Despite relative confidentiality in a world of the supply chain dominated by the MRP methodology – Material Requirement Planning – the DDMRP methodology – Demand Driven Material Requirement Planning – derived in particular from “lean management” is beginning to make its mark ten years after its introduction in France. Beyond better industrial performance, defenders of the solution highlight its remarkable adequacy with an era dominated by uncertainty and the quest for resilience at all industrial levels. Meeting with Jérémy Catteloin, expert engineer in supply-chain management at BEVOLTA.

- The Demand Driven methodology is still relatively unknown in France. What obstacles do you encounter with the industrial and distribution companies you meet?

To begin with, many top managers and even supply-chain directors are unaware of the shortcomings of the MRP method – Material Requirement Planning – which remains to this day the most widely used within industrial companies to manage flows. Identifying the obstacles of a flow management method such as MRP requires a detailed knowledge of the operating mode of a supply chain and of ERP (in which MRP constitutes the heart of flow calculations), which does not is not always the case with top management, far from it. Consequently, to the extent that many decision-makers see the limits to the MRP calculation poorly, they do not necessarily perceive the need for an alternative solution in response to these limits.

- What are these limits?

MRP – Material Requirement Planning – is great in theory but it does not adapt well to the reality of the field, various variability and in particular forecast errors, where DDMRP has a much richer footwork. Indeed in the Demand Driven methodology, and in particular in the systems which have integrated it, we have a field of possibilities in terms of settings which is natively wide and which makes it possible to address almost all the problems without having to develop add-ons. -on Excel or divert the use of the ERP system in place.

- We gladly hear supply-chain managers say that their supply chain is already linked to demand – “Demand Driven” in the acronym DDMRP – even though they operate according to the classic MRP methodology. How to explain it?

In their minds they are already demand-driven insofar as they organize and optimize their supply chain based on demand forecasts. They therefore think they operate in a pull mode. So when they see "Demand Driven", they think "we're already there". However, there are two fundamental differences between the MRP calculation method, they do not necessarily perceive the need for an alternative solution in response to these limits.

Manage inventory as closely as possible

In the DDMRP calculation, we really have the ability to decouple the management of multi-level stocks from the forecasts of finished products, while in the MRP calculation, whatever the level of the BOM, all the calculations are based on a single assumption: the forecasts of finished products. Thus, the further one looks into the nomenclature and the more finely one looks, the more the forecast errors increase. So where the forecasting error is admissible under the management of stocks of finished products in a distribution network, it is much less so in the management of an industrial supply-chain with much deeper levels of nomenclature and manufacturing times of several weeks or even several months for certain references. It should be noted here that the heart of the deployment of a DDMRP targets an industrial supply-chain on the different levels of nomenclature from raw materials to finished products, but also distribution supply-chains to facilitate the management of stocks and flows. in a distribution network. We can see it clearly: using the details of the sale of a finished product over an 8-month horizon to go and plan tomorrow the quantity of component X that we must manufacture tomorrow is very difficult. This means that in many supply chains, the result of the MRP calculation that runs every day is not used to manage these levels of the nomenclature. It is the experience of the scheduler or the workshop manager who determines the quantities to be manufactured, in other words the MRP calculation is very often disengaged on a good part of the industrial supply chain. Often without the managers even being aware of it! Field users find that if they applied the MRP calculation, it would make them make inefficient or even counterproductive decisions with regard to customer service, productivity, in short, industrial efficiency. They must therefore develop interpretation techniques in parallel with the MRP calculation. For an often random result… In the DDMRP calculation, on the other hand, you can configure at each level in relation to the finished product forecasts and position a cursor on the level of independence that you want to use at each point of the nomenclature. We therefore have a real decision-making and management tool, with the possibility of disengaging dependence on finished product forecasts or, on the contrary, remaining connected because we believe that we can have confidence.

Visual inventory management

The other key differentiator is that the DDMRP tools have been designed with key lean management ingredients, including visual performance management and user empowerment. This translates concretely into color codes according to the different layers of stocks – these are called buffers – allowing users to see immediately if they are in the right level of the buffer or if they are on the contrary at risk, especially with regard to safety stock. Security stock which, in the MRP system, is like a real black box since very few people manage to master them. Some groups or industries have developed specific tools alongside MRP to manage these safety stocks. These tools precisely use the good practices that are those of the DDMRP, to compensate for the shortcomings of the classic MRP.

In short, there are two essential things to remember about the DDMRP:

1. Needs calculations can be decoupled from forecasts
2. We have a visual tool for managing flows and stocks which is a decision-making aid for users who can work more easily by exception and be very reactive.

DDMRP tools like BEVOLTA make it possible to benefit from these best practices for managing and securing stocks, at a lower cost, while maintaining your ERP for the cross-functional and financial vision it offers.

Interview by Ghislain Journé