Why we need Demand Driven Buffers over the Medium to Long Term

Posted by Paul Johnston on 16-Mar-2021 09:49:57

Order_process

Introduction

Demand Driven MRP (DDMRP) is a great trigger to buy/make/distribute in the short-term. But what occurs over the next 1 to 12 months? Supply chains need the visibility over this period of time as well. Can we still use DDMRP? In short, yes!

What is DDMRP used for?

DDMRP is the operational component of the Demand Driven Adaptive Enterprise (DDAE) to deliver inventory and customer service benefits. For further case studies and education, please read this article on Demand Driven MRP & The Demand Driven Adaptive Enterprise.

DDMRP is an unconstrained order release process based on inventory buffers within the Decoupled Leadtime (DLT). These buffers can be sized using historical demand and/or future demand. This will ensure the buffers are dynamically sized. However, DDMRP has no visibility of the capacity available to supply those buffers. Demand Driven S&OP (DDS&OP) is vital to allow us to carry out a supply and demand reconciliation to recommend buffer adjustments to reduce these risks.

The relevant range of Demand Driven S&OP is everything outside the DLT up to approx. 1-2 years. DDS&OP also reviews historical performance of the buffers and ensures the key inputs to buffer sizing (Average Daily Usage (ADU), Red zone, Green Zone) are optimal.

A SAP IBP solution

The Olivehorse DDS&OP solution is built within SAP IBP and therefore seamlessly integrates with SAP Demand Driven Replenishment (DDR). The flexibility of SAP IBP plus the Supply Optimiser allows us to consider capacity constraints, material lead-times across the End-to-End network and calculate buffer adjustments outside the DLT.

DDSOP V2

More to share

Over the coming months, we will be sharing case studies about how our DDS&OP solution will help your business manage Seasonal Products, Supply and Distribution constraints, Group Planning and resources with mixed planning methodologies. 

To learn more about Demand Driven and the Olivehorse DDS&OP solution please contact our expert Paul Johnston. 

Olivehorse Consulting are Gold Partners with SAP, Affiliates of the Demand Driven Institute (DDI) and the Olivehorse DDS&OP solution is DDI certified.

 

Read more on: DDMRP, SAP IBP, Demand Driven Adaptive Enterprise, Integrated Business Planning, Olivehorse, Supply Chain Planning, Strategy, DDAE, DDS&OP, demand driven replenishment, demand driven institute