John Rogelstad, managing consultant at The Logic Factory, explains the concept behind Demand-Driven Material Requirements Planning (DDMRP), and how it’s impacting North American manufacturing.

DDMRP is intended to serve as the intermediary between long-term sales and operations planning and execution, Rogelstad says, replacing the role of traditional MRP and filling the tactical space usually occupied by master production scheduling.

The idea has been around in some form since the early 2000s. The Demand Driven Institute formed in 2007, then spent the next 10 years formalizing and codifying the concept.

DDMRP helps by moving final decisions on product details and content further upstream in the supply chain, delaying as long as possible commitments to inventory until manufacturers have actual demand levels at hand. Rogelstad says it’s much more adaptive than previous ideas and rules of thumb employed to balance inventory and demand. “It serves the market better.”

Since its inception, DDMRP has been growing in popularity, as supply chain planners weave its principles into their products and inventory practices. At last count, Rogelstad says, approximately 2,500 companies had adopted it, making it still a “niche philosophy” in the world of supply chain management.

DDMRP doesn’t entirely replace the forecast, but it takes much of the guesswork out of final decisions on inventory acquisition and deployment. It might appear that a company using the practice is adding inventory at the outset, but the opposite turns out to be true. “It’s asking you to think about the inventory that’s in work in process, so you can build what you need.”

Rogelstad says DDMRP is gradually catching on in North America, as manufacturers seek ways to improve flow in the plant and minimize unneeded inventory. “Probably in the next decade it will start to become more of a household word,” he adds.