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7/14/2019 MPCn8-Distribution Requirement Planning.ppt
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Distribution
Requirements PlanningChapter 8
Vollmann, Berry, Whybark,Jacobs
7/14/2019 MPCn8-Distribution Requirement Planning.ppt
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What is DRP?
DRP provides the basis for integrating
supply chain inventory information and
physical distribution activities with the
Manufacturing Planning and Control
system.
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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.
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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
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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.
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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.
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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.
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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.
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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.
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Basic DRP Record
Forecast requirements (Gross Requiremen)
In transit (Scheduled Receipts)Projected available balance (Available)
Planned Shipments (Planned Order
Releases)
Fig. 8.3
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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
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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
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Management Issues with DRP
Data integrity and completeness
Organizational support
Problem solving
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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.
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Organizational support
Where does DRP fit within the Supply
Chain Management? Fig. 8.13
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Problem Solving
Sales promotion – Fig. 8.14
Closing a warehouse –
Fig. 8.15
Monitoring stock aging
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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.