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This post is part of a series about DDMRP. After an introduction to DDMRP and a brief explanation of why DDMRP is needed, we have already covered the first two components of DDMRP: inventory positioning and strategic buffers.This one will be a relatively short post about the third component, buffer adjustments.


Manual Buffer Adjustments


The whole idea of DDMRP is that buffers are dynamic and adjusted automatically as average daily usage (ADU) changes. This automatic adjustment is quite robust and in many cases enough, but buffers might have to be manually manipulated if a big change in demand is planned or anticipated . This might happen for example because of the natural product life cycle (phase-in, phase-out), because of promotions or because of seasonality.


Initially DDMRP was somewhat poor in this regard (we’re not supposed to forecast after all), but I think that reality has imposed itself and with time DDMRP has incorporated different ways of buffer adjustments. The more frequent one is still what is now called a Demand Adjust Factor (DAF), which is nothing more than a factor that should be multiplied by the originally calculated ADU in order to obtain an adjusted ADU. A DAF less than 1 will decrease the ADU, while a DAF greater than one increases the ADU.


There are now other ways to adjust the buffer, namely zone adjustment factors and lead time adjustment factors but they are less common and should be easy to implement anyway, so we will focus on DAF here.


Implementation in SAP


In part IV we discussed how each zone (red, yellow, and green) is calculated using the average daily usage and other material attributes. To implement a Demand Adjust Factor we would need to be able to maintain a DAF per material and per period, perhaps in a transaction similar to the one used in standard SAP to maintain planned independent requirements (md61).


For this component, the DDMRP compliance criteria say that:

component 3.PNG

So in summary, in SAP:

  • there should be a transaction to maintain DAF per material and period
  • this DAF, if maintainted must be used in the zone sizing.

The next two posts will cover the last and most demanding DDMRP components: demand driven planning and demand driven execution.

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2 Comments

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  1. Nikos Giannopoulos

    Good afternoon Rui Pedro.

    I’ve been watching your posts on Demand Driven MRP and i find them very interesting and very usefull. My company, KAFKAS SA, the major electrical goods resailer in my country, could greatly benefit from this approach. We have 55 selling points and 1 central storage location, so, as you can understand, correctness of our inventory is essential.
    I would like to consider Demand Driven MRP for our company, maybe by a building a ptototype in our test environment. However, to fo so, i am missing the other two final parts of your blogs. Could i kindly ask you to point me in any source of additional info on this matter? May i ask for your help and guidance on building this ptototype?

    Thanking you in advance,
    Looking forward to hearing from you,
    Best personal regards,
    Dr. Nikos Giannopoulos

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    1. Rui Pedro Dantas Post author

      Hi NIkos,
      I was busier than usual in the last months of 2016, and unfortunately I haven’t had time to write the last posts in this series. I do plan to do it as shortly as possible, though.
      I have also sent you a private message, I would be glad to help where possible.
      Regards, Rui Dantas

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