Demand Driven Material Requirements Planning (DDMRP) is an innovative supply chain modeling, planning, and management methodology for protecting and ensuring the information and materials flow.
The model leverages the best of MRP, DRP, Lean, Theory of Constraints, and Six Sigma to provide a new method to model, plan, execute and manage your supply chains that are more relevant today.
For years, supply chain managers have struggled with a major controversy within the system – how to strike a balance between two indicators:
- inventory levels optimization
- the service level increasing
The conflict is that the higher the service level, the more inventory we need to keep. But the more inventory we keep, the more working capital we have frozen, and this lead to an ROI decrease.
So, in search of a balance, the logisticians spend a lot of effort, either increasing inventory to improve the service level or reducing inventory levels to free up finances.
The main task of DDMRP is to optimize stocks and increase the service level at the same time, while the methodology allows you to reduce the dependence of production planning on forecasting.
This method was developed by the Demand Driven Institute and is now approved by ASCM/APICS.