Every Supply Chain has to have at least one manufacturer somewhere along it's length, and that almost always means there's the potential for a problem.

If that manufacturing business is using an ERP software package, there's a good likelihood they are also using a key module of the software called MRP, or Material Requirements Planning.

And herein lies the problem; MRP software, which was originally formulated in the 1950's and formulated as a computer program in the 60's has hardly been changed in the past 50 years. Unfortunately, our world has. And the material requirements planning logic that was so promising that it led a revolution in the 1970's and 1980's as computers became common, no longer is a good fit for today's operating realities.

The life cycles of many products have been compressed dramatically. After many years of trying to reduce lead times, the trend to outsourcing has led to purchased parts and materials lead times that are longer than ever before. Nevertheless, customers now habitually order products with shorter lead times than ever before. And, customers feel entirely free to change their minds. Forecasts are the least accurate they've ever been and they've NEVER. And further after decades of formal efforts aimed at reducing the variability in processes of all kinds, the longer lead times, shorter product cycles and expanded volatility in demand has created more variability than ever before.

Which gives us a real dilemma when it comes to MRP.

On the one hand, the MRP logic - which takes either a forecast or real demand and uses the Bill of Material and a database of inventory and order data to work out what's needed, how many are needed, and when - has never been more necessary. The ability to recalculate is vital when so much is changing so fast.

On the other hand, the volatility combined with MRP's reworking means our MRP systems are swamping planners with exception messages, and planners can't keep pace; and priorities are changing so often that no-one can respond effectively.

One consequence of this is, manufacturers in many environments (for example, those with any complexity in their BOMs) are forced to live with constant, chronic shortages of purchased materials and parts and manufactured parts, and finished goods that is having a devastating effect on inventory levels, customer service levels and whole plant productivity.

Now, because the manufacturing business is in a Supply Chain, and is attempting to cope with demand signals and generate their own ..., the impact of this badly broken engine at the heart of a manufacturing business has implications for the entire Supply Chain.

What's the solution? An innovative new approach , in many ways a fusion of the best of MRP with concepts from DRP (Distribution Requirements Planning), Lean manufacturing, Theory of Constraints and some pure innovative thinking. It's known as Demand Driven MRP, abbreviated to DDMRP, and the scale and nature of results so far in users of all kinds has been spectacular.

The DDMRP technology has been fully documented in the new, 3rd Edition of Orlicky's Material Requirements Planning an updated version of the book, Orlicky's MRP, that first documented the classic MRP approach almost 40 years ago.

Typical results include substantial reductions in inventory (as much as 60% for some users), together with major improvements in Customer Service, often to the 98% order-fill-rate and better. When this is combined with reductions in the expenses associated with expediting (freight in, freight out, and overtime) the combination is matchless in terms of the potential for improved performance.

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