What Are The Benefits Of Demand-Driven MRP?

In this interview, Ulrich Wetterauer, Head of Competence Center Value Chain Design & Configuration at Camelot ITLab, briefly sums up the key benefits of Demand-Driven MRP.

Mr. Wetterauer, what makes Demand-Driven MRP worthwhile for companies?

Ulrich Wetterauer: Demand-Driven MRP is primarily about mastering the variability and complexity of today’s global supply chains. And this leads to improvements that amount to a quantum leap.

What does that mean in more tangible terms?

Wetterauer: Companies that already use DDMRP were able to reduce their inventory by an average of 31 percent – across all industries! They were also able to significantly reduce expenses for material handling, storage costs and depreciation. In addition, significant improvements in service levels led to competitive advantages and increased sales. DDMRP compensates for fluctuations in demand and thus stabilizes production.

As a result, capital-intensive production and storage capacities that are no longer required can be released, overall plant efficiency increases, and production costs go down.

Fig.1.: The benefits of Demand-Driven MRP.

These are results that are inconceivable with traditional approaches.

Wetterauer: Exactly. This is demonstrated both by actual customer projects and the extensive simulations we have carried out on the basis of representative supply chains. Traditional, purely fore-cast-based supply chain planning approaches can definitely no longer keep up here. The future belongs to Demand-Driven Supply Chain Management and the companies that consistently implement this innovation.