Why DDMRP Is Fundamentally Flawed

Demand Driven Material Requirements Planning (DDMRP) is a multi-echelon planning and execution method. This technique is a further development of MRP and works through strategically placed decoupling points and stock buffers that promote the flow of information throughout a supply chain.

Previously, it has been described as being ‘Built for People, Not Perfection’. However, in this episode of LokadTV we try and learn whether this method really works in practice and why, as a technique, it is unfortunately fundamentally flawed.

The approach was built in response to the frustration that many practitioners were feeling with their supply chains and has gained traction over the last few years. DDMRP is made up of four pillars of innovation. We learn more about these four innovations and discuss exactly why introducing decoupling points is far too simplistic and naive an approach to take, especially when faced with the multitude of complexities that supply chains represent.

We discuss the principle of net flow calculation and understand why it is merely a glorification of a highly simple relationship between stock and demand that already exists. We also explain what the somewhat dramatic sounding “decoupled explosion” actually boils down to in practice.

To round things up, we go into more details on how using human inputs to tweak the systems through these decoupled explosions is, in fact, too crude a solution for satisfactory results and discuss the valuable insights that DDMRP does give on moving averages for forecasting, specifically in the frequency domain.

Timestamps

00:08 Introduction

00:32 What is the general idea behind DDMRP?

02:32 Why doesn’t it actually work in practice?

05:40 How well does the net flow equation work in practice?

08:45 What about the decoupled explosion? What is going on here?

10:20 Who is actually making those choices?

13:08 Do we prefer to rank by economic strength?

17:17 DDMRP has its flaws then, so should we completely discount it as a technique?

19:35 Are there any insight that DDMRP gives us that are actually pretty good?