A numerical take on DDMRP

A numerical take on DDMRP

DDMRP stands for Demand Driven Material Requirements Planning. In the last few years, the popularity of DDMRP has been growing in certain industries; occupying the niche that lean manufacturing or six sigma used to occupy. Yet, what can really be expected from DDMRP and how much novelty does it bring to the table as far as supply chain optimization is concerned?

In order to address this question, let’s review DDMRP from a numerical perspective, i.e. looking at DDMRP as a set of numerical recipes to deliver a measurable performance optimization of a given supply chain. Indeed, as all the benefits put forward by the authors of DDRMRP are all quantified targets (ex: achieve 97-100% on time fill rate performance), it seems fair to adopt a numerical stance to assess the merits of this approach.

The authors behind DDMRP state that this approach brings four key innovations to supply chain optimization, namely:

  • decoupling the lead times
  • the net flow equation
  • the decoupled explosions
  • the relative priority

Jumping to conclusions, the careful review of each of those points – done in greater details in the following – indicates that there is very little substance to the bold claims of DDMRP. The numerical recipes proposed by DDMRP would not even have been considered state-of-art by the end of 1950’s as the nascent field of operations research had already uncovered arguably more sophisticated and better numerical optimization strategies at the time.

The improvements claimed to be achieved by DDRMP start with a wrong baseline: MRPs – just like ERP – are typically not delivering any numerical optimization capabilities. Their underlying relational database systems are simply unsuitable to carrying any sizeable data crunching workload, even when considering modern computing hardware. Thus, despite the discourse of many enterprise software vendors – operating in the transactional side of the problem – it is incorrect to take MRPs are a baseline as far as supply chain optimization is concerned.

This article was written by Lokad, to read more, the complete article on Lokad’s blog