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DDMRP for IBP-Inventory

In the recent past DDMRP is a buzz word around SAP, future innovations in S/4 HANA-Manufacturing and IBP-Inventory modules are around DDMRP. DDMRP is available to customers from 1709 version of S/4 HANA (on-premise) and from 1802 version of IBP.

DDMRP for IBP-covers first 3 components of Demand Driven Institute. In this Blog I am covering the DDMRP with three DDI components available as standard with IBP-Inventory module as on 1902 release of IBP.

Components of DDMRP

SAP Integrated Business Planning for inventory supports first three components of Demand Driven Materials Requirement Planning (DDMRP) as defined by the Demand-Driven Institute:

1.Strategic Inventory Positioning by creating decoupling point buffers

2.Buffer Profiles and Levels

3.Dynamic Buffer Adjustments to buffer levels

DDMRP Setup

Sample Planning area-SAP3B has been introduced for DDMRP Buffer Planning.

‘Actuals’,’Average Daily Usage’ and ‘Demand Adjustment Factors’ are important Input Keyfigures to Recommend Decoupling point and to calculate DDMRP Buffer levels.

Note:’Demand Adjustment factor,’Average Historical Demand KF’s contribute together to populate values for ‘Average Daily Usage’

.Leadtime rank, Decoupling point indicator and variability rank are attributes as KF in Location product Master data.This will be purely as KF from version 1905.

There are 22 output Keyfigures available as on 1902 release for DDMRP.

Planning operators

DDMRP for IBP Inventory supports below 3 Planning operators.

Recommend Decoupling Points (Solve) operator to recommend decoupling points across entire supply chain. This operator also recommends buffer levels and creates decouple point indicator and decoupled lead time.

To Identify the De-coupling position six major criteria as per DDI.How this is mapped in DDMRP for IBP Inventory we will see in the below table:

Outcome of the Decoupling points will update the values in the Location product MDT for the product with reason for the decoupling point.

Calculate DDMRP Buffer Levels based on the Decoupling point decisions and run scenarios the app compares buffer levels and adjust the buffers according to buffer profile overrides (New from 1902). Buffer level algorithm also runs with the input and output KFs mentioned in the above picture.4 based on Decoupling point indicator highlighted in Decoupling constraints.

Note:DDMRP Planning operators will only run in Batch mode

DDMRP Apps

Manage Forecast error calculations Inventory Optimization app is used to calculate Average Daily usage and Variability of ADU by creating Forecast error profiles using this app with Keyfigures “Blended Sales (DDMRP)” and “Forecasted Sales (DDMRP)”. Multiple profiles can be created using this app to get different outputs

These profiles will be visible in Excel Planning view as Planning operator “Forecast error”.

‘Forecast error ’profile calculation is used to calculate the ADU.This is the 1st run before DDMRP planning operators as an input to recommend De-coupling points.

DDMRP buffer Analysis app is used to identify decoupling points and set buffer levels for DDMRP for the selected data set in the supply chain. In this app we can create, Run and Save, Delete (from 1902) the scenarios. If the results are ok, we can save the results to Baseline as well.

DDMRP Buffer analysis app will have the summary of Decoupled Leadtime, Average on -Hand and Average On-Hand value comparison between the selections. Also, to see the Decoupling points of individual Product location.

Supply Chain Network App

Below Analytics app helps to see the KF values in Selected supply chain network.Below example selected Keyfigures are Decoupled Lead time and Decoupling critical path Indicator(T).

Master Data Type:

Buffer Profile

Buffer profile is used to maintain the Item type,Lead time and variability category indicator values for Make,Buy and Transfer products.Different values can be maintained for each category using Buffer profile set ID.The outcome of the Buffer levels generated based on the comparison with Input values given in the Location-Master data and decoupling point indicator.

Location Product

DDMRP relevant attributes related to Location-Product MDT are highlighted here.

All other MDT details refer SAP help.

Excel Planning view

Final output will be like this

Buffer Zone analysis based on above results (Value of TW06 2019)

DDI components coverage between S/4 HANA and IBP

*Not Standard = It can be implemented with Camelot IBP suite

Conclusion

According to my assumption, I see that the SAP is moving towards DDI components 1 to 3 within IBP and the ouput of first 3 components acts as an input for Planning and Execution part (i.e. 4th and 5th of DDI component) in S/4 HANA DDMRP.

Note:S/4 HANA DDMRP part will be covered in my upcoming blog

*Camelot IBP Add-on output

Links and References

https://www.demanddriveninstitute.com/ddmrp  – Demand Driven Institute

https://www.amazon.com/Demand-Driven-Material-Requirements-Planning/dp/0831136286   Demand Driven Material Requirements Planning (DDMRP), Version 2 by Carol Ptak, Chad Smith

https://launchpad.support.sap.com/#/notes/2670816IBP for Inventory: DDMRP operator “Recommend Decoupling Points” does not produce any ‘ZONE’ outputs

https://launchpad.support.sap.com/#/notes/2700590IBP – DDMRP Buffer Analysis Error: “Unable to load data. Please verify that all required key figures exist

https://launchpad.support.sap.com/#/notes/2556745MAD Forecast Error calculation Defined-IBP for Inventory

https://www.youtube.com/watch?v=y9dIBP Inventory: DDMRP vs IO

https://www.youtube.com/watch?v=M-PfajA-2gUHow to Make DDMRP happen for SAP IBP with SAP, DDI and Camelot

https://launchpad.support.sap.com/#notes/2761155 – IBP for Inventory: Understanding the multiplication by 7 in the ZONE calculatoins for DDMRP

3 Comments
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  • Dear Reader

    There is a small error in Vankatesh’s description of the IBP calculations,   which originated from an error in SAP documentation, which is in the process of being corrected.

    The IBP software does not multiply ADU by 7,  which would be an incorrect calculation.   Internally,  IBP  is working with decoupled lead time in weeks and multiplies by 7 to get DLT in days.  The final equation for each buffer level is a function of ADU and decoupled lead time in days.

    Sorry for any misunderstandings…

    Mike Lipton

    SAP Supply Chain Solution Management