand rather than forecasts. It classifies products based on lead time, bill of materials usage, and demand variability to identify which are suitable for demand-driven replenishment. DDMRP reduces the "bullwhip effect" by compressing lead times using a decoupled lead time concept. It ties replenishment directly to real-time inventory usage and demand based on predetermined stocking strategies, unlike traditional MRP which is driven by forecasts.

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270 views

DDMRP

Demand Driven Material Requirement Planning (DDMRP) enables companies to plan supply chains based on customer demand rather than forecasts. It classifies products based on lead time, bill of materials usage, and demand variability to identify which are suitable for demand-driven replenishment. DDMRP reduces the "bullwhip effect" by compressing lead times using a decoupled lead time concept. It ties replenishment directly to real-time inventory usage and demand based on predetermined stocking strategies, unlike traditional MRP which is driven by forecasts.

Uploaded by

mani msv
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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DDMRP

Demand Driven Material Requirement Planning


Enables a company to build more closely to actual market requirements and
promotes better and quicker decisions and actions at the planning and execution level.

Helps to plan and manage supply chains efficiently based on customer demand,
rather than through traditional MRP procedures.


Products are classified based on

Lead time

BOM usage

Variability to identify whether they are relevant for demand-driven replenishment.

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Demand Driven Material Requirement Planning
What is Bullwhip Effect ?

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Demand Driven Material Requirement Planning

How DDMRP eliminates Bullwhip Effect ?

DDMRP reduces the Bullwhip effect by reducing Lead


time using the Decoupled Lead time
concept(Compressing lead time).

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DDMRP MRP
01 - Planning to tie replenishment to
demand 
VS 01 - A key part of the material and
resource planning system

02 - Forecast/Sales & Operation


02 - Actual usage by demand (pull) 
planning  (push) 

03 - Tied directly to real-time inventory,


03 - Driven by forecasts at and
usage, and predetermined stocking
beyond cumulative lead time
strategies based on demand 

MRP
04 - Volatile environment 
DDMRP 04 - Stable with predictable
demand 

05 - MRP and a visual control 05 - S&OP, forecast


system for replenishment accuracy, and stability 
Demand Driven Material Requirement Planning

 Classic MRP Lead time calculation

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Demand Driven Material Requirement Planning

 DDMRP-Decoupled Lead time Calculation

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Demand Driven Material Requirement Planning

DDMRP PROCESS FLOW

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Demand Driven Material Requirement Planning

Prerequisites
Master Data setup:
 Past Consumption Data for DD Materials
 MRP type should be D1
 Re-Order Point should be maintained
 Maximum Stock Level should be maintained
 Safety Stock should be maintained
 For In-house materials, need to be maintained PP master data (BOM,Routing/Master
Recipe and Production Versions)
 For Procuring materials, need to be maintained the Info records
 Buffer Profile should be maintained
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Demand Driven Material Requirement Planning

FACTORS involved in DDMRP


Average daily usage(ADU)
Lead time factor

Decoupled lead time


Average daily usage (ADU)
Average usage of a product or component on a daily basis,
Calculated based on the demand over a selected averaging interval.
Average quantity for goods issue of a specific product in the horizon days.
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Average Daily Usage(ADU) calculation

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Demand Driven Material Requirement Planning
LEAD TIME FACTOR :
• The lead time factor is a percentage of ADU within the decoupled lead
time of the part.

• Order Spike Threshold Calculation:

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Demand Driven Material Requirement Planning

Sales Orders Impact On Buffer Calculation & Qualified Spike


• Qualified Spike Demand:
• Spike Horizon: It is a time interval that starts after today and ends after the number of
calendar days of the decoupled lead time into the future at the earliest.

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Demand Driven Material Requirement Planning
Buffer Equation Summary

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Demand Driven Material Requirement Planning
• Buffer Zone Calculation

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Demand Driven Material Requirement Planning

FIORI TILES USED FOR DDMRP


Schedule Product Classification
• Shows you how to classify your products by systematically evaluating

based on:

 Goods issue value (ABC classification),

 Usage across BOMs (PQR classification)

 Variation in actual demand (XYZ classification) across a specified evaluation interval.

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Demand Driven Material Requirement Planning
Mass Maintenance of Product
 To View the results of the classifications,

 Decide whether the material is relevant for strategic stock positioning.

Buffer Positioning
 This process step shows you how to monitor and decide which products to buffer

and un-buffer by checking buffer analysis

 DLT will be calculated in this step

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Demand Driven Material Requirement Planning

Buffer Sizing
 This process step shows you how to calculate buffer levels – maximum

stock level, reorder point and safety stock for buffered products.

 Maximum stock-Cumulative sum of the quantities of the red, yellow and green zones

 Reorder point-Cumulative sum of the quantities of the red and yellow zones

 Safety stock -The minimum recommended stock buffer level that should be maintained

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Demand Driven Material Requirement Planning
Schedule Lead Time Classification of Products
• This process step shows you how to classify your Demand-Driven Replenishment-

relevant products by evaluating them based on their Decoupled Lead Time (EFG
classification) across a specified evaluation interval.

Schedule Buffer Proposal Calculation


• This process step shows you how to generate buffer (stock) level proposals for your

Demand-Driven Replenishment-relevant products based on their average daily usage,


decoupled lead time, buffer profiles and several other factors.
• can schedule runs to recalculate the buffer proposals periodically to keep them up to
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date.
Demand Driven Material Requirement Planning
Manage Buffer Levels
• This process step shows you how to ensure that products are available when needed

by managing the safety stock, reorder point and maximum stock through buffer

proposals for optimized Demand-Driven Replenishment.

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Benefits of DDMRP

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Thank You!

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• Resources:
• Demand Driven Institute –
https://www.demanddriveninstitute.com
• SAP Community WIKI – https://wiki.scn.sap.com
• SAP – https://help.sap.com
• CamelotITLab – https://www.camelot-itlab.com

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