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How to improve Return on Investment (ROI) / Return on Capital Engaged (ROCE) thru DDMRP?


Are you experiencing ‘bi-modal’ inventory distribution?

A simple way of thinking about this is that if you have too much of the wrong inventory and too little of the right inventory you are experiencing ‘bi-modal’ inventory distribution.

Too little of the right inventory causes stock outs, back orders, expedites and missed sales. It also has a very disruptive impact on your planning and manufacturing operations personnel. Too much of the wrong inventory results in excess cash and space being tied up in inventory that isn’t helping you service market demand.

Through implementing Demand Driven MRP tactics companies arrive at a much more effective distribution of their inventory. Through strategic buffering they achieve a strategic position with the majority of parts showing adequate on hand stock to address today’s demand with inbound supply arriving at the right time to address future demand.

There are five components of DDMRP.  All five of these components are sequential and all are necessary for DDMRP to produce its full impact.  The five steps are:

  • 1. Strategic Inventory Position
  • 2. Buffer Profiles and Levels
  • 3. Dynamic Adjustments
  • 4. Demand Driven Planning
  • 5. Visible and Collaborative Execution