Demand Driven Material Requirements Planning (DDMRP) is a methodology for inventory and materials management that aims to decouple forecast error from order generation. It was developed as an evolution from MRP to better handle today's complex supply chains. The DDMRP methodology includes strategic inventory positioning, buffer profiles and levels, dynamic adjustments, demand driven planning, and visible collaborative execution. An Odoo application called Eficent.io implements the full DDMRP methodology within Odoo to help companies better manage their inventory and materials.
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Demand Driven Material Requirements Planning (DDMRP)
1. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
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Demand Driven Material Requirements
Planning (DDMRP)
Jordi Ballester Alomar
2. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Structure
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1. Introduction
a. What is DDMRP?
b. Why DDMRP?
c. What is the Objective?
2. Methodology
a. Strategic Inventory Positioning
b. Profiles and Levels
c. Dynamic Adjustments
d. Planning
e. Execution
3. DDMRP in Odoo
3. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Introduction
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4. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
What is DDMRP?
Demand Driven Material Requirements Planning
● Methodology for inventory and materials management.
● Borned as a natural evolution from MRP for the current environment, but it
also takes concepts from Lean, Six Sigma, ToC...
● It aims to decouple the forecast error and orders generation.
● Developed by Carol Ptak y Chad Smith.
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5. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Why DDMRP?
40 years later, are we again in a re-examination period?
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Circumstance 1970 2018
Supply Chain Complexity Low. Mostly linear chains. High. “Supply webs”.
Product Life Cycles Long. Years, even decades. Short. Usually months.
Customer Tolerance Times Long. Weeks or months. Short. E-commerce, hours.
Product Complexity Low. High. And growing...
Product Customization and Variety Low. Few options. High. Lots of configurations.
Long Lead Time Parts Few. Local vendors. Many. Global market.
Forecast Accuracy High. Low variability. Low. Complexity and competition.
Pressure for Leaner Inventories Low. Less penalized. High. And keeping up service levels.
Transactional Friction High. Hard access to information. Low. With a click.
7. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
The Bullwhip Effect
● It is an extreme change in the supply position upstream in a supply chain
generated by a small change in demand downstream in the supply chain.
● Inventory can quickly move from being backordered to being excess.
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Foundry Component Assembler
Distortions to relevant materials
Distortions to relevant information
Final
Product
8. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
What is the Objective?
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The Primary Objective of Operations Management:
“Protect and promote the flow of relevant
information and materials.”
9. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Decoupling Inventory
● An amount of inventory kept between entities in a manufacturing or
distribution network.
● Seeks to create independence between processes or entities.
(APICS Dictionary, 14th edition)
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Foundry Component Assembler
Final
Product
Decoupled Lead Time Decoupled Lead Time
10. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Methodology
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11. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
DDMRP Components
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Demand Driven Material Requirements Planning
Strategic
Inventory
Positioning
Buffer
Profiles and
Levels
Dynamic
Adjustments
Demand
Driven
Planning
Visible and
Collaborative
Execution
1 2 3 4 5
Model the environment Plan Execute
13. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Strategic Inventory Positioning
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Bill of Material Structure Report Bill of Material Matrix
14. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
DDMRP Components
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Demand Driven Material Requirements Planning
Strategic
Inventory
Positioning
Buffer
Profiles and
Levels
Dynamic
Adjustments
Demand
Driven
Planning
Visible and
Collaborative
Execution
1 2 3 4 5
Model the environment Plan Execute
15. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Buffer Profiles and Levels
● Buffers are composed of three zones, each of those with a clear purpose.
● Buffer zones are computed combining group and specific (to product and
buffer) properties.
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Buffer Profile
● Product Type
● LT Category
● Variability Category
Examples:
● PSL (Purchased Short
Low)
● MLH (Manufactured Long
High)
Product Specific
● Purchase Lead Time
● Manufacturing Lead Time
Buffer Specific
● Minimum Order Qty
● Location
● ADU Calculation Method
● Imposed Order Cycle
16. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Buffer Profiles and Levels
● DDMRP Buffer form view:
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17. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
DDMRP Components
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Demand Driven Material Requirements Planning
Strategic
Inventory
Positioning
Buffer
Profiles and
Levels
Dynamic
Adjustments
Demand
Driven
Planning
Visible and
Collaborative
Execution
1 2 3 4 5
Model the environment Plan Execute
18. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Dynamic Adjustments
● One of the main characteristics of a DDMRP buffer is that they are not static.
○ Automatic Adjustments: Mostly through the daily evolution of the ADU. But also
influenced by changes on the buffer profile, MOQ, DLT...
○ Planned Adjustments: There also exist tools to prepare the buffers to anticipated events.
Most common one is the Demand Adjustment Factor (DAF).
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19. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
DDMRP Components
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Demand Driven Material Requirements Planning
Strategic
Inventory
Positioning
Buffer
Profiles and
Levels
Dynamic
Adjustments
Demand
Driven
Planning
Visible and
Collaborative
Execution
1 2 3 4 5
Model the environment Plan Execute
20. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Demand Driven Planning
● One of the greatest innovations in DDMRP is the Net Flow Equation.
● It gives the Net Flow Position (NFP) which governs the supply orders
generation.
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On-Hand
Incoming
Qualified
Demand
Order Spike
Threshold
1 2 3 4 5
Order Spike Horizon
-1-2-3-4
Net Flow Position
Reordering Point
NFP = On-Hand + Incoming - Qualified Demand
21. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Demand Driven Planning
● Planning screen in Odoo
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22. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
DDMRP Components
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Demand Driven Material Requirements Planning
Strategic
Inventory
Positioning
Buffer
Profiles and
Levels
Dynamic
Adjustments
Demand
Driven
Planning
Visible and
Collaborative
Execution
1 2 3 4 5
Model the environment Plan Execute
24. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Visible and Collaborative Execution
● Current On Hand alert on the Manufacturing App:
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25. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
Visible and Collaborative Execution
● Current On Hand alert on the Purchase App:
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26. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
DDMRP in Odoo
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27. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
● Our solution is called Eficent.io (https://eficent.io)
○ Open Source (LGPL).
○ Available for versions: 12.0.
○ Certified by the Demand Driven Institute
(https://www.demanddriveninstitute.com/compliant-software).
● At Eficent we are also certified instructors and we provide public and private instructions.
DDMRP Application for Odoo
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28. Copyright 2018 Eficent Business and IT Consulting Services S.L. - Brussels, October 3-5, 2018 - #OdooExperience - www.odoo.com
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Thank you!
Jordi Ballester Alomar
mail: jordi.ballester@eficent.com
twitter: @jbeficent_erp