demand driven material requirements planningdemand driven material requirements planning - (DDMRP) - A method of planning inventories that involves five components:
- inventory positioning 2. grouping of parts into buffer profiles based on lead time; variability in demand and supply; whether the part is made, bought or distributed; and whether significant order multiples are involved
- dynamic buffers 4. planning rules that tie supply orders to consumption 5. visible and collaborative execution
Perspective: Traditional MRP systems are push systems based on forecasts of demand for finished products and generally focus on local optima throughout the supply chain. In contrast, DDMRP is a pull system based on strategic placement of inventories across the supply chain with strategic buffers positioned for critical raw materials, work-in-process, finished goods and possibly distribution inventories. The system is based on measures such as buffer status that better reflect both a firm's and a supply chain's ability to respond effectively to customer demand.