Special times call for special measures in supply chain & logistics planning



"Companies are dying younger because they are failing to adapt to the growing complexity of their environment. Many misread the environment, select the wrong approach to strategy, or fail to support a viable approach with the right behaviors and capabilities.”


Martin Reeves, Simon Levin, and Daichi Ueda, Harvard Business Review 

DEMAND DRIVEN WORLD IS COMING …

Sensing demand, adapting planning, and pulling from suppliers – all in real time!

The Demand Driven Adaptive Enterprise (DDAE) Model now spans the operational, tactical and strategic ranges of an organization allowing it to continuously and successfully adapt to the complex and volatile supply chains we see today. It combines the fundamental principles of flow management with the emerging new science of complex adaptive systems (CAS). It is the way that successful businesses will work in the 21st Century.

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DEMAND DRIVEN

Becoming “Demand Driven” according to Demand Driven Institute requires:

A fundamental shift from the centrality of supply and cost based operational methods (commonly referred to as “push and promote”) to a centrality of actual demand and flow based methods (commonly referred to as “position, protect and pull”). The term “actual demand” is extremely important in distinguishing it from a re-branded and somehow superior forecasting approach.

LOGISTICS PLANNING

Logistics” according to the Council of Logistics Management” refers to:

The process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. Logistics planning serves to link and synchronise the overall supply chain as a continuous process and is essential for effective supply chain connectivity.

FACT 1

Conventional supply chain management practices trace their roots back to the first true MRP systems in the mid 1960s.

FACT 2

Today’s supply chains look nothing like the supply chains of the mid 1960s. They are much more complex and volatile. See the chart to the right for a point by point summary.

FACT 3

Despite this obvious difference in circumstances conventional MRP systems still plan precisely the same way today as they did 50 years ago!

Demand Driven Logistics Planning with DDMRP

Demand Driven Material Requirements Planning is a formal multi-echelon planning and execution method to protect and promote the flow of relevant information through the establishment and management of strategically placed decoupling point stock buffers.

DDMRP combines some of the still relevant aspects of Material Requirements Planning (MRP) and Distribution Requirements Planning (DRP) with the pull and visibility emphases found in Lean and the Theory of Constraints and the variability reduction emphasis of Six Sigma.

These elements are successfully blended through key points of innovation in the DDMRP method.

The 5-Step Process

As Demand Driven Institute explains, DDMRP Demand Driven Material Requirements Planning has five sequential components.

1

STRATEGIC INVENTORY
POSITIONING

Strategic Inventory Positioning will determine where the decoupling points are placed.

2

STRATEGIC BUFFER PROFILES
AND LEVELS

Buffer Profiles and Levels will determine the amount of protection at those decoupling points.

3

DYNAMIC BUFFER
ADJUSTMENTS

Dynamic Adjustments define how that level of protection flexes up or down based on operating parameters or known future events.

4

DEMAND DRIVEN
PLANNING

Demand Driven Planning is the process by which supply orders (purchase orders, manufacturing orders and stock transfer orders) are generated.

5

VISIBLE AND COLLABORATIVE
EXECUTION

Visible and Collaborative Execution is the process by which a DDMRP system manages open supply orders.

What is unique about Demand Driven MRP

Supply chain specialists might feel skeptical at first glance. MRP has been around for almost 50 years, and we think we know it well. DDMRP is not MRP with some “demand” element. It’s much more than this.

REALISTIC PLANNING LEADTIME

DDMRP starts with the determination of where to place decoupling points. Decoupling allows for demand signal distortion and supply continuity variability to be combated simultaneously.

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NEW PLANNING EQUATION

Demand driven planning is the fourth component of DDMRP.Planning is the process of generating supply orders. In order to do that, DDMRP uses a unique equation called the net flow equation.

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HYBRID MRP BOM EXPLOSION

Combining the use of decoupling with managing for dependencies is done by decoupled explosion. It is the cessation of a dependent requirements explosion at each decoupling point.

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TRANSPARENT RELATIVE PRIORITIES

Both for planning and execution the buffered positions of DDMRP provide a sense of priority (percentage reference) for position itself as well as how that priority relates to other positions. 

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Read all Case Studies and Testimonials

Real Results

The companies headquartered predominantly in Europe and the US were surveyed by Camelot ITLab upon successful completion of their implementation projects. They include SMEs as well as large enterprises.

Graphs below present real, confirmed results from single implementations. 

These results were achieved parallel – there were no enforced trade-offs !

Service Level
Increase

Lead Time
Reduction

Inventory Value
Reduction

DEMAND DRIVEN MINDSET

7000
supply chain
professionals trained
world-wide

The Demand Driven Planner (DDP)™ Program is designed for planning, purchasing and supply chain personnel responsible for implementing and maintaining a DDMRP implementation.

Perfect fit for the following supply chain functions:

Production Planning
Material Planning
Purchasing / Procurement
Distribution Planning

Training introduction

Watch our class invitation

Demand Driven Planner is a 2-day intensive course. We start from understanding the New Normal – our current reality we are living. Then we re-discover the value of undisturbed flow and start building our planning method accordingly. We learn the buffers and the way they work. After planning, there comes the time for a perfect execution, which is related to a new set of metrics. Finally, we turn into analytics and process improvement.


Quite a journey! Will you join us?

Now you can learn Demand Driven Concept
in Central Europe.

We train in Poland, Czechia, Slovakia, Romania, and Hungary.

Check next public classes near your factory.

SUPPLY CHAIN COURSES

Inhouse Training in Your Company



If you are interested in having an in-house (closed) training in English for your organization, be informed that we can help in all Central Europe countries. Leave us a message, and we will contact you shortly to present an offer. We know the value of and right place and time. That is why we will do our best to enable perfect timing fitting your company’s busy timetable.

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