This document provides an overview of Demand Driven Material Requirements Planning (DDMRP). It explains key DDMRP concepts like the available stock equation, qualifying sales order demand spikes, and generating supply order recommendations based on available stock levels. An example is shown over multiple days to illustrate how available stock is calculated and supply orders are generated in response to demand while considering order lead times and buffer profiles. The goal of DDMRP is to shift planning from forecasts to actual sales order demand to improve demand signal accuracy and inventory alignment.

1. Copyright © Demand Driven World, 2014
Demand Driven MRP and DRP
Supply Order Generation

2. Copyright © Demand Driven World, 2014
Demand Driven Planning vs. Execution
• Planning = Process of Generating Supply Order Requirements
• Execution = Process of Managing Open Supply Orders
Demand Driven Material Requirements Planning
Strategic
Inventory
Positioning
Buffer Profiles
and Levels
Dynamic
Adjustments
Demand Driven
Planning
Visible and
Collaborative
Execution

3. Copyright © Demand Driven World, 2014
The Available Stock Equation
• Unique to DDMRP – used to create supply order
recommendations
• On‐hand + On‐order – Qualified Sales Order
Demands
On‐Hand
On‐Order

4. Copyright © Demand Driven World, 2014
Breaking it Down
• On‐Hand: Inventory physically in stock
• On‐Order: The quantity of stock that has been
ordered but not received
• Qualified Sales Order Demand: Sales Orders due
today, in the past and qualified future spikes.

5. Copyright © Demand Driven World, 2014
Qualifying Spikes
Today 2 3 4 5 6 7 8 9
TotalQuantityOrdered
Order Spike Horizon = Length of time in the future in which spikes are considered
Order Spike Threshold = Quantity in daily buckets which would qualify for available
stock equation inclusion

6. Copyright © Demand Driven World, 2014
Shifting From Forecast to Actual Demand
From:
Forecast
Plant
Planning
Suppliers
Logistics
• Planned orders create supply orders in
anticipation of need
• Forecast error associated with Planned orders
results in inventory misalignments and expedite
expenses
Typically 50-70% Accuracy
To:
Sales
Order
Plant
Planning
Suppliers
Logistics
• Only qualified sales orders within a short range
horizon qualify as demand allocations
• Sales orders give a near perfect demand signal in
terms of what will be sold and when it will be sold.
Typically 99% Accurate

7. Copyright © Demand Driven World, 2014
What’s Different?
• Available Inventory – The on‐hand inventory balance
minus allocations, reservations, back‐orders and
(usually) quantities held for quality problems. Often
called beginning available balance. (APICS Dictionary 14th Edition, page 10)
• Differences
– Not on‐hand focused
– No planned order derived allocations
– Incorporates open supply
– Used to create supply orders recommendations

8. Copyright © Demand Driven World, 2014
Generating Supply Order Recommendations
10,000
5,000
Part Open
Supply
On‐hand Demand Available
Stock
Recommended
Supply Qty
Action
r457 5453 4012 1200 8265 0 No Action
f576 3358 4054 540 6872 3128 Place New Order
h654 530 3721 213 4038 2162 Place New Order
r672 2743 1732 623 3852 0 Expedite Open Supply
(Execution)
Supply generation is based what zone the available stock equation places the part
Available stock = on-hand + on-order – QUALIFIED sales order demand (past due,
due today and qualified spikes)

9. Copyright © Demand Driven World, 2014
DDMRP Intro
9
Part/SKU Info
35 units
70 units
52 units
Replenishment Lead Time = 7 days
Lead time = 7 days (Medium – 50%)
ADU = 10
Medium Variability (50%)
Order Spike Horizon = 7 days
Order Spike Threshold = 26 (50% Red)
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
Order Spike Threshold (50% of red)
Order Spike
Horizon
▼
1 2 3 4 5 6 7
Sales Order Demand
Supply Orders
-4 -3 -2 -1
As time progresses Sales Orders and Supply Orders advance toward the buffer

10. Copyright © Demand Driven World, 2014
DDMRP Intro
10
Order Spike
Horizon
▼
Order Spike Threshold
35
Sales Order Demand Supply Orders
1 2 3 4 5 6 7
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
-7 -6 -5 -4 -3 -2 -1
65
72
10
37
127 Today’s Order Recommendation: NONE
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
▪
▪
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 1
On-Hand
Available Stock
10 18 17
6 5
9 10

11. Copyright © Demand Driven World, 2014
DDMRP Intro
11
Order Spike Threshold
35
Sales Order Demand Supply Orders
2 3 4 5 6 7-7 -6 -5 -4 -3 -2 -1
37
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
55
72
48
79 Today’s Order Recommendation: 78
SPIKE
8
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
▪
▪
▪
▪
◄SPIKE!
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 2
On-Hand
Available Stock
18 17
6 5
9 10 30

12. Copyright © Demand Driven World, 2014
DDMRP Intro
12
Order Spike Threshold
Sales Order Demand Supply Orders
3 4 5 6 7
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
72
115
47
37
140
▪
8
Today’s Order Recommendation: NONE
▪
▪
▪
78
9
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 3
On-Hand
Available Stock
SPIKE
17
6 5
9 10 30
5

13. Copyright © Demand Driven World, 2014
DDMRP Intro
13
Sales Order Demand Supply Orders
4 5 6 7
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
55
115
36
37
134
8
Today’s Order Recommendation: NONE
78
9
▪
▪
10
Order Spike Threshold
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 4
On-Hand
Available Stock
SPIKE
6 5
9 10 30
5 6

14. Copyright © Demand Driven World, 2014
DDMRP Intro
14
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
49
115
35
37
129 Today’s Order Recommendation: NONE
78
▪
▪
5 6 7 8 9 10
Order Spike Threshold
11
▪
▪
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 5
On-Hand
Available Stock
SPIKE
5
9 10 30
5 6
9

15. Copyright © Demand Driven World, 2014
DDMRP Intro
15
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
44
115
39
37
120 Today’s Order Recommendation: 37
78
6 7 8 9 10
Order Spike Threshold
11
▪
▪
12
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 6
On-Hand
Available Stock
SPIKE
9 10 30
5 6
9 10

16. Copyright © Demand Driven World, 2014
DDMRP Intro
16
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
72
115
40
147 Today’s Order Recommendation: NONE
78
7 8 9 10
Order Spike Threshold
11 12 13
37
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 7
On-Hand
Available Stock
SPIKE
10 30
5 6
9 10 20

17. Copyright © Demand Driven World, 2014
DDMRP Intro
17
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
62
115
30
147 Today’s Order Recommendation: NONE
78
8 9 10
Order Spike Threshold
11 12 13 14
37
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 8
On-Hand
Available Stock
SPIKE
30
5 6
9 10 20
6

18. Copyright © Demand Driven World, 2014
DDMRP Intro
18
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
32
115
5
142 Today’s Order Recommendation: NONE
78
9 10
Order Spike Threshold
11 12 13 14
37
15
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 9
On-Hand
Available Stock
5 6
9 10 20
6
11

19. Copyright © Demand Driven World, 2014
DDMRP Intro
19
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
105
37
6
136 Today’s Order Recommendation: NONE
10
Order Spike Threshold
11 12 13 14
37
15 16
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 10
On-Hand
Available Stock
6
9 10 20
6
11 10

20. Copyright © Demand Driven World, 2014
DDMRP Intro
20
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
99
37
9
127 Today’s Order Recommendation: NONE
Order Spike Threshold
11 12 13 14
37
15 16 17
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 11
On-Hand
Available Stock
9 10 20
6
11 10 20

21. Copyright © Demand Driven World, 2014
DDMRP Intro
21
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 12 13 14
-7 -6 -5 -4 -3 -2 -1
90
37
10
117 Today’s Order Recommendation: 40
Order Spike Threshold
12 13 14
37
15 16 17
▪
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18
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Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 12
On-Hand
Available Stock
10 20
6
11 10 20

22. Copyright © Demand Driven World, 2014
DDMRP Intro
22
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
-7 -6 -5 -4 -3 -2 -1
80
77
20
137 Today’s Order Recommendation: NONE
Order Spike Threshold
13 14
37
15 16 17 18 19
40
▪
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Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 13
On-Hand
Available Stock
20
6
11 10 20

23. Copyright © Demand Driven World, 2014
DDMRP Intro
23
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14
-7 -6 -5 -4 -3 -2 -1
97
40
6
121 Today’s Order Recommendation: 36
Order Spike Threshold
14 15 16 17 18 19
40
20
▪
▪
15 16 17
▪
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▪
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Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 14
On-Hand
Available Stock
6
11 10 20

24. Copyright © Demand Driven World, 2014
DDMRP Intro
24
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14
-7 -6 -5 -4 -3 -2 -1
91
76
11
156 Today’s Order Recommendation: 36
Order Spike Threshold
15 16 17 18 19
40
20 21
36
15 16 17
▪
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Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 15
On-Hand
Available Stock
11 10 20

25. Copyright © Demand Driven World, 2014
DDMRP Intro
25
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14
-7 -6 -5 -4 -3 -2 -1
80
76
10
146 Today’s Order Recommendation: 36
Order Spike Threshold
16 17 18 19
40
20 21
36
15 16 17
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22
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Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 16
On-Hand
Available Stock
10 20

26. Copyright © Demand Driven World, 2014
DDMRP Intro
26
Sales Order Demand Supply Orders
Available Stock Today:
On-Hand
Open Supply
Sales Order Demand
1 2 3 4 5 6 7 8 9 10 11 12 13 14
-7 -6 -5 -4 -3 -2 -1
70
76
18
128 Today’s Order Recommendation: NONE
Order Spike Threshold
17 18 19
40
20 21
36
15 16 17
22 23
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Order Spike
Horizon
▼
TOG = 157 ►
TOY = 122 ►
TOR = 52 ►
DAY 17
On-Hand
Available Stock
20

27. Copyright © Demand Driven World, 2014
DDMRP Intro
27
0
20
40
60
80
100
120
140
160
180
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Demand Available Stock On Hand Open Supply
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
10 18 17 6 5 9 10 30 5 6 9 10 20 6 11 10 18
127 79 140 134 129 120 147 147 142 136 127 117 137 121 156 146 128
65 55 72 55 49 44 72 62 32 105 99 90 80 97 91 80 70
72 72 115 115 115 115 115 115 115 37 37 37 77 40 76 76 76
DAY
Demand
Av Stock
On Hand
Supply
Average Daily Usage over 17 day period = 11.8 Average On Hand Inventory = 71.6

28. Copyright © Demand Driven World, 2014
DDMRP Intro
28
28All material and content © copyright 2012 Demand Driven Institute. All rights reserved.
Certified Demand Driven Planner (CDDP) is a trademark of the ISCEA
Average On-Hand
Inventory = 71.6
On Hand Inventory Distribution
0
1
2
3
4
5
0
20
40
60
80
100
120
140
160

29. Copyright © Demand Driven World, 2014
De‐Coupled Explosion
• The explosion starts when a part’s
available stock position enters the
rebuild zone
• The explosion stops at each stock
position – No Matter What!!
101
201 203 204
302 303P
403P 404P
301
401P 402
304P
501P501P
301
404P
304P
203
101

30. Copyright © Demand Driven World, 2014 30
Available Stock Status = Relative Priority of
Supply Order Generation
DDMRP creates resupply signals based on
the “available stock” status of each buffer.
This gives prioritized sequence based on
actual need.

31. Copyright © Demand Driven World, 2014
Distribution Network Planning Priority– Current
Available Stock Positions
SKU Seattle Burbank Denver Chicago Newark Atlanta Dallas Overall
ABC 52% 90% 83% 76% 13% 21% 103%
CDF 78% 63% 76% 72% 68% 92% 63%
TUX 90% 55% 62% 17% 27% 56%
XYZ 63% 106% 47% 35% 90% 87% 89%

32. Copyright © Demand Driven World, 2014
The Hybrid
Region 1 Region 2 Region 3 Region 4
Slow and Medium Movers
Fast movers go direct ship

33. Copyright © Demand Driven World, 2014
Determining Fast versus Medium and Slow
• MOQ/ADU = Average order frequency
• Comparing average order frequency across all parts produces
a “flow index”
Flow Index
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 19 20 20+
#ofSKU
Direct Ship Candidates Hub and Spoke SKU
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 19 20 20+
VolumeofSKU
Direct Ship Candidates Hub and Spoke SKU

34. Copyright © Demand Driven World, 2014
Hybrid Supply Order Generation
• Hubbed items = typical available stock equation
• Direct Shipped Supply Order Generation:
– EASY: Imposed order cycle (e.g. every 6 days)
– HARDER: Accumulation of supply order demand at the forward
locations to a set % of the sourcing unit minimum order quantity (e.g.
until ADU would complete the allocation on the order completion
date)
SKU Seattle Burbank Denver Chicago Current Combined
Required Supply
Order Quantities
Sourcing
Unit
MOQ
Remainin
g to full
batch
Combined
ADU
Days Left
to full
MOQ
Lead
Time
Order?
CBA 68% 62% 61% 71% 6043 15000 8957 3105 3 3 YES
FDC 88% 83% 76% 72% 2934 15000 12507 1907 6 4 NO

35. Copyright © Demand Driven World, 2014
Prioritized Share
• If supply order is launched and fulfilled with
less total combined supply order requirement
than the sourcing unit MOQ then shipments
are directed using a “prioritized share”
equation

36. Copyright © Demand Driven World, 2014
Prioritized Share for Direct Shipped Items
Region 1 Region 2 Region 3 Region 4
Deployment Schedule
♦
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
♦♦
♦
To Be
Deployed
1,200
Region 4 620
Region 3 510
Region 2 70
SKU XYZ