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Demand Driven Material Requirements Planning (DDMRP), by Carol Ptak, Chad Smith
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In the 1950s, a planning method was conceived called Material Requirements Planning (or MRP). MRP changed the world of manufacturing forever. But times have changed customer tolerance times are much shorter, product variety and complexity has increased, and supply chains have spread around the world. MRP is dramatically failing in this New Normal. Demand Driven Material Requirements Planning (DDMRP) is a practical, proven, and emerging method for supply chain planning and execution that effectively brings the 1950s concept into the modern era. The foundation of DDMRP is based upon the connection between the creation, protection, and acceleration of the flow of relevant materials and information to drive returns on asset performance.
Using an innovative multi-echelon Position, Protect, and Pull methodology, DDMRP helps plan and manage inventories and materials in today s more complex supply scenarios, with attention being paid to ownership, the market, engineering, sales, and the supply base. This method enables a company to decouple forecast error from supply order generation and build in line to actual market requirements, and promotes better and quicker decisions and actions at the planning and execution level. DDMRP is already in use by MAJOR Global 1000 companies. Demand Driven Material Requirements Planning is THE definitive work on DDMRP, and will be required as courseware for all those taking the Certified Demand Driven Planner (CDDP) Program.
Features
- THE authoritative work on the emerging DDMRP methodology.
- Provides a clear, concise, and compelling explanation of the breakdown of conventional planning systems.
- Includes immersive and extensive examples that bring DDMRP to life across multiple industries, including vertically integrated supply chains, fast-moving consumer goods (FMCG), heavy fabrication and assembly, and retail and wholesale distribution.
- Features over 300 graphical figures.
- Ptak and Smith are world renowned leaders in the fields of MRP, Theory of Contraints (TOC), Quality Improvement, and Supply Chain Management.
- Sales Rank: #192312 in Books
- Published on: 2016-07-11
- Original language: English
- Dimensions: 10.00" h x 1.00" w x 7.00" l, .0 pounds
- Binding: Hardcover
- 368 pages
Review
What industry experts are saying about Demand Driven Material Requirements Planning (DDMRP)...
With the development of DDMRP and now the writing of this book, Ptak and Smith have broken through common practice to bring common sense to supply chain management. If your company is facing variability and uncertainty across your supply chain and the future looks little like the past, then this book holds the answer.
DDMRP represents the future of planning in today’s complex and volatile supply chains. Inherent flaws in the traditional planning approaches are exposed and resolved for today’s complex adaptive supply chains. With the Demand Driven Adaptive Schema and the pivotal position of Demand Driven Sales and Operations Planning, this is not just a better way to plan; it is a better way to run an organization in today’s hypercompetitive environment. Operations and strategy can now easily and realistically be connected bi-directionally, allowing both to adapt to critical changes for the best return on shareholder equity.
This book is the ultimate reference for this new way of life across a dynamic adaptive supply chain. —Dick Ling S&OP Consultant and Author of Orchestrating Success
About the Author
Carol Ptak, CFPIM, CIRM, is a partner with the Demand Driven Institute, and was most recently at Pacific Lutheran University as Visiting Professor and Distinguished Executive in Residence. Ms. Ptak is a past president of APICS, and has authored several books on MRP, enterprise resource planning (ERP), Lean, and TOC.
Chad Smith, CDDP, is a co-Founder and Partner at the Demand Driven Institute, and co-Founder and Managing Partner of Constraints Management Group (CMG), a leading implementer of demand driven operational systems for mid-range and large manufacturers and supply chains. Mr. Smith has co-authored and contributed to several books on MRP, TOC, and demand driven performance.
Most helpful customer reviews
1 of 1 people found the following review helpful.
A very good book that learns you step by step how to ...
By Derk Kuiper
This is what the Material and Production planners were waiting for !
Demand Driven MRP is not just another book about old concepts, it is a study book to become a Certified Demand Driven Planner (CDDP). The book shows the long journey of Chad Smith and Carol Ptak in dealing with problems of traditional Material Requirements Planning (MRP). I was caught by the message of DDMRP during the APICS conferences in the US.
Although I have read white papers and other materials about DDMRP, this book gives a comprehensive view of managing the flow of materials and products inside the company as well as between nodes in supply chains.
The authors start with a brief reflection on traditional MRP as it currently is still part of numerous Enterprise Resource Planning (ERP) systems to control the production processes aimed at delivering the right products on time to the customers.
The main problem with MRP in traditional environments is that it is not compatible anymore with increasingly dynamic environments (such as shorter product life cycles, more severe competition, longer transportation lines, more demanding customers, more diverse customer segmentation). The problem with traditional MRP is that it makes all items below the master scheduled end items dependent on variations in demand for individual products. This means that on the different levels of the structure of a product, demand becomes dependent on the volatility of demand for end items. When companies have many individual products, each with their own variability, the complexity may explode to lower levels of the bill of material.
The effect of volatility is that it changes from speeding up deliveries of lower level components to delaying production or purchasing because of shifting priorities. All variation comes with a cost of expedited shipments, material shortages that hinder production processes and delays that contribute to high levels of work in process. This variability is the main cause of the bi-modal distribution of inventory: too many of the wrong products and too little of the goods you need for servicing your customer.
This book makes clear how inventory could be strategically placed on the lead time line (manufacturing lead time and purchasing lead time) in order to create buffers. It clearly demonstrates how lead time for end products and components can be decoupled, so they cannot have a disturbing effect, often called; the bullwhip effect. The book shows methods to how inventory can be located at strategically defined places, and at the same time save money that is invested in inventory. As inventory is the operations management contribution to the amount of working capital employed, lower inventories can directly contribute to the higher return on working capital. At the same time, lower levels of working capital give the opportunity to invest the savings in more profitable activities.
Demand Driven MRP shows that the concept is about planning availability of materials, but it is also an instrument for execution, by showing what materials are actual to be ordered at suppliers or manufacturing. DDMRP planning works with management of buffers (decoupled items) and management of lead times for the non-buffered items. Each buffer consists of three zones, colored red, yellow and green. The red zone consists of safety, but is very different from safety stock in MRP, because all levels of inventory, including safety are dynamically updated and actively used by the planners and purchasers.
The book focuses on the attention to maintaining flow from the perspective of materials and products including distribution inventory, but also involves capacity constraints (bottlenecks) in manufacturing, purchasing and distribution. For these, the method is about planning the material flow by using the ‘ net flow equation’, but also on controlling actual inventory per product and component in the execution phase.
The book gives tools to calculate the effect of strategically placed buffers and dynamic adjustments and compare this by the inventory investment using traditional MRP. This makes the method very trustworthy.
I agree with the authors that the concept is very intuitive for professionals in material and production planning. Implementing the thoughts and concepts in the organization requires an organization-wide acceptance in order to take full advantage.
Conclusion: A very good book that learns you step by step how to use the innovative new concept of Demand Driven MRP, with the five step approach:
1.Strategic Inventory Positioning
2.Buffer Profiles and Levels
3.Dynamic Adjustments
4.Demand Driven Planning
5.Visible and Collaborative Execution
0 of 0 people found the following review helpful.
A must read for all those who are dependent upon MRP.
By John Melbye
Carol Ptak and Chad Smith continue to bring relevant methodology to the world of manufacturing and planning. This methodology and the principles of DDMRP solve many, if not all, of the problems we face in manufacturing. And, it extends to distribution and other industries as well. This book clearly illustrates what is wrong with the methods we are using today, then proceeds with a comprehensive solution that builds on many of the basic principles that we all use today. A must read for all those who are dependent upon MRP and for those manufacturers who think they don't need MRP.
0 of 0 people found the following review helpful.
The next step in Supply Chain evolution
By KB
Original MRP concepts were brilliant and revolutionized manufacturing, but the methods were never built to cope with the volatility of the modern world. This is a must read for those looking to learn more about DDMRP and how it can improve your supply chain. Expanding upon the ideas first set out in Orlicky's Material Requirements Planning 3rd Edition, this does a very good job of explaining how DDMRP works. It has a great chapter on linking DDMRP with S&OP. In 20 years, I believe most companies and software will have replaced traditional MRP methods with DDMRP.
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