A classical material requirement planning (MRP) used to determine the materials and components needed to produce the product do not fit current dynamic changes in supply chains. Market fluctuations and increased customer demand for shorter lead times result in supply chain shortages and make it hard to maintain a stable production pace.
In this dynamic environment, the classical MRP can not only be overwhelming in number of actions and the priorities it generates, but also can put you in a vicious circle of stockouts and overstocks.
As a result, many companies are now turning to Demand Driven Material Requirements Planning (DDMRP) as a solution.
DDMRP is a planning methodology that separates supply and demand by using decoupling points and buffers to maintain optimal inventory levels. This approach helps prevent the "bullwhip effect," which occurs when even small fluctuations in demand at downstream of the supply chain cause progressively larger fluctuations all the way up the supply chain. Each buffer covers the average use of a part and can be adjusted to accommodate demand spikes.
Microsoft Dynamics 365 Supply Chain Management supports DDMRP, making it easier for companies to adopt this methodology. DDMRP has been proven effective in variable environments where your customer requires lead time that is shorter than your cumulative lead times. Microsoft Dynamics 365 Supply Chain Management puts into practice the Theory of Constraints. Strategically placed decoupling points and buffers can protect your manufacturing efficiency and shorten the time to delivery.