MRP (Material Requirements Planning) determines, based on the bill of materials, the master production schedule and available stock, what quantities of components to order or make, and by when. DDMRP (Demand Driven MRP), a more recent evolution, positions strategic buffer stocks and reacts to actual consumption rather than to forecasts alone.
This term is flagged as "to be defined" in the source data lake: the definition below corresponds to standard professional usage of MRP and DDMRP and should be treated as a working definition to be validated before final publication.
From classic requirements calculation to demand-driven logic
MRP starts from the demand set by the master production schedule for a finished product, then "explodes" that demand through the bill of materials to obtain component and sub-assembly requirements, level by level. For each item, it compares gross requirements against stock and orders already in progress, then proposes purchase or manufacturing orders by working backward through the necessary lead time. Its classic limitation is a certain "nervousness": a simple forecast change can trigger a cascade of replanning at every bill-of-materials level, and amplify variations from one link of the chain to the next (the so-called "bullwhip effect").
DDMRP was designed to address this limitation. Rather than recalculating everything from forecasts, it places buffer stocks sized at strategic decoupling points in the chain (often before a bottleneck or a long-lead-time supplier), and triggers replenishments based on actual consumption observed at these points rather than on forecast alone. The goal is to reduce plan nervousness and improve responsiveness to real demand variations, without replacing S&OP, which remains the overall level for managing the supply-demand balance.
FAQ
What is the difference between MRP and DDMRP?
MRP calculates requirements by cascading forecasts through the bill of materials, with a risk of nervousness when forecasts change frequently. DDMRP positions strategic buffer stocks replenished based on actual consumption, which limits this effect and improves responsiveness.
Does DDMRP replace the S&OP / master production schedule?
No. DDMRP is a requirements-calculation method, comparable in that respect to classic MRP. S&OP and the master production schedule remain the levels for overall management of volumes and capacities; DDMRP steps in downstream, to more finely determine replenishments.
Related terms
Master production schedule · S&OP · Lead time · Safety stock · Scheduling · VMI.
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