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Demand-Driven MRP – Part I: Over View

Dear All,

 

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

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 $
  • Variability

Manual Interventions

Year End Sales / Peak Seasons of sales

Special Promotions

Visible and Collaborative Execution

Tools to Monitor buffers

Reports

 

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.

For better Understanding of DD MRP use this link to know in detail and more about DD MRP concept so in my nest part when I show how to use tools it will be understandable in better way

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