5 Myths About Demand Driven Supply Chain Planning

A leading provider of demand driven MRP (demand driven supply chain planning) based products, DDC Advanced Solutions, has today signed a strategic agreement with Coca-Cola Beverages Africa to deploy supply chain optimized (MRP) products in its multiple production, warehousing and distribution facilities across 10 Countries in sub-Saharan Africa. The new agreement will enable DDC to improve the quality of core product families, while lowering overall cost of ownership for the company. This is the first strategic partnership between a global beverage giant and an African operation. Read on to understand more about the benefits of this new strategic partnership.

MRP is a powerful management strategy designed to improve the quality, supply and demand in a market by planning for long-term sustainability. The core strength of demand driven MRP is in its ability to plan for eliminating excess capacity and improving efficiency and control in any manufacturing or distribution process. For example, when reducing inventory levels, improving cash flow and streamlining operations, increasing productivity, reducing costs, expanding markets and reducing waste, MRP reduces cycle time, manufacturing and inventory costs. A common myth is that MRP is just about increased manufacturing capacity. While increasing manufacturing capacity does help to solve some of the problems associated with the myth, MRP ultimately helps to achieve the true market demand.

Another myth is that reducing inventory levels only leads to short-term cost savings and higher profits. On the contrary, this approach results in significant cost over-runs because of increased inventory costs. Moreover, inventory bottlenecks can cause substantial customer feed-backs because they affect customer perceptions of service and satisfaction. By ensuring that we have the right kind of tools to reduce our lead times, we can also ensure that we are meeting the challenges of the marketplace head on, which ultimately increases our competitiveness.

Reduce your planning efforts and eliminate false plans: The other myth is that MRP planning is too complex and time consuming. However, the reality is that MRP planning is simply another tool for managing a supply chain and is easy enough to understand even for a small team of sales and marketing personnel. Reduce your planning efforts and increase your efficiency and control by understanding the true market demand and how to address it through the simple principles of demand driven MRP.

Increase your competitive advantage by having MRP compliant supply chains: MRP planning requires long term strategic planning and execution. This is because you need to identify the right kind of opportunities as well as the right timing to act. It is important to note that there are no magic bullets when it comes to demand driven MRP. There are no sure-fire techniques that allow you to predict the right time to act or prevent an opportunity from emerging. However, with the right data and the right insights, you can increase your competitive advantage by ensuring that your MRP compliant supply chains to meet the requirements of the global marketplace.

Reduce your costs by reducing inventory lead times: Another myth is that reducing inventory lead times is a myth. But the truth is that it is very much a fact that cutting inventory lead times means reducing the total cost of production. In fact, it is a proven fact that cutting inventory lead times can increase profitability by up to 20%. So, when planning your strategy, you should take into consideration the reduction in inventory lead times and look for opportunities to consolidate inventories. In fact, the challenge is to identify opportunities to reduce the average time for every commodity. If you use compressing inventory techniques, you can reduce inventory lead times by almost half and even more.