Last Spring DynaSys launched their latest product release named DSCP-2018. This innovative release delivered great business value to our customers including the DDI certified, Demand Driven Material Requirements Planning capability. At the time DynaSys was the first supply chain planning technology vendor to add DDMRP techniques to an existing End to End Supply Chain Planning solution suite. Combining DDMRP, alongside Advanced Planning System (APS) and traditional MRP capabilities could be confusing. But DynaSys turned this challenge into an opportunity.
The reasons for adopting DDMRP techniques into an established proven product was a natural decision for the DynaSys team. After more than 30 years in the Supply Chain Planning technology business we have been confronted by many “latest technologies” and our research concluded that DDMRP was something very different.
However often when I introduce DDMRP to a new audience there is opposition by those that see DDMRP as a rebadging of Kanban or Theory of Constraints. It is easy to understand why. When comparing DDMRP and Kanban at 5000 feet it is simplistically comfortable to put them in the same box. There are some similarities. Both techniques are replenishment planning methodologies triggered by an actual order. However, more importantly there are many differentiators.
There are a number of detailed studies that perform a mathematics comparison of the DDMRP and Kanban models. However there are also key differences from a planner visibility perspective.
Priorities of Supply.
Traditional Kanban triggers replenishment of a product without any additional information to differentiate between supply orders regarding priority or urgency. DDMRP on the other hand provides two key priority signals for the planner. The first is whether the replenishment is being initiated from a yellow or red inventory position. Anybody with a driver’s license can tell you that red is more important that yellow.
Another key advantage of DDMRP is the visibility of the buffer penetration. This is crucial for allocating priorities between supplies for products within the same inventory zone, i.e. yellow. Planners know to resolve supply shortages for those with the largest percentage of inventory buffer penetration.
An important part of the DDMRP model is the recalculation of dynamic buffers based on changes to average daily usage and other supply parameters. The frequency of buffer recalculation will depend on several factors and there is no one size fits all. Traditionally Kanban buffer sizes were set based on physical numbers such as the size of a bin. Most modern Kanban implementations have virtualized the Kanban size however no business process exists to dynamically review or adjust the buffer size as exists in DDMRP.
Not unlike buffer sizes, Kanban does not have the built in levers to adjust the plan for anticipating seasonal demand or known future events such as promotions. The DDMRP framework provides adjustment factors that can be used to influence the plan to accommodate the impact of known future events.
Many deployments of DDMRP use manually adjusted adjustment factors. A unique capability at DynaSys provides calculation of planned adjustment factors based on the results of a tactical APS. This approach delivers the intuitive simplicity of DDMRP for executing the plan while using the APS to adjust the longer plan for situations where stock must be increased in anticipation of peaks in demand.
In conclusion: It is important to first get a good understanding of DDMRP to truly appreciate its unique differentiation over other methodologies such as Lean/Kanban and Theory of Constraints.