Description
Demand Driven Material Requirements Planning (DDMRP) is a quantitative method intended to optimize the supply chain performance of multi-echelon manufacturing businesses. This method delivers the quantities to be either bought or manufactured for any SKU of a BOM. A BOM (Bill of Materials) represents the assemblies, components and parts needed to manufacture an end-product. DDMRP seeks to determine, at any point of time, how much more raw materials should be sourced and whether more units of any SKU should be produced.
The goal of DDMRP is to mitigate the flaws of MRP and enable the supply chain practitioner to compute the quantity to buy and to manufacture when facing a multi-level BOM situation. The problem is challenging because there is no direct correlation between the quality of service of any intermediate SKU and the quality of service of the end product. DDMRP is very simplistic with regards to factors that cannot reasonably be dismissed when considering present computing hardware.
The supply chain exists to serve the economic interests of the company. While DDMRP is correct in stating that its prioritization is a more flexible approach compared to binary all-or-nothing approaches as implemented by MRPs, the prioritization scheme proposed by DDMRP itself is rather incomplete.
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