mpcn8-distribution requirement planning.ppt

7/14/2019 MPCn8-Distribution Requirement Planning.ppt

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Distribution

Requirements PlanningChapter 8

Vollmann, Berry, Whybark,Jacobs



What is DRP?

DRP provides the basis for integrating

supply chain inventory information and

physical distribution activities with the

Manufacturing Planning and Control

system.



What is DRP?

Managing the flow of materials between

firms, warehouses, distribution centers.

DRP helps manage these material flows.

Just like MRP did in Manufacturing.

Links firms in the supply chain by

providing planning records that carry

demand information from receiving points

to supply points and viceversa.



DRP and the MPC linkages

In the Front End one of the linkages is with

demand management which connects it

with the customers (via the MPS).

In the Back End one of the linkages is with

the vendors.

Fig. 8.1



DRP and the Marketplace

DRP starts in the marketplace. Some firms

gather information on inventory levels and

product usage from customers.

This knowledge of their customer

requirements provides firms the

opportunity to make-to-knowledge.

This is specially true when they have

vendor managed inventories.



DRP Purposes:

DRP enables the firm to capture data,

including local demand conditions, for

modifying the forecast and to report

current inventory positions.

DRP provides data for managing the

distribution facility and the database for

consistent communications with thecustomers and the rest of the company.



DRP & Demand Management

Demand management is the connectionbetween mfg. and the marketplace.

Plans derived from the DRP information

and shipping requirements are the basisfor managing the logistics system.

Continually adjusts changes in the

demand, sending inventories from centralwarehouse to distribution centers wherethey are needed.



DRP & Demand Management (Cont)

DRP is connected to the logistics system

By helping determine vehicle capacity

planning.

Helping loading.

Developing vehicle dispatching.

Determining warehouse capacity.

Provides the data to accurately say whenavailability will be improved and delivery can

be expected.



DRP and MPS

DRP greatest payoff is from integratingrecords and information.

Crossing the area of interfirm MPCsystems means negotiating with supplychain partners for sharing costs andbenefits.

DRP permits evaluation of current

conditions to determine if mfg. prioritiesneed to revised.

Provides the master scheduler better info

to match mfg output with shipment needs.



Basic DRP Record

Forecast requirements (Gross Requiremen)

In transit (Scheduled Receipts)Projected available balance (Available)

Planned Shipments (Planned Order

Releases)

Fig. 8.3



Time Phased Order Point

Figure 8.4

Linking several warehouse records Fig.

8.5

Record packaging bulk materials Fig 8.6

Bulk material and MPS Fig. 8.7

Records for a single SKU, one warehouseover 4 periods. Fig. 8.8

Same for shipments logic Fig. 8.9

Same for error add-back Fig. 8.10



Safety Stock and DRP

When there is more uncertainty in terms of timing, then it may be better to use safetylead time.

When the uncertainty is in quantity thensafety stock may be better.

Carry safety stock where there is

uncertainty (near the customer) or wherethere is some element of independentdemand



Management Issues with DRP

Data integrity and completeness

Organizational support

Problem solving



Data Integrity and completeness

A key issue is the use of aggregateforecasts which are later on broken down

into detailed forecasts.Forecast errors should be avoidedespecially biased errors.

Management programs should beestablished to monitor the process.

Inventory accuracy depends on transactionprocess routines and discipline.



Organizational support

Where does DRP fit within the Supply

Chain Management? Fig. 8.13



Problem Solving

Sales promotion – Fig. 8.14

Closing a warehouse –

Fig. 8.15

Monitoring stock aging



Monitoring Stock Aging

Use strict first-in first-out physical

movement.

Identify those products that may be

heading for a problem before it is too late.

Build in exception messages to flag

potential shelf life problems.

If demand is dropping –

forecast should be

reduced. Available inventory or in transit

should cover a larger period of time.

Maybe shipped to another warehouse.

mpcn8-distribution requirement planning.ppt

Documents

drp information

demand information

warehouse records

planning records

demand management contdrp

distribution centers

distribution facility

customer requirements