Managing Supply Chain Disruptions with DDMRP

Disruptions in the supply chain can have a ripple effect that causes significant problems for companies. Many things can go wrong, from supplier failures to natural disasters, and cause a supply chain disruption.

This post will discuss how DDMRP can help companies manage supply chain disruptions. We’ll look at the three critical challenges associated with today’s supply chains – visibility, velocity, and variability – and how DDMRP can be applied in managing supply chain disruptions. A case study on the supply chain disruption brought about by the war in Ukraine can be included as an example and how DDMRP helped manage supply chain disruption because of this global event.

Defining DDMRP

DDMRP stands for Demand Driven Material Requirements Planning. It is a planning methodology that helps organizations address the three key challenges associated with today’s supply chains – visibility, velocity, and variability.

DDMRP can be applied in managing supply chain disruptions brought about by the pandemic and other external environmental and political factors. A case study on the supply chain disruption brought about by the war in Ukraine can be included as an example and how DDMRP helped manage supply chain disruption because of this global event.

Global Supply Chain Disruptions

Around the world, there are many supply chain disruptions happening and here is an overview of some of the interruptions that many supply chain companies face:

Disruptions due to Covid-19 pandemic

This year, global supply networks saw an unanticipated domino effect.

COVID-19-related supply chain disruptions began in China and extended worldwide as more shutdowns and closures occurred – 94 percent of Fortune 1000 firms experienced supply chain disruptions earlier this year!

However, each company’s position was unique. While some experienced a drop in sales, others saw an increase. While some could not obtain raw materials owing to scarcity, others faced logistical challenges.

Disruptions caused by Russia-Ukraine war

If the pandemic disrupted the global supply system, the Ukraine conflict brought it to a halt. The most severe supply chain threat is a protracted conflict between Ukraine and Russia. Aside from the uncertainty, it creates market barriers, impeding the transportation of goods such as car parts, oil, and grain. Furthermore, this substantial influence on our supply chains is accompanied by almost weekly price hikes, thus feeding the fires of inflation. As a result, most businesses and millions of people worldwide are experiencing economic hardship.

• War and the Supply Chain

According to a recent Dun & Bradstreet research entitled “Global Business Impacts: Russia-Ukraine Crisis”, approximately 600,000 enterprises globally rely on Russian and Ukraine suppliers, with slightly more than 90 per cent situated in the United States. 

These high figures are partly due to Russian and Ukrainian exports of oil, gas, wheat, corn, sunflower seed, semi-finished iron products, and other American commodities. Finding new markets for these items has therefore obviously become an essential subject.

• Economic Repercussions in Ukraine and Russia

Russia’s invasion has rocked the economic landscape of Ukraine. According to the World Bank, Ukraine’s GDP will contract by 45 per cent this year. It may fall considerably lower depending on the severity and duration of the war. Russia’s economy has also entered a deep recession, with production expected to fall by 11-12 per cent this year.

With supplies running low, manufacturers have fled Ukraine, and those who remain are few and far between. On a recent Verusen webinar, Ben Findlay, CEO of UK-based Machine Compare, a digital marketplace that sells second-hand machinery to help minimize waste throughout supply chains, talked. Many of Ben’s clients and associates in Ukraine have fled the nation owing to the devastating effects on goods, services, and enterprises and the widespread human tragedy.

Why Is DDMRP Effective in Managing Supply Chain Disruptions?

So, why is DDMRP so effective in managing supply chain disruptions?

There are three key reasons:

Firstly, DDMRP gives you complete visibility of your entire supply chain. This means you can see exactly where everything is at any given time and, more importantly, where everything is going. This is crucial in times of disruption, as you need to know precisely which parts of the supply chain are affected.

Secondly, DDMRP enables you to respond quickly to disruptions. With such a clear view of the supply chain, you can quickly and efficiently decide how to best manage the situation.

Thirdly, DDMRP is highly adaptable, meaning it can be easily tailored to meet the specific needs of your business. This makes it the perfect solution for managing any supply chain disruption, whether big or small.

COVID-19 and Effective Supply Chain Management

Demand-Driven Material Requirements Planning comes into play here. It is more practical since it is based on demand rather than expectations and employs stock buffers to make supply and demand independently. It assists you in addressing the three major supply chain concerns of today: visibility, velocity, and unpredictability.

DDMRP can alleviate the pain points of MRP while establishing a more flexible supply chain since demand dictates choices. It enables production planners to make better-informed decisions by utilizing ERP systems.

According to a poll by the Institute for Supply Management®, a considerable percentage of organizations anticipate a moderate to severe effect on supply chain operations in the fourth quarter of 2020.

They can minimize lead times, cooperate with numerous suppliers, and save money with DDMRP.

This may be observed by examining the outcomes of organizations that have used DDMRP. 

The firms observed:

• Up to 30% improvement in service levels
• Up to 60% decrease in inventory
• Up to 70% reduction in work in progress
• More than a 50% reduction in lead times

How DDMRP Helped Manage the Supply Chain Disruption Caused by the War in Ukraine?

The war in Ukraine has had a devastating impact on the country’s economy and its citizens. It has also significantly impacted the supply chains of companies doing business in Ukraine.

As you know, the war in Ukraine has caused widespread damage and disrupted the supply of goods to businesses and consumers. However, DDMRP can help companies to overcome these challenges by providing a framework for managing variability and risk.

DDMRP was able to help manage the supply chain disruptions such as interrupted shipping routes or supplier bankruptcy caused by the war in Ukraine by allowing companies to quickly respond to changes in demand while maintaining a high level of inventory accuracy. 

DDMRP also helped companies better understand their suppliers’ capacity and plan for potential disruptions, minimize the impact of these disruptions on their business, and keep their supply chains running smoothly.

Applying DDMRP in Your Own Supply Chain

So, you understand the basics of DDMRP and how it can help to address the three key challenges associated with today’s supply chains. But how can you use this information to help manage supply chain disruptions in your business?

Well, it depends on the nature of the disruption and the type of business you’re in. But, as a General rule, DDMRP can be applied in managing supply chain disruptions caused by global events such as pandemics, natural disasters, or political instability.

An excellent example is the war in Ukraine, which has caused widespread supply chain disruption throughout Europe. In this case, DDMRP was used to help manage stock levels and keep supplies flowing to critical areas.

Tips for Success With DDMRP

Now that you understand how DDMRP can help manage supply chain disruptions, here are some tips for making sure your implementation is successful:

1. Make sure you have a clear and concise plan for how DDMRP will be used in your organization.
2. Train all your staff on how to use DDMRP and ensure everyone is on the same page.
3. Establish key performance indicators to track how well DDMRP works for you.
4. Regularly review and update your DDMRP plan as needed.
5. Always prepare for the unexpected and have a backup plan ready in case of a supply chain disruption.

You may be facing disruptions to your supply chain due to the pandemic or other external environmental and political factors. Is it possible to protect supply networks from future geopolitical conflict?

The quick answer is no, but you should always consider your organization’s risk appetite, posture, and management skills. Diversifying sources and channels and developing risk response plans for the most vulnerable supply chains are essential resilience drivers. Long-term resilience requires supply chain executives to balance investments in specialized people, procedures, and technology to enable their firms to adopt end-to-end risk management.

This includes strategies such as establishing strategic redundancies, which boost competitiveness and protect vital value networks and supplier ecosystems. DDMRP can help you manage these disruptions by giving visibility, velocity, and variability in your supply chain.

Interested in knowing how Patrick Rigoni can step up the game of your supply chain?  Contact us today and get a free consultation.
Patrick Rigoni also offers in-depth DDMRP courses; if you are interested to know more about DDMRP for the supply chain for your company, here is the link to the NEW DDMRP Page.