In the last blog post we discussed the compatibility of NetSuite’s native electronic signaling (reminders, etc.) with some of the basic principles of demand-driven materials requirements planning, aka DDMRP. To take that a step further, DDMRP specifically uses multiple color-codings to signal inventory positions to the planner:
We can accomplish this in NetSuite through a variety of native features, including color highlighting on saved searches:
Traditional MRP solutions typically will result in inventory fluctuating wildly between overstocked and understocked—and that’s exactly the problem that DDMRP is meant to help resolve. But like any system, the key is really how you implement it. One of the things that I really love about the new third edition of Orlicky’s Material Requirements Planning is how co-authors Chad Smith and Carol Ptak explain in detail the calculations and considerations required to implement a DDMRP system.
One of the key points is identifying decoupling points in the system—essentially recommended stages at which to store some semi-finished (WIP) product to help buffer against demand fluctuations. One of the tools used for this is called a Matrix BOM. This utility helps identify sub-assemblies that are common amongst several finished goods products and looks something like this:
This again is presented in NetSuite using our Pivot Report functionality. Seems there’s a
common theme beginning to emerge…
In all there are five sequential components of DDMRP:
- Strategic inventory positioning
- Buffer profiles and levels
- Dynamic adjustments
- Demand-driven planning
- Visible and collaborative execution
Steps 1–3 are iterative and should be revisited often to ensure accuracy.
Step 4 is where the planning logic comes into play and Step 5, as discussed previously, is the signaling component to make sure that everyone is on the same page.
So this is all very good, but the proof (as my mother taught me) is in the pudding. How do we know any of this actually works? Tune in to Part 4 of my blog to find out! And yes, I promise that will be the last of the DDMRP blog series—but NOT the last you will hear from me on DDMRP. Until next time…
-Gavin Davidson - Vertical Market Expert, Manufacturing