In this post, I’m discussing innovations 3 and 4, Decoupled Explosions and Planning Priority.
Innovation 3 is the decoupled explosion. The decoupled lead times gives us the exact position of the buffers. This is a shift from traditional MRP and MRP 2, that aren’t capable of supporting the process flow through the execution phase.
Decoupled explosion is a direct result of positioning the buffers at strategic positions in the BOM structure. Replenishment is based on buffer status and the explosion will therefore automatically stop at the next buffer, creating an independent dependency. (See below right.)
As can be seen from the diagram below on the left, MRP BOM explosions will run to full completion when triggered causing amplified variation and nervousness, meaning that open supplier orders will need to be changed, cancelled or expedited. DDMRP on the other hand uses the buffers to absorb variation, creating a smooth, systematic and stable transfer of relevant information and materials.
Innovation 4 is the Planning Priority.
This innovation works together with the buffers. The first status indicator is the colour of the zone in which the Net Flow Position (NFP) sits and the second is the Planning Priority. The rule in DDMRP planning is that if the NFP is in the green zone, no action is required. If the NFP is in the yellow zone then you must replenish to top of green. The second level indicator is the percentage in the planning priority. This value indicates the quantity of stock still available for use. The lower the percentage, the higher the priority. This approach ensures that stock levels are maintained at all times, ensuring that there is sufficient to satisfy the next customer order.
The table above gives a clear example of the planning priority based on the net flow position.
So in summary, we can see that the 4 innovations place DDMRP above the traditional MRP models and that it is far more suitable to the Complex adaptive systems that make up 21st century Supply Chains. The innovations are designed to work together to minimise variation, reduce the lead time to customer, ensure stock is available in each of the buffers to support a 95%+ Customer Service level at the optimal inventory level with the highest return on capital employed (ROCE)
Should you have any questions or comments, please in the comments section or email to firstname.lastname@example.org. You can also call me on +27 82 777 0922.
Thanks to the Demand driven institute for creating such an awesome methodology that is changing the face of supply chains around the world.
About the author
Dave Hudson is a supply chain and operations specialist and executive coach with over 30 years’ experience, and currently 1 of 5 endorsed Demand Driven instructors on the African continent.