Demand Driven MRP - (DDMRP) - is a new breakthrough approach that utilizes your existing ERP software to provide: a simplified customer relationship management (CRM) solution to address a chronic, nagging MRP-related issue. The demand for more efficient and effective ways to manage the supply chains within an enterprise have created a demand for true simplified MRP. The adoption of this new enterprise resource planning (ERP) applications has provided countless benefits to businesses by streamlining the entire supply chain management process. A demand driven MRP solution has the ability to reduce operational cost while effectively increasing cash flow and enhancing financial performance.

There are two major areas in which demand driven MRP can be applied. First, it can reduce costs by strategically buffering orders and eliminate inventory holding times. Second, it can improve the quality and quantity of products produced. Strategic locking reduces the cost of storage and returns by: (I) automatically removing outdated or empty products from shelves when the stock level reaches a pre-decided limit; (ii) only keeping products available to customers when they meet the defined purchase requirements; (iii) notifying the customer on a specified date and time that the product is now available for purchase. This decoupling of inventory holding times and product availability enables demand driven mrp to be a proactive partner in the strategic control of inventory.

Many factors affect MRP decisions and the process of implementing demand driven mrp includes: replenishment, seasonal, frequency of manufacturing, and many other factors. Strategic inventory positioning provides insight into several issues critical to the success of any manufacturing operation. A primary focus of strategic inventory positioning is reducing downtime due to outages, equipment downtime and excess inventory. Strategic inventory positioning also addresses short-term and long-term liabilities arising from seasonal fluctuations in demand for particular products. It is important to consider whether these issues can be solved through production processes or will additional equipment and inventory to be required.

Strategic inventory management is a process of improving quality, lowering waste, increasing lead times and reducing supplier risk. It is designed to increase the speed at which goods are produced and to lower the cost of manufacturing by improving the efficiency of the supply chain. With the introduction of a dedicated MRP system there are a measurable reduction in the level of product inventory lead times and the time to bring new products on-site for an assembly. MRP systems can measure the quantity of materials stored on-site versus the on-site quantity of goods ordered per day. All of these improvements will have a direct positive impact on customer satisfaction.

Many ERP packages are designed with the sole purpose of providing planned inventory on demand. This leads to the assumption that if demand driven MRP is implemented, then the ERP software itself should be optimized for on demand production. However, there are several challenges inherent in the implementation of on demand MRP that must be addressed during the implementation process. These include the scheduling of material, labor, and material costs for both scheduled and unplanned visits to the ERP warehouse. Although all of these costs are time-consuming and lead to increased overhead, planning for these activities in advance can eliminate some of the challenges of on-demand MRP implementation.

Other challenges for on demand driven or implementation include the increase in the number of on-site inspectors required to record inventories, increase in on-site processors needed to maintain the inventories as well as an increase in on-site material suppliers and lessening the lead times required to meet delivery deadlines for completed components. Some additional challenges for this type of MRP include increasing inventory holding times and reducing hold times at local and regional depots. Inventory lead times at regional distributors will also increase as companies move their operations to reduce costs and increase cash flow. If successful, companies that are implementing this type of MRP will be rewarded with both positive cash flow improvements and a reduction in cost base components.