Manufacturing the Cloud: DDMRP and the Death of a TLA, Part 2

I don’t know about you, but I’m really all about look and feel, so my reluctance to jump on the material requirements planning (MRP) bandwagon --and its resulting pages upon pages of unintelligible outputs -- really isn’t all that surprising.

Let’s go back a few years to when I was interviewing with NetSuite. I’d been keeping an eye on them for a while because I loved the cloud concept, and before I made up my mind whether to join I asked to see a demo. Apparently this is an unusual request that by itself almost resulted in them not hiring me, but in the end they relented and my future manager did a very high-level dashboard demo. I was hooked from the first KPI drill-down!

One of my favorite features in NetSuite is the Reminders. Think of Reminders as a user- and role-specific manage-by-exception list. An example for a purchaser is shown below:

  
In their native form, the reminders are a signaling system to direct the user to the specific things that they have to pay attention to today. In fact, during my demonstrations of NetSuite I rarely go through the menu structure at all — I can run the majority of the demo through my reminders. It’s pretty logical when you think about it:

1. Take an order

2. Item is in stock

a. Reminder to the shipper to fulfill 

3.  Item is not in stock

                 a. Reminder to the purchaser to buy more

                         i.     PO is place

        b. Reminder to the shipper to receive on due date

4.  Ship Product

                a. Reminder to A/R to invoice

5.  If invoice is overdue

        a.  Email the customer with a friendly reminder

6.  If the invoice is over $xxx

        a.  Set a Reminder to follow up by phone

7.  Repeat

To me, that is the essence of what DDMRP, aka demand-driven materials requirements planning, has done to the entire planning cycle: Planning by Exception.

Of course, lean concepts have been around for a long time and the basic principles have been the same: Reduce inventory and WIP to an acceptable service level target, but at some point you always expose the rocks of demand / supply inconsistency.

So how does DDMRP address this differently than the other methods? Essentially it combines some of what we know and love from MRP, DRP, Lean and Theory of Constraints and introduces some innovative new techniques to visually signal inventory positions as follows:

Obviously there is more to this than I can fit into a single blog post, so until Part 3 becomes available, do yourself a favor and check out Chad Smith’s introductory video on YouTube.

 

Chad, a partner at the Demand Driven Institute and co-author of the third edition of Orlicky’s Materials Requirements Planning, provides a great overview of how DDMRP works.

Stay tuned!

-Gavin Davidson - Vertical Market Expert, Manufacturing

Comments

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[Jeffrey Jones]

Very helpful -- not sure what a NetSuite Vertical Market Expert, Manufacturing really is, but Gavin has great insights and provides valueable opinions.

Thank you!