Supply Planning Improved. Bringing Demand-Driven Supply Chains to Life


O8 DDMRPII™ (End-to-end supply planning and execution) delivers objectives more effectively than DRP or MRP

Key inventory management objectives:

  • To deliver 99% fill rate and service level with minimal stocks at minimal cost
  • Reduce number of stock outs
  • Minimise excess stocks & obsolescence
  • Minimise administration, handling & transport costs
  • Reduce number of exception messages that drive non-value added activity
  • Allow business to focus on high value add processes and decision making
  • Minimise the reliance on inaccurate forecasts
  • Allow the supply chain to cope with uncertainty


Key Issue

DRP Process

O8 DDMRPII™ Process

Selection of appropriate replenishment control technique

  • 2 basic techniques set manually (Call-off or Make to order (MTO), & MRP.)
  • Reliance on forecast results in a focus on selecting the correct forecast algorithm – the algorithms can be highly complex & are often augmented by a specialist forecasting system.

7 separate control techniques: 

  • (MTO, RoP, Poisson distribution planning, Re-order cycle, Multiple level Re-order Point (kanban), rate based, promotions & event management).
  • Use of VVA (Volume & variability analysis ) to determine appropriate control technique by SKU.
  • Inventory control techniques re-assessed formally every month.

Correct safety stock in system

  • Inventory safety stock is manually set using specific volumes or number of days cover. Parameters often not maintained.
  • Safety stock built into calculation via customer service parameter. Stock is appropriate to each SKU and is recalculated monthly.

Calculation of inventory targets accounting for demand variability & forecast volume

  • Forecast algorithms attempt to predict time based fluctuations from history and build result into the plan.
  • Stock levels set for overall expected volumes and additional inventory added to cater for demand variability.
  • Selective use of volume forecasts based on historic accuracy.

Account for batch & delivery constraints when planning inventory targets

  • Inventory requirement accurate on day MRP is executed.
  • Exception messages created to encourage rules to be broken to restore plan
  • No formal ability to cater for delivery schedules or planning schedules in inventory target setting.
  • Targets are amended during calculation to account for lead-time & batch constraints.
  • Additional tools support multiple planning and execution business cycles. eg Fixed planning & ordering schedules.
  • Ability to link planning process and SKU level inventory targets to ABC analysis.

Support for financial and business planning

  • Inventory plan changes each time MRP is run.
  • Main driver of plan is the forecast – operational constraints hidden.
  • Individual planners alter plan with ‘gut-feel’ or off-system calculations that take into account recent business drivers, eg reduce stock levels. No ability to link these day to day decisions with an overall plan.

  • Separation of planning from daily ordering process results in inventory targets which are approved by business at S&OP meeting.
  • Inventory is attributed to operational constraints and the effect of altering those constraints can be seen in real time simulation tools.
  • Key decision parameters are service and inventory positions – supports clear link between policy setting & business mgt.

Rigorous & robust process

  • Substantial part of planners’ role undertaken ‘off-system’ on spreadsheets.
  • No in-built mechanism for reviewing appropriateness of safety stock numbers or current plan.

Monthly S&OP review cycle ensures robustness of targets & execution:

  • Metrics & KPI’s produced
  • Continuous improvement activity is focused on inventory drivers & improving business performance
  • Every SKU is reviewed & correct control technique & inventory target is re-assigned
  • Improvement activities are measured & incorporated as they happen

Minimisation of time delay and cost in running the planning process

  • MRP usually run on a fixed schedule. Output is a revised plan driving re-work and alterations to the plan on a regular basis.
  • Management of plan outputs is a manual and time consuming process.

  • Inventory plan fixed through operating period.
  • Replenishment signals produced automatically.
  • Plan & execution success constantly monitored & alerts produced ahead of issues occurring.

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