Demand-Driven MRP – Part I: Over View
Demand-Driven MRP in Short (DD MRP) has been introduced into SAP S/4 HANA with its 1709 Release. and there is a lot of Buzz regarding DD MRP, so I have decided to Share knowledge based on my understanding and experience.
Will plan this in 2 parts one with DD MRP overview and second with how to use DD MRP Tool
let’s jump into the topic
What is DD MRP
- DD MRP is Not an SAP Product its Delivered by Demand Driven Institute
- Its therein Market in from 10 years
- It’s a tool which reduces shortages and overloads
- Its secret is maintaining of Buffers
People are in assumption that DD MRP improves Forecasting but it’s a tool which works against Forecasting
Because 70~80 % can be only achieved and even in some cases it’s 40~60%
Key Points about DD MRP
- It’s Available in SAP From 1709
- DD MRP works on Buffer level Stock.
- It captures Spikes in Demand
- It’s only for selected Materials (high variability)
- Stock-outs & overstock will be controlled
- It supports MTS, MTO & ATO
- It’s a Combination of Pull & Push
- It’s not order based planning
- It’s not an auto driven tool requires manual interventions.
- It requires a lot of calculations and trails.
- At the moment it won’t support Fashion, Retail, VC Model
Variability in Supply Chain causes our forecast failure
when you see the Forecast accuracy at Finished goods Level it’s around 70 ~80 % but when Low-level Materials are used in multiple BOM’s then the accuracy of low-level forecast becomes 200 ~ 300 % inaccurate
MRP Type VB vs PD
Below are the Key parameters
- Identification of material
- Maintaining Buffers
- Adoption of Sudden Spikes
- Manual Interventions
- Visible and Collaborative Execution
Identification of materials: –
Tools -> Material Classification
the material gets classified based on below points
- Lead time
- Bom usage
- Value $
Year End Sales / Peak Seasons of sales
Visible and Collaborative Execution
Tools to Monitor buffers
Decuple Lead Time
Which Materials are planned in DD MRP Lead time won’t be calculated
Above are the Key Points which we need to understand before we go further.
the rest of the Tools usage and how to Activate DD MRP will see in next Part.
Please share, Like and Comment anything else you want to share or add points.
Thanks & Regards
SME – S/4 HANA Manufacturing & Procurement
SAP Ariba P2P